State-run Canara Bank on Thursday reported a 28 percent dip in profit after tax at Rs 444 crore for the quarter ended September on higher provisions.

The bank amalgamated Syndicate Bank with itself effective April 1, 2020. The amalgamated entity had posted a standalone profit after tax of Rs 616 crore in the same quarter of the previous fiscal.

The pre-amalgamation standalone profit in September 2019 quarter stood at Rs 364.92 crore. Canara Bank's Managing Director and CEO L V Prabhakar said the bank made advanced provision for Dewan Housing Finance (DHFL), which it has declared as fraud, and also Rs 125 crore floating provision during the quarter.

The bank's outstanding loan to DHFL is Rs 3,980 crore. Against which, the bank has to make a provision of Rs 1,677 crore during Q2 and Q3. The provision on DHFL account which the bank was to make in Q3 has been provided in Q2, he said.

"I have made ample provision taking into consideration the next quarter (Q3). In spite of making advance provisioning for the NBFC account and also floating provision of Rs 125 crore, we have shown profit during the quarter. My intention is to make the balance sheet strong and stable," he explained.

The lender has also fully provided for staff costs based on new wage revision according to a bipartite agreement and pension, gratuity and leave encashment. It also made a provision of Rs 178 crore towards income tax, he said. Net interest income rose 29.31 percent to Rs 6,296 crore in the quarter from Rs 4,869 crore in the same period of the previous fiscal.

Gross non-performing assets (GNPA) ratio reduced to 8.23 percent from 10.10 percent. Net NPA ratio stood at 3.42 percent from 5.72 percent. Provision coverage ratio (PCR) improved to 81.48 percent as at September 2020 from 69.60 percent as at September 2019.

Cash recovery during the quarter stood at Rs 1,504 crore and recovery from written-off accounts was at Rs 2,342 crore. The bank had targeted a recovery of Rs 10,000 crore during this fiscal but expects to surpass it, Prabhakar said.

Fresh slippages in the quarter were at Rs 327 crore.

The lender has received one-time restructuring requests worth Rs 600 crore so far and the restructuring has been invoked in these accounts. Of this, around 80 percent is from corporates. "We are projecting about Rs 13,000-13,500 crore of our loan outstanding to be restructured," Prabhakar added.

The bank's domestic deposits stood at Rs 9,10,984 crore and advanced at Rs 6,27,195 crore as at September 2020. The lender's scrip closed at Rs 85.60 apiece, down 1.67 percent, on BSE.