Canara Bank Receives Board Approval for Rs 7,500 Crore Fundraising
In a positive development, Canara Bank has obtained the board’s approval for a fundraising plan of INR 7,500 crore during the current financial year. As a result, Canara Bank shares observed a 2 percent surge in afternoon trading.
According to the bank’s exchange filing, INR 3,500 crore will be raised through additional Tier I (ATI) bonds, while the remaining INR 4,000 crore will be obtained via Tier II bonds. The board convened on June 28 to finalize these decisions.
Additional Tier I (ATI) bonds are unsecured bonds without a fixed maturity rate, primarily issued to secure long-term capital. These bonds typically offer higher coupon rates but come with an inherent risk in the event of a bank collapse. On the other hand, Tier II bonds are perpetual instruments utilized by banks for subordinate debt.
During FY23, Canara Bank, a government-owned lender, experienced a 17 percent year-on-year increase in revenue, reaching INR 111,209 crore. Moreover, the bank witnessed a substantial 83 percent growth in net profit, amounting to INR 11,254 crore. Notably, Canara Bank’s EBITDA margins rose by 46 basis points, reaching 26.07 percent. It’s worth noting that one basis point represents a hundredth of a percentage point.
In an earnings call, MD-CEO Satyanarayana Raju stated that Canara Bank has projected a credit growth of 10.5 percent for FY24. In the previous fiscal year, the bank achieved a credit growth rate of 16 percent.
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Furthermore, Canara Bank successfully reduced its Net Non-Performing Assets (NPAs) by 92 basis points, amounting to 1.73 percent during FY23. This figure is below the bank’s targeted threshold of 2 percent for net NPAs.
As of 2:02 pm, Canara Bank’s shares were trading at INR 301.65 on the National Stock Exchange, reflecting a 1.65 percent increase compared to the previous closing. Unfortunately, the stock has experienced an 11.53 percent decline so far this year.
About Canara Bank:
Canara Bank, renowned for its customer-centric approach, was established in July 1906 by Shri Ammembal Subba Rao Pai, an esteemed visionary and philanthropist, in the town of Mangalore, which was a small port town in Karnataka at the time. Throughout its hundred-year existence, the bank has experienced several stages of growth and development.
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