Indian private sector bank, Canara Bank has reported a fall of 26 per cent in its net profit at Rs. 876 crore during the third quarter of the financial year till December 2011.

The total income of the bank rose from Rs. 6,444.55 crore in the same quarter of 2010 to the level of Rs. 8,591.15 crore in the quarter till December 2011. The deposits in the bank rose 19.7 per cent while advances increased by 15.5 per cent during the quarter.

Chairman and Managing Director S. Raman said that the bank's profitability would have been higher if it did not have to face provisioning for an "impaired asset," and higher depreciation of investments in the quarter.

The net interest margin (NIM) of the bank was at 2.64 per cent compared to 3.21 per cent a year earlier. Mr. Raman also pointed out that the higher interest expenditure also affected the bank's profitability as interest costs increased by 56 per cent on a yearly basis.

The total non-performing assets (NPA) were at Rs. 3,999 crore, which is about 45 per cent higher than the previous year. The net NPA ratio for the bank weakened from 1.05 per cent to 1.49 per cent during this period.

"We have been careful in choosing our accounts this year," Mr. Raman said. He added that the banks in the country will benefit from the opportunity created by the cut in CRR rates by the RBI as it reverses the monetary policy in India.