Canara Bank opens Rs.2,500 crore QIP

Canara bank

Canara Bank has opened its qualified institutional placement of equity shares worth Rs.2,500 crore on 17th August. The floor price for the QIP has been set at Rs.155.58 per share, which is slightly above the current market price. Canara Bank can offer a discount of 5% on the issue price at its discretion. The QIP issue was approved by shareholders at the AGM conducted on 03rd August.

This QIP fundraising is intended to boost the bank’s capital adequacy, which is essential to expand its lending book. This is part of the overall Rs.9,000 crore of fundraising approved during the current fiscal. Apart from this Rs.2,500 crore, Canara Bank will raise another Rs.4,000 crore through the issue of Additional Tier-I Basel-III compliant bonds. In addition, another Rs.2,500 crore will be raised through Additional Tier-II Basel-III compliant bonds.

Check: Canara Bank Quarterly Results

For the quarter ended June 2021, Canara Bank had reported a 3-fold jump in net profits to Rs.1,178 crore. However, total revenues in the quarter were up just about 3% at Rs.21,210 crore. The profit growth had been largely an outcome of a sharp fall in provisions for loan losses in the Jun-21 quarter. The gross NPAs of Canara Bank had fallen 34 bps to 8.50%. The bank is perfectly poised to expand its loan book and that needs additional capital buffers.

Canara Bank was one of the acquiring banks in the government triggered merger of PSU banks. Accordingly, Syndicate Bank had been fully merged into Canara Bank for better synergies in the wholesale loan book and in treasury operations. The latest QIP will be an important step in Canara Bank becoming self-sufficient in capitalizing its balance sheet, instead of depending on central government infusion.

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