Canara Bank on Thursday reported a 33% year-on-year rise in its net profit to Rs 5,004 crore for the fourth quarter of FY25, its highest-ever net profit in a single quarter. The growth was driven by a spike in fee-based non-interest income and higher bad loan recoveries.
Total interest income rose 8% year-on-year to Rs 31,002 crore while interest expenses increased 12% to Rs 21,560 crore. Non-interest income, which includes fee-based income and treasury gains, jumped 22% to Rs 6,351 crore. Of this, fee-based income stood at Rs 2,335 crore and recoveries from written-off accounts contributed Rs 2,471 crore, a 30% rise YoY.
“The growth in the bottom line was to some extent led by interest income, but the major contribution came from fee-based income and recoveries. Fee-based income grew 20.3% YoY to Rs 2,335 crore,” managing director and CEO K Satyanarayana Raju said during the earnings briefing.
Net interest income saw a marginal decline to Rs 9,442 crore, from Rs 9,580 crore in the same quarter last year. Net interest margin (NIM) compressed to 2.80%, compared with 3.05% in March 2024. The bank has guided for a NIM of 2.75%–2.80% for FY26.
“Already two rate (repo) cuts are over and we are expecting another one or two rate cuts. So, we are expecting the stress on NIMs to continue in the next quarter as well,” Raju said.
He said 44–45% of lending is linked to external benchmarks, which requires immediate transmission of rate cuts to borrowers. “But transition of interest rate reduction on deposits takes a minimum of six months.”
Canara Bank’s global gross business rose 11% year-on-year, crossing the Rs 25 lakh-crore mark for the first time. As of March 2025, global gross business stood at Rs 25.3 lakh crore.
The retail, agri, and MSME segment accounted for 57% of total global advances. Retail advances jumped 43% year-on-year to Rs 2.23 lakh crore while advances to agriculture and allied services fell 2.5% to Rs 2.47 lakh crore. The MSME portfolio rose 8% to Rs 1.39 lakh crore.
Raju attributed the surge in retail advances to the bank’s focus on metro-centric gold loan products. “Last year, we stopped lending for gold loans for agriculture purposes. Instead, we launched a retail gold loan product for metropolitan customers for their consumption purpose and that product is well received by everybody,” he said.
The share of low-cost current account and savings account (CASA) deposits stood at 31.17% of total domestic deposits as of FY25. The bank has guided for a CASA ratio of 32% for FY26.
Raju said the bank has already mobilized Rs 6,000 crore in the current quarter through its 444-day retail term deposit and may not require more than Rs 10,000 crore in total. “We already reduced rates in bulk deposits and certain buckets like 2–3 years and 3–5 years. We will review other buckets also once the required growth is achieved for this quarter.”
The gross non-performing asset (GNPA) ratio improved to 2.94% as of March 2025 from 4.23% a year ago. The net NPA ratio fell to 0.70% from 1.27%. The lender has guided for GNPA and NNPA ratio of 2.5% and 0.6%, respectively, for FY26.
Canara Bank’s board has recommended a dividend of Rs 4 per equity share for FY25, subject to necessary approvals. “The proposed dividend represents 200% of the paid-up capital ― the highest ever in the bank’s history,” Raju said.