Canara Bank reported a 19% year-on-year (YoY) rise in net profit to Rs 4,773.96 crore for the quarter ended September 2025, driven by improved asset quality. Sequentially, the profit was up marginally by 0.5%.

The bank’s net interest income (NII) declined 2% YoY to Rs 9,141 crore in the reporting quarter, while other income grew 41.6% YoY. The net interest margin (NIM) moderated slightly to 2.52% in Q2, compared with 2.55% in the previous quarter. The bank has guided for NIMs in the range of 2.75%–2.80% by the end of FY26.

Analysts had pegged the net profit for the reporting quarter at Rs 4,403 crore and the net interest income at Rs 9,028 crore, as per Bloomberg estimates. Asset quality showed steady improvement, with the gross non-performing asset (NPA) ratio declining to 2.35% as on September 30, from 2.69% a quarter earlier. The net NPA ratio improved to 0.54%, down from 0.63% in the previous quarter.

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Provisions and contingencies rose 4.6% YoY to Rs 2,354.17 crore, while provisions for NPAs fell 42% YoY to Rs 1,503.63 crore. The provision coverage ratio (PCR) improved by 270 basis points (bps) to 93.59% as of September 30. The credit cost declined 29 bps YoY to 0.68%, and the bank has guided for a credit cost of 0.90% for FY26.

In terms of global business, deposits grew 13.40% YoY to Rs 15.3 lakh crore, while advances rose 13.74% to Rs 11.51 lakh crore. Within advances, the retail, agriculture, and MSME (RAM) portfolio expanded 16.94% YoY.

“I feel that the RAM sector will grow better than the corporate growth in the next two quarters. Our strategy is to reach RAM sector at 60% and the corporate at 40%. We don’t want to grow in the corporate at the cost of bottom line. We don’t want to be part of that interest war because that is hitting our bottom line. We are very cautious on that,” said K Satyanarayana Raju, managing director and CEO, at the post-earnings media call.

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Raju added that post-GST reforms, the bank is witnessing higher traction in the vehicle loan segment, which grew 25.6% YoY as of September 30. Within domestic deposits, CASA deposits rose 10.53% YoY to Rs 4.3 lakh crore, with the CASA share at 30.69%.

On the NSE, shares of Canara Bank closed 3.1% higher at Rs 132.78 on Thursday. This was the last earnings call of K Satyanarayana Raju as MD & CEO, as his tenure ends on December 31.