Canara Bank on Thursday reported a 26% year-on-year rise in net profit to ₹5,155 crore for the third quarter, aided by higher fee-based income and gains from the sale of investments.
Interest income increased 6% year-on-year to ₹31,544 crore, while non-interest income jumped 36% to ₹7,900 crore during the quarter. Treasury income surged 149% to ₹3,056 crore, largely driven by ₹2,590 crore from the sale of investments.
Fee-based income rose 7% to ₹2,327 crore, while recoveries from written-off accounts stood at ₹2,051 crore, further supporting non-interest income.
Pressure on Margins
Interest expenses climbed 7% to ₹22,729 crore, keeping net interest income largely flat at ₹9,252 crore compared with ₹9,149 crore a year ago. The bank’s cumulative net interest margin (NIM) declined to 2.50% from 2.52% in the previous quarter and 2.83% in the year-ago period. Earlier, the bank had guided for a global NIM of 2.75–2.80% for the full year.
“The pressure on NIM continues given the fact that 49% of our portfolio is Repo Linked Lending Rate products, where we have to pass on the interest rate cut immediately,” Canara Bank management said during the bank’s earnings briefing.
They added that the bank is focusing more on retail, agriculture and MSME (RAM) advances while reducing low-yielding corporate loans to improve margins. “We are still continue to maintain 8.34% yield on advances, which is a reasonably good yield given our low CASA position,” they said.
Gross domestic advances grew 13% year-on-year to ₹11.19 lakh crore, outpacing domestic deposit growth of 11% to ₹13.97 lakh crore. Global business, comprising deposits and advances, stood at ₹27.14 lakh crore at the end of the third quarter. The bank has guided for 10–11% credit growth for FY26 and reported 13.59% growth in the current quarter.
Future Growth Outlook
“We see the same traction will continue in the last quarter also and bank will end up at 13.5% credit growth,” Interim MD & CEO Hardeep Singh Ahluwalia said.
Retail advances posted the strongest growth, rising 31% to ₹2.73 lakh crore. MSME advances increased 14% to ₹1.6 lakh crore, while agriculture advances grew 11% to ₹2.7 lakh crore. Retail, agriculture and MSME (RAM) loans now account for 59% of the bank’s total advances.
Ahluwalia said retail loan growth was driven by an 18% rise in housing loans and a 26% increase in vehicle loans. “Gold also forms part of retail loans. We have rolled out the products in metros and it has shown almost 95% growth,” Ahluwalia said.
Corporate loans grew 7% to ₹4.88 lakh crore. The bank’s yield on advances declined to 8.34% from 8.79% in the year-ago quarter.
Deposit Mix Analysis
On the liability side, term deposits rose 12% to ₹9.85 lakh crore, while low-cost CASA deposits grew 9% to ₹4.12 lakh crore. The cost of deposits eased marginally to 5.62% from 5.7% in the year-ago quarter.
The bank expects less than ₹10,000 crore in provisions under the Expected Credit Loss (ECL) framework. “Our profit last fiscal was ₹17,000 crore. This year also it will be in the range of ₹17,000 to ₹20,000 crore. The bank is adequately poised to absorb all ECL changes,” Ahluwalia noted.
Asset quality continued to improve, with the gross non-performing asset (GNPA) ratio declining to 2.08% from 2.35% in the previous quarter and 3.34% a year earlier. Net NPA fell to 0.45% on both a sequential and year-on-year basis.