Public sector lender Canara Bank on Thursday reported a 22% year-on-year increase in net profit for the first quarter of FY26, reaching ₹4,752 crore, driven by robust treasury gains and higher fee-based income.
Canara Bank financials
Interest income rose 8% year-on-year to ₹31,003 crore, while other income—which includes treasury and fee income—surged 33% to ₹7,060 crore. Treasury income saw a sharp 296% jump to ₹1,993 crore, largely aided by ₹1,617 crore from the sale of investments, while fee-based income rose 16% to ₹2,223 crore.“Even with pressure on net interest margin (NIM), we managed to post a stronger operating profit and bottom line by controlling operating expenses and leveraging treasury gains,” said Canara Bank MD & CEO K Satyanarayana Raju during the earnings briefing.
Interest expenses increased 13% to ₹21,994 crore, compressing the bank’s net interest margin to 2.55%, down from 2.80% in the previous quarter. Raju attributed the margin pressure to the 100 basis point (bps) repo rate cut by the Reserve Bank of India since February. “Around 45% of our loan book is linked to RLLR, and we passed on the entire 100 bps cut to our borrowers. Deposit rates, however, remained high until June 8,” he stated.
He added that deposit rates were reduced by over 50 bps on June 9, and the cost of deposits, currently at 5.74%, is expected to decline significantly in the July–September quarter.
Quarter one and domestic growth
As of Q1FY26, gross advances rose 12.4% year-on-year to ₹10.96 lakh crore, with retail, agriculture, and MSME (RAM) loans comprising 58% of the loan book. Raju said the loan mix aligns with the bank’s strategy of maintaining a 58:42 ratio between RAM and corporate loans. “RAM credit is growing at 15% year-on-year, led by 34% growth in retail loans, 14% in housing loans, and 22% in vehicle loans,” he said.
Domestic deposits increased 9% year-on-year to ₹13.39 lakh crore, with term deposits rising 11% to ₹9.43 lakh crore. CASA deposits (current and savings accounts) saw a modest growth of 3.7%, reaching ₹3.95 lakh crore.
Asset quality showed continued improvement. The gross non-performing assets (NPA) ratio declined to 2.69% from 2.94% in Q4FY25, while the net NPA ratio improved to 0.63% from 0.70%. The slippage ratio also dropped to 0.20%, down from 0.33% a year earlier. Shares of Canara Bank closed 5.28% higher on the NSE at ₹113.49.