Canara Bank may cut rates on retail term deposits if needed, says MD Raju
This story was originally published at 18:08 IST on 8 May 2025
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--Canara Bank MD: Plan to open 250 branches in FY26
--CONTEXT: Comments by Canara Bank's management at post-earnings press meet
--Canara Bank MD: Plan to recruit around 3,000 people in FY26
--Canara Bank: Reclassified INR 27 bln from MSME to non-MSME to meet norms
--Canara Bank MD: Stress on NIM to continue as rate cuts by RBI expected
--Canara Bank MD: See treasury income at same levels or better going ahead
--Canara Bank MD: May cut retail term deposit rates if required
MUMBAI – Canara Bank may cut interest rates on retail term deposits depending on market conditions and the bank's requirement, Managing Director and Chief Executive Officer K. Satyanarayana Raju said on a post-earnings media call. "We've already reduced interest rates in certain buckets from Apr. 1. We'll review the rest based on our comfort level and deposit growth," Raju added.
He also clarified that any rate revision would be data-driven, not reactive. "We won't reduce rates just to protect (our) net interest margin. We won't compromise deposit growth. Any change will depend on demand-supply dynamics and will be carefully assessed," he said. Currently, the bank offers retail term deposit rates ranging from 4.00% to 7.45% for the general public and up to 7.98% for senior citizens, across maturities of 7 days to 10 years.
Canara Bank reported a modest uptick in its net interest margin to 2.73% in the Jan-Mar quarter from 2.71% a quarter earlier, though it remained below 3.07% a year ago. The bank has guided for a margin of 2.75–2.80% in 2025-26 (Apr-Mar) but expects continued stress on the net interest margin due to likely rate cuts by the Reserve Bank of India. "We expect one or two more rate cuts (in financial year 2025-26). Since 43–44% of our advances are benchmark-linked, those will reflect changes quickly. But deposit repricing takes at least six months," Raju said.
The bank expects its treasury income to stay strong in the current quarter, supported by a favourable interest rate environment. Canara Bank reported treasury income of INR 30.48 billion in Jan-Mar, more than double from a year ago.
On advances in the micro small medium enterprises, Raju explained that a 1% sequential decline in the March quarter was due to regulatory reclassification. "As per new guidelines, MSMEs without Udyam registration have been reclassified. Due to this, loans worth around INR 27 billion moved out of the MSME category to the non-MSME category," he said. While, the bank's MSME advances fell on quarter, they grew 8.2% year-on-year to INR 1.40 trillion for the quarter under review.
The bank plans to open 250 new branches in FY26 and hire around 3,000 employees. "We will continue to recruit in line with branch growth," Raju said. As of Mar. 31, Canara Bank had 9,849 domestic branches, up from 9,604 a year ago.
The public sector bank's net profit for Jan-Mar rose over 33% on year and 22% on quarter to INR 50.03 billion. On Thursday, shares of Canara Bank ended at INR 95.37 on the National Stock Exchange, up 1.8% from the previous close. End
Reported by Sachi Pandey and Ashna Mariam George
Edited by Nishant Maher
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