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Informist, Thursday, Jul. 24, 2025

By Sagar Sen and Ashutosh Pati

NEW DELHI – State-owned Canara Bank is hoping to do better recoveries in the ongoing September quarter over the June quarter, senior management of the lender said in an analyst conference call Thursday.

"Actually, National Asset Reconstruction Co. Ltd., we identified eight more new accounts, which is under different stages, that will continue to follow it up with them, that is around 4000 crores (INR 40 billion). But actually, our board has approved some one-time settlement agreements for the almost four more big proposals. Out of that majority, we are expecting that the repayment will come in this quarter. So, this quarter definitely will be much better than the first quarter in the recoveries," the management said.

The bank in its investor presentation said total cash recovery towards book liability in the reporting quarter was INR 5.05 billion. Total cash recovery including recovery in written off accounts was INR 19.19 billion.

The bank, which had given a guidance of having net non-performing asset ratio of 0.60%, expects to reach that aim by September. "Our practice is we give guidance conservatively but we will exel in our performance, we are continuing to do that. But definitely we will excel in net NPA and gross NPA whatever we have given for March. We are sure that the guidance that we had given for the March 2026 we may likely cross by September, in not September, December 100%," the management said.

In the June quarter, the net NPA ratio fell 7 basis points sequentially to 0.63% end of June, while gross non-performing assets ratio fell 25 bps to 2.69%. On a on-year basis, the net NPA fell 61 bps and gross NPA fell 145 bps. The bank's provision coverage ratio rose 395 bps on year to 93.17% as of Jun. 30.

The public sector bank posted a net profit of INR 47.52 billion for the quarter, up nearly 22% on year, mainly on back of a fourfold rise in treasury income. The bank's treasury income for the quarter totalled INR 19.93 billion, compared with INR 5.03 billion a year ago. "Open market operations support was there, out of that we gained a substantial income of around INR 5 billion, which may not be there this quarter," the management said.

In terms of margin, the bank expects to maintain net interest margin above 2.5%. The net interest margin of the bank was down 18 basis points sequentially at 2.55% during Apr-Jun, and 35 bps lower than the year ago figure. In the previous quarter, the bank had projected its net interest margin in the range of 2.75-2.80% in FY26.

"If no further rate cuts are there, we may see slowly that the net interest margin may gradually improve in the third and fourth quarter," the lender's management said. Going ahead, the bank expects healthy growth in lending to agriculture micro, small and medium enterprises as it has taken several steps in that direction.

On Thursday, shares of the bank ended at INR 113.51 on the National Stock Exchange, up 5.3% from Wednesday's close.  End

Edited by Akul Nishant Akhoury

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