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Informist, Thursday, Oct. 30, 2025

 

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--Canara Bk: See credit growth around current pace of 13% Q3, above guidance
--CONTEXT: Comments from Canara Bank in press conference post Q2 earnings
--Canara Bank: Increased demand for credit already in Oct, festival season
--Canara Bank: Will raise some portion of approved fundraising via bonds Q3
--Canara Bank: Plan to raise entire approved INR 95 bln via bonds FY26
--Canara Bank on PSU bank mergers: Heard no word from govt
--Canara Bank: Currently holding INR 35 bln in excess provisioning
--Canara Bank: Will get INR 19.35 bln from IPOs of subsidiaries in Q3 
--Canara Bank: See retail, agri, MSME loans growing faster than corp loans
--Canara Bank:Got INR 9-bln other income boost Q2 from priority sector loans 
--Canara Bank: See gross NPA below 2% FY26, net NPA below 0.5% Q3 
--Canara Bank: Cleared proposals for corp loans worth INR 260 bln Tue
--Canara Bank: Saw immediate surge in vehicle loans post GST rate cuts
--Canara Bank: Working on using Agentic AI in day-to-day ops

 

MUMBAI/NEW DELHI – Canara Bank may keep up its existing pace of credit growth and outpace its guidance on loan growth for 2025-26 (Apr-Mar), the bank's management said in a press conference following its Jul-Sept earnings. The bank has already seen higher credit demand in October during the festive season, aided by the reduction in goods and services tax rates, Managing Director and Chief Executive Officer K. Satyanarayan Raju said Thursday.

 

As of Sept. 30, the state-owned lender's gross global advance rose 13.7% on year to INR 11.51 trillion. It has guided for only 10-11% annualised loan growth in FY26 but may be able to grow at a 13% pace in Oct-Dec, which may push it above the guided level for the full year as well, Raju said.

 

"And I am sure that in the next two quarters...the bank can encash that (and) the credit growth will continue at the current level only. That's what actually we are expecting," Raju told the media during the conference.

 

The bank was able to leverage on the increased demand for credit in recent months, and the immediate impact of the GST rate cut was felt on vehicle loans, which rose over 25% to INR 233.67 billion as of Sept. 30, the management said. The government overhauled the indirect tax regime by collapsing the four-slab GST structure to a two-slab structure of 5% and 18?fective Sept. 22. 

 

In the next few quarters, loans to retail, agriculture, and micro, small and medium-enterprises will grow faster than the corporate book of the bank, Raju said. This is in line with the lender's vision to restrict corporate loans to 40% of its portfolio, from 42% as of September-end. The bank was still seeing traction in corporate loans, and had just cleared proposals from corporates worth around INR 260 billion in two days.

 

However, some sectors, such as fisheries and gems and jewellery, have been facing challenges following the 50% tariff imposed on India's exports to the US in late August. Geopolitical factors have also led to a decline in education loan applications for studies in the US, with more customers now seeking loans for destinations such as the UK and Australia, Raju said.

 

Earlier Thursday, the bank reported a 19% on-year rise in its Jul-Sept net profit to INR 47.74 billion, beating Street estimates. The bottom line was boosted by a 42% jump in other income to 70.54 billion, which accounted for nearly one-fifth of its total income. The bank generated INR 9 billion in the reporting quarter from selling priority sector lending certificates as it had met its priority-sector lending targets, Raju said.

 

The bank's treasury income rose nearly 80% on year during the September quarter to INR 15.83 billion. The CEO said the state-owned lender had so far sold about 2.5% of its held-to-maturity portfolio, generating INR 2.30 billion, within the Reserve Bank of India's annual limit of 5% for such sales. The bank was leveraging its excess statutory liquidity ratio securities to find arbitrage and invest in the money market to boost treasury income, he said.

 

Going ahead, the bank said its Oct–Dec results will be boosted by about INR 19.35 billion earned from the listing of its subsidiaries on the exchanges. Two of its financial services subsidiaries — Canara Robeco Asset Management Co. Ltd and Canara HSBC Life Insurance Ltd. — were listed in October. The initial public offerings comprised an offer for sale by existing shareholders, including Canara Bank.

 

The state-owned lender expects its asset quality to improve further following a sharp reduction in non-performing asset ratios during the September quarter, though the pace of improvement may moderate compared with the last few quarters, Raju said. He said gross NPA ratio would be below 2% at the end of FY26, lower than the bank's guidance of 2.5% while the net NPA ratio would fall below 0.5% in the December quarter. The bank also holds around INR 35 billion in excess provisioning as a buffer in case required.

 

Canara Bank had improved its underwriting and that was leading to lower slippages on a quarterly basis, improving its asset quality on a longer-term basis, the CEO said. The gross non-performing asset ratio declined to 2.35% as of Sept. 30 from 2.69% at the end of June and 3.73% as of Sept. 30, 2024. The net non-performing asset ratio fell to 0.54% from 0.63% as of Jun. 30 and 0.99% at the end of September 2024.

 

Meanwhile, the bank will tap the bond market to raise some part of its approved fundraising in the ongoing quarter, Raju said. The lender plans to raise INR 35 billion through additional tier-I bonds and INR 60 billion through tier-II bonds, as approved by the board in June. The entire INR 95 billion will be raised during the current financial year ending March, the CEO said. The bank's capital adequacy ratio slipped slightly to 16.20% as of Sept. 30 against 16.52% a quarter ago and 16.57% a year ago.

 

Canara Bank also plans to expand its offline network while increasing its use of technology. It plans to open 280 branches in FY26, slightly above the average of around 250 branches added annually over the past two years, Raju said. The bank is also exploring the integration of Agentic artificial intelligence into its daily operations and enhancing offerings on its mobile application.

 

Separately, the MD said the bank has not received any communication from the Department of Financial Services, Ministry of Finance, regarding further amalgamation of public sector banks. On Thursday, shares of the state-owned lender closed 3.2% higher at INR 132.89 on the National Stock Exchange.  End

 

Reported by Aaryan Khanna and Rati Chaphekar

Edited by Subhojit Sarkar

 

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