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Informist, Thursday, Oct. 30, 2025

--ICRA assigns AA+ rtg to Canara Bk's Basel III Tier I bonds; outlook stable

MUMBAI/NEW DELHI – Rating agency ICRA Ltd. Thursday assigned a 'AA+' rating with a stable outlook to Canara Bank's proposed issuance of INR 35 billion worth of Basel-III tier-I bonds, the lender informed exchanges. Earlier Thursday, Canara Bank said in a press conference it would raise funds through bonds in the ongoing quarter ending December.

The state-owned bank's board had approved raising capital through INR 95 billion of bonds in 2025-26 (Apr-Mar), including INR 35 billion of additional tier-I debt and INR 60 billion through tier-II debt. The lender's robust deposit franchise and strong liquidity profile got the second-highest rating on ICRA's rating methodology, the ratings agency said.  The bank's capital adequacy ratio fell slightly to 16.20% as of Sept. 30 against 16.52% a quarter ago and 16.57% a year ago.

"ICRA expects Canara to generate sufficient internal accruals to meet its growth capital requirements while keeping the desired cushion on the capital well above the regulatory levels {including capital conservation buffers (CCB))," the agency said in its rationale for the rating. "Nevertheless, the impact of transitioning to provisioning based on the expected credit loss (ECL) framework, on the capital and profitability levels will remain monitorable."

ICRA said Canara Bank's asset quality and solvency will remain heatlhy after a sharp reduction in vulnerable legacy accounts, with adequate provisions. The bank held an additional provision of INR 35 billion as of Sept. 30. A build-up in bad loans needs to be monitored after the lender's strong loan growth in recent years amid increased macroeconomic and geopolitical uncertainty, the ratings agency 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 state-owned lender's shares ended 3.2% higher at INR 132.89 on the National Stock Exchange.  End

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

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