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Informist, Friday, May 8, 2026

By Priyasmita Dutta

NEW DELHI – State-owned Canara Bank is expected to report a decline in its net profit for the March quarter, driven by weak treasury income and muted operating profit, according to brokerages tracking the lender. Higher provisions during the quarter are also seen weighing on the bottom line.

The state-owned bank's net profit is estimated at INR 44.02 billion in the March quarter, down 12% on year, according to the average of estimates from seven brokerages. Sequentially, net profit is seen declining 15%. Prabhudas Lilladher Pvt. Ltd. has the lowest net profit estimate at INR 35.62 billion, while Emkay Global Financial Services Ltd. has the highest at INR 54.36 billion. If the bank reports a year-on-year decline in net profit, it would mark its first such fall in 33 quarters. 

Brokerages expect the bank's other income to weigh on the bottom line in the March quarter. Lower treasury income amid higher bond yields is likely to keep other income muted, Motilal Oswal Financial Services Ltd. said in a report. In the corresponding quarter a year ago, treasury income had risen 15% on year to INR 9.95 billion. The sequential decline is expected to be sharper, as treasury income was at INR 30.56 billion in the December quarter. 

Banks with large treasury operations are expected to incur mark-to-market losses due to the sharp rise in government bond yields. In March, the 10-year bond yield rose almost 37 basis points after the war in West Asia began on Feb. 28.

The Bengaluru-based bank will announce its March-quarter results on Monday.

Analysts have divergent views on Canara Bank's provisions during the quarter. Elara Securities (India) Pvt. Ltd. expects provisions to rise over 9% on year and fall 17% sequentially, while Kotak Securities Ltd. sees provisions declining 1.1% on year and 25% on quarter. Meanwhile, brokerage Prabhudas Lilladhar expects provisions to jump 17% on year and fall 11% sequentially. SMIFS Ltd. has the highest estimate for provisions, projecting them to rise 35% on-year and 3% on-quarter. 

Despite differing on provisions, analysts do not expect major surprises on the asset quality front. Gross non-performing asset ratio could improve by 20 bps on a quarterly basis, and credit costs could decline by 13 bps, Prabhudas Lilladher said. Motila Oswal expects the gross NPA ratio to improve to 2.0% at the end of March, compared with 2.1% in the trailing quarter and 2.9% a year earlier. The net NPA ratio is expected to be 0.4%, down 10 bps sequentially and 30 bps on-year, the brokerage said. 

Kotak Securities said the low net NPA ratio, in line with other PSU banks, leaves room for a decline in credit costs. SMIFS expect credit costs during the March quarter to be 13 bps higher than in the year-ago quarter. 

Canara Bank's operating profit is also expected to remain subdued during Jan-Mar, with net interest income seen rising just 0.6% on-year and 2.7% on-quarter to INR 95.02 billion, according to the average of estimates from seven brokerages. Estimates of net interest income range from INR 93.20 billion to INR 97.00 billion. 

Brokerages expect loan growth to be 14–17% higher on year at the end of March, while deposit growth is seen at 8–11%. Analysts will watch movements in special mention accounts, Motilal Oswal said. Special mention accounts are loans identified by banks as showing early signs of stress or potential default.

Canara Bank posted a net profit of INR 51.55 billion in the December quarter, up 26% on-year. Since the January quarter results, the bank's stock has fallen nearly 14. At 1458 IST, the bank's shares were trading 0.8% lower at INR 134.90 on the National Stock Exchange. 

Of the eight brokerage reports on the bank available with Informist, six have a 'buy' recommendation on the stock, with an average target price of INR 157. One brokerage has a 'sell' recommendation, while another has a 'hold' recommendation.

The following are the Jan-Mar earnings estimates for Canara Bank from seven brokerages in descending order of the estimate of net profit in INR billion:

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Edited by Saji George Titus

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