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Informist, Sunday, Jul. 26, 2026

By J. Navya Sruthi

MUMBAI – Canara Bank is expected to report a lower net profit for the June quarter owing to sluggish operating profitability and low non-interest income, according to analysts tracking the bank. However, an expected year-on-year fall in its provisions is likely to cushion the bank's profit. Its net interest income is expected to rise on year owing to healthy credit growth and low credit costs, analysts said.

The public-sector lender's net profit for the June quarter is estimated to fall over 13% on year to INR 41.34 billion, according to the average of estimates from five brokerages. The highest estimate for the net profit is INR 44.16 billion from Motilal Oswal Financial Services Ltd. The lowest estimate is INR 33.90 billion from Prabhudas Lilladher Pvt. Ltd. Sequentially, the net profit is seen falling over 8%. The bank had reported a net profit of INR 45.06 billion for the trailing quarter and INR 47.52 billion for the year-ago quarter.

"We expect the bank to report a sharp earnings decline YoY (year-on-year) led by sluggish operating profitability," Kotak Securities Ltd. said in a note. The brokerage expects the bank's non-interest income to fall 23% on year to INR 54.53 billion. Its provisions for the quarter, however, are expected to fall 37% on year to INR 14.88 billion. This is likely to arrest the decline of the government-owned bank's net profit.

Analysts expect the bank's net interest income to rise on a yearly basis as well as sequentially because of a significant rise in its advances during the June quarter. The bank's net interest income for the quarter is estimated at INR 100.55 billion, up nearly 12% on year and nearly 3% on quarter, according to the average of five estimates. The highest estimate for net interest income is INR 102.42 billion from Prabhudas Lilladher and the lowest is INR 97.46 billion from Kotak Securities. The lender had reported net interest income of INR 98.08 billion in the March quarter and INR 90.09 billion in the June quarter a year ago.

Canara Bank's net interest margin is expected to be largely steady on quarter and on year, according to most brokerages. In the March quarter, the net interest margin was 2.54%. According to brokerage reports available with Informist, the bank's advances during the June quarter are expected to have risen around 18% on year. At the same time, its credit cost is expected to have fallen 29 basis points to 58 bps, according to SMIFS Ltd.

The rise in the bank's net interest income would be in line with its peers. Analysts expect the net interest income of public-sector banks in the June quarter to grow 11% on year, supported by a two-year credit growth of 18.6%. Healthy treasury gains are also expected as the yields on bonds have declined from the peak, analysts said. The yield on the 10-year benchmark gilt rose to 7.14% at the beginning of the June quarter but then fell to 6.70% in June after a slew of measures announced by the Reserve Bank of India and the government to attract foreign inflows to support the rupee.

Canara Bank will detail its June quarter earnings Monday. Investors are likely to focus on the management's comments on foreign currency non-resident (bank) deposits and their potential to narrow the funding gap in the earnings season. They will also focus on the likely impact of the delayed and deficient monsoon on the bank's asset quality. 

Friday, the bank's shares closed at INR 125.65 apiece on the National Stock Exchange, up slightly from Thursday. Its shares have fallen nearly 3% since May 11, when it detailed its March quarter earnings. All eight brokerage reports on the bank available with Informist have a "buy" recommendation with an average target price of INR 149, which is nearly 19% higher than the current market price.

Following are earnings estimates, in INR billion, for Canara Bank for the June quarter from five brokerages, in descending order of the net profit estimate:

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Edited by Himanshi Gupta

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