More Stories

Informist, Wednesday, Jan. 28, 2026

By Shruti Nair

MUMBAI – Canara Bank is expected to report a double-digit on-year growth in its bottom line, driven by one-off gains from partial stake sales in two of its subsidiaries, according to brokerages. The public-sector bank divested a portion of its stake in asset management and life insurance subsidiaries in October 2025. The realisation from these sales is around INR 21 billion.

The state-owned bank's net profit for the December quarter is expected at INR 50.67 billion, up over 23% on year, according to the average of estimates from six brokerages. Sequentially, the lender's bottom line is expected to grow by over 6%. The highest estimate for Canara Bank's December quarter net profit is INR 59.22 billion by Emkay Global Financial Services Ltd., while the lowest is INR 44.80 billion by Motilal Oswal Financial Services Ltd.

The bank's bottom line is expected to jump on year due to gains from stake sales in two of its subsidiaries through initial public offerings. The bank divested a 13% stake in Canara Robeco Asset Management Co. Ltd. and now holds only 38% in this arm. It also divested a 14.5% stake in Canara HSBC Life Insurance Co. Ltd., in which it now holds a 36.50% stake.

According to publicly available data, Canara Bank realised INR 6.37 billion from the sale of its stake in the asset management arm, while it realised INR 14.60 billion from the sale of its stake in the insurance subsidiary.

The lender's net interest income is expected at INR 93.52 billion, up by over 2% on a year-on-year and sequential basis. The highest estimate for the bank's net interest income is INR 95.56 billion by Motilal Oswal Financial Services and the lowest estimate is INR 92.55 billion by Kotak Securities. SMIFS Ltd. attributes the modest growth in the bank's net interest income to a moderate contraction in its net interest margin on quarter.

The bank's net interest margin is expected to fall 22-27 basis points on year. However, the impact of margin contraction on the bottom line is expected to be limited, as gains from the stake sale are likely to firmly push net profit growth into double digits. On a quarter-on-quarter basis, the bank's net interest margin is expected to decline by 2-3 bps, according to three brokerages, while two brokerages expect the margin to be flat sequentially.

Prabhudas Lilladhar Pvt. Ltd. expects the cut in the Reserve Bank of India's repo rate to have softened margins in the second half of the financial year 2025-2026 (Apr-Mar) but foresees a recovery in the next financial year. Kotak Securities estimates the margin to be flat sequentially and expects the rate cut to offset the benefits from the repricing of term deposits.

The bank's gross non-performing asset ratio is expected to improve 18-20 bps on quarter, according to estimates from two brokerages. The bank's gross non-performing asset ratio was 2.35% in the trailing quarter.

Prabhudas Lilladher sees further scope for reduction in the bank's gross non-performing assets as public sector banks have managed the stress in their accounts.

"We expect GNPA to further reduce from 2.4% in Q2'26 to 1.4% by Q4'28E. To protect asset quality, bank is mainly expanding its unsecured portfolio by giving loans only to pensioners and salaried class who receive their pension or salary through CBK (Canara Bank) thereby excluding any non-bank or non-salaried customers," Prabhudas Lilladher said.

Emkay Securities sees a sequential decline in slippages, while Kotak sees no major surprises in the bank's asset quality. On a year-on-year basis, the bank's gross non-performing assets ratio is expected to improve by 100-117 bps from 3.34% in the year-ago quarter.

Despite the expected improvement in asset quality, the bank's provisions are seen rising both sequentially and on year. Provisions are expected at INR 25.26 billion for the December quarter, according to the average of estimates from five brokerages, up over 7% on quarter and over 5% on year.

"We are watchful of likely provision requirements that may emanate from ECL (expected credit loss) transition," Prabhudas Lilladher said in its report. Kotak Securities said the bank is likely to utilise the gains from its stake sale in its subsidiary to augment its provision buffer.

Estimates of the bank's credit costs vary. Kotak Securities sees a sharp sequential decline in credit costs. SMIFS estimates the fall at 7 bps. However, Motilal Oswal expects credit costs to be flat sequentially, while Prabhudas Lilladher sees an increase of 13 bps. The bank's credit costs were 0.68% in the September quarter. SMIFS expects a fall of 18 bps on-year in credit costs, while Prabhudas Lilladher sees a rise of 2 bps. Credit costs were 0.89% in the year ago quarter.

Wednesday, shares of the bank ended at INR 157.74 on the National Stock Exchange, up 2.0% from the previous close. The shares are up over 16% since the bank reported its September quarter earnings.

Of the seven brokerage reports on the bank available with Informist, five have a 'buy' or equivalent recommendation, with an average target price of INR 148 per share. This is over 4% lower than the current market price. Two brokerages have a 'hold' or equivalent recommendation with a target price of INR 160 and two have a 'sell' or equivalent recommendation with a target price of INR 130 per share.

The bank will release its December quarter results Thursday.

The following are the Oct-Dec earnings estimates for Canara Bank from six brokerages in descending order of the estimate of net profit in INR billion:

End

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.