More Stories

Informist, Thursday, Jan. 29, 2026

 

Please click here to read all liners published on this story

--Canara Bank:Focus to grow in retail, agri, MSME sector where ylds are high
--CONTEXT: Comments by Canara Bank mgmt in press conference post Q3 earnings
--Canara Bank: Expect credit growth around 13.5% in FY26
--Canara Bk:Should be able to maintain around 13?posit growth in Q4, FY26 
--Canara Bank: See lower provisions in coming qtrs on fall in NPA ratios
--Canara Bank:Don't see increased risk in expanding retail, MSME, agri loans
--Canara Bank: Expect NIM to stabilise at 2.45-2.50%; pressure on NIM remains
--Canara Bank: Reducing low yielding corporate advances to expand NIM
--Canara Bank:May raise INR 60 bln via tier-II bonds at opportune time in Q4
--Canara Bank: No corporate slippages in Q3; agri slippages nearly INR 8 bln
--Canara Bank: Well positioned to deal with costs associated with ECL norms
--Canara Bank: Total cost for ECL norms around INR 100 bln across 4 years

 

NEW DELHI/MUMBAI – Canara Bank is focusing on expanding its high-yielding portfolio of loans in the retail, agriculture, and micro, small, and medium enterprises sectors to protect its net interest margin, the management said in a post-earnings press conference Thursday. The bank has cut down on its low-yielding corporate advances as it seeks to ensure a higher return on credit disbursed.

 

The bank's credit to the retail, agriculture, and micro, small, and medium enterprises sectors rose 4.5% on quarter and 18.7% on year to INR 7.04 trillion as on Dec. 31, growing to 59% of its total advances. However, the management does not see a build-up of risk from the expanded lending to the higher-yielding sectors. Retail credit alone grew by nearly a third to INR 2.73 trillion, but the gross non-performing asset ratio was 0.49% for the sector as on Dec. 31.

 

"So to answer your question, we are not growing advances through a riskier advance," Executive Director S.K. Majumdar said. "Our NPA (non-performing assets) percentage on entire RAM (retail, agriculture, and micro, small, and medium enterprises) portfolio was never better than this... I am sure we will... not only maintain this, we will improve going forward."

 

The management has guided for the bank's net interest margin to stabilise in the 2.45-2.50?nd against the guidance of 2.75-2.80% for the financial year 2025-26 (Apr-Mar). In Oct-Dec, the lender's margin fell to 2.45% from 2.50% in the September quarter, with an average margin of 2.50% in the nine months ending December. The public-sector lender continued to face pressure on its margins as loans, of which around 48% are linked to repo rate changes, were repriced quicker than deposit rates could come down, the management said. After a pause since June, the Reserve Bank of India's Monetary Policy Committee on Dec. 5 cut the policy repo rate by a further 25 basis points, the impact of which will continue to play out in the March quarter for Canara Bank.

 

The press conference was held during market hours following the lender's earnings. Canara Bank reported 26% year-on-year growth in net profit for the December quarter to INR 51.55 billion, beating analysts' consensus estimate. However, its shares ended almost 5% lower at INR 150.32 on the National Stock Exchange.

 

The fall in the bank's non-performing asset ratios is likely to bring down its provisions in the coming quarters, the management said. There were no corporate slippages in the December quarter, with around INR 8 billion of the INR 18.99 billion slippages during the reporting quarter coming from the agriculture sector. The bank reported provisions of INR 24.14 billion, little changed on year and up 2.5% on quarter.

 

The gross non-performing assets ratio declined to 2.08% as of Dec. 31 from 2.35% a quarter ago. The net non-performing assets ratio fell to 0.45% at the end of December from 0.54% as on Sept. 30. Despite the bottom line being boosted by stake sales in the bank's insurance and asset management subsidiaries in the December quarter, Canara Bank's officials said they expect to maintain their return of assets at the current level of 1.13% as on Dec. 31.

 

Business growth is also likely to handsomely beat guidance for FY26 and stay in line with trends seen until December, the management said. Credit growth is seen around 13.5% for the financial year, against the 10-11% guidance for global advances, while deposits will rise by around 13%, against the 10.5% guidance for the year.

 

Meanwhile, the lender is positioned well to deal with the costs associated with the Reserve Bank of India's expected credit loss norms, proposed to come into effect from Apr. 1, 2027. The total cost to the bank is estimated to be around INR 100 billion over four years of implementation between 2027 and 2031, though it may be lower depending on the movement of bad loans in the portfolio, according to the management. 

The RBI's draft norms on the expected credit loss framework mandate that banks set aside more funds for potential bad loans on implementation. The norms also mandate that banks classify non-performing financial assets into three categories based on the period for which the asset has remained non-performing and the "realisability of the dues", while continuing to apply existing rules for classifying non-performing assets. 

 

The bank remains well capitalised and there would be "negligible" impact on its capital-to-risk-weighted-assets ratio, of less than 1% of its common equity tier-I capital, from the change to expected credit loss calculation, the officials said. The bank also has board approval to raise another INR 60 billion in FY26 through tier-II bonds and it is looking for an opportune moment to tap the market during the current quarter. As on Dec. 31, the public-sector lender's capital-to-risk-weighted assets ratio was 16.50%, up from 16.20% at the end of September.

 

"We may not raise, we may not need this," the management said at the press conference. "As you know, profit accretion is quite handsome, but we will definitely raise substantial amount during the current quarter of tier-II and announce it once the board approves that date."  End

 

Reported by Aaryan Khanna and Shruti Nair

Edited by Rajeev Pai

 

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.