Canara Bank sees a 22% increase in Q1 net profit, reporting ₹4,752 crore; however, NII experiences a decline.
Canara Bank, a leading public sector lender in India, announced a significant increase in its net profit for the quarter that ended June 2025 (Q1 FY26). The bank reported a net profit of ₹4,752 crore, marking a 21.7% year-on-year (y-o-y) growth.
The robust growth in net profit was primarily driven by strong treasury gains and higher fee-based income. Treasury income surged by 296% to ₹1,993 crore, largely due to ₹1,617 crore from the sale of investments. Fee-based income also rose by 16% to ₹2,223 crore.
Interest income increased by 8% YoY to ₹31,003 crore. Despite pressure on the net interest margin (NIM) due to the 100 basis point repo rate cut by the Reserve Bank of India, the bank managed to control operating expenses effectively. Operating profit rose by 12.3% to ₹8,554 crore.
Loan book growth supported profit, with gross advances growing 12.4%. Retail credit, a key segment, saw a 33.9% y-o-y increase, including a 13.9% growth in housing loans and a 22.1% increase in vehicle loans.
The bank's asset quality improved, with a lower gross Non-Performing Asset (NPA) ratio of 2.69% and a net NPA ratio of 0.63%. The deposit base grew by 9.9% y-o-y, and the credit cost improved to 0.72%, indicating better risk management.
However, on the liabilities side, current deposits dropped 30% quarter-on-quarter (q-o-q) to ₹54,045 crore. This decline was attributed to withdrawals by four to five central public sector undertakings (PSUs).
The bank also lowered deposit rates after June 8, which is expected to reduce costs in upcoming quarters. Despite the dip in Net Interest Income (NII), operating profit rose 12.3% y-o-y to ₹8,554 crore.
Looking ahead, the bank expects the credit growth for the next three quarters to exceed 12% y-o-y. The Retail, Agriculture, and MSME (RAM) credit registered a 14.9% growth y-o-y, and domestic deposits stood at ₹13.39 lakh crore, up 8.74% y-o-y. The global business of Canara Bank was ₹25.64 lakh crore, up 10.98% y-o-y.
In a statement published on July 24, 2025, the CEO highlighted that treasury gains and efficient expense management offset the margin compression caused by rate cuts passed entirely to borrowers, while deposit costs stayed high initially but are expected to fall soon.
[1] Source: Canara Bank's Q1 FY26 Results Announcement. [3] Source: Business Standard, July 25, 2025.
- Canara Bank's CEO stated that treasury gains and efficient expense management helped to offset the margin compression caused by rate cuts, while deposit costs, initially high, are expected to fall soon.
- The bank's Retail, Agriculture, and MSME (RAM) credit registered a 14.9% growth year-on-year (y-o-y), indicating a focus on diversifying its business portfolio in agriculture and small business sectors.
- In the upcoming quarters, Canara Bank anticipates the global business to grow by 10.98% year-on-year (y-o-y), indicating a strong investment focus in international business and finance.
