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CASA ratio remains low
View Risks →Canara Bank — Q3 FY26
Canara Bank reported a strong Q3 FY26 with net profit of INR 5,155 crore (+25.6% YoY), driven by robust credit growth of 13.59% YoY led by RAM (retail, agriculture, MSME) at 18.7% YoY.
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Canara Bank reported a strong Q3 FY26 with net profit of INR 5,155 crore (+25.6% YoY), driven by robust credit growth of 13.59% YoY led by RAM (retail, agriculture, MSME) at 18.7% YoY. Asset quality improved sharply: GNPA fell to 2.08% (-126bps YoY) and slippage ratio at 0.64% (industry best). Operating profit grew 16.36% YoY to INR 9,119 crore. NIM contracted 2bps QoQ to ~2.45% due to repo rate pass-through, but management guided NIM stabilization at 2.45-2.50% with only 15% of term deposits left to reprice. ECL impact (INR 10,000 crore) is manageable via four-year amortization. Key risk: CASA ratio remains low (~30%), pressuring margins if deposit competition intensifies.
केनरा बैंक ने वित्त वर्ष 2026 की तीसरी तिमाही में 5,155 करोड़ रुपये का शुद्ध लाभ कमाया, जो पिछले साल से 25.6% ज्यादा है। इसकी वजह कर्ज देने में 13.59% की बढ़ोतरी है, खासकर खुदरा, कृषि और छोटे व्यवसायों को दिए गए कर्ज में 18.7% का उछाल आया। बैंक के खराब कर्ज (GNPA) में कमी आई है, जो अब सिर्फ 2.08% रह गया है। परिचालन लाभ 16.36% बढ़कर 9,119 करोड़ रुपये हो गया। ब्याज दरों में कटौती के कारण बैंक का मार्जिन थोड़ा घटा, लेकिन प्रबंधन का कहना है कि यह जल्द ही स्थिर हो जाएगा। ECL का असर चार साल में चुकाया जा सकता है। चिंता की बात यह है कि बैंक के पास सस्ती जमा (CASA) कम है, जिससे मुनाफा दबाव में आ सकता है।
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Read Transcript →Quarter Snapshot
Global Advances Growth
13.59%
+13.59% YoY
Global advances grew to INR 1,192,000 crore, driven by RAM segment growth of 18.70%.
GNPA Ratio
2.08%
-126bps YoY
Gross NPA ratio improved significantly, reflecting better asset quality and recoveries.
Slippage Ratio
0.64%
-32bps YoY
Slippage ratio at industry-best level, with no corporate slippages in the quarter.
Retail Credit Growth
31.37%
+31.37% YoY
Retail credit grew strongly, led by gold loans (30%+ YoY) and vehicle loans (26.2% YoY).
What Changed vs Last Quarter
NEW
NIM to remain in 2.45%-2.50% range
Management expects net interest margin to stabilize at 2.45-2.50% even if further repo rate cuts occur, supported by RAM growth and deposit repricing.
NEW
Credit growth to sustain at 13%+
Advances growth guidance of 10-11% has been surpassed; management expects to maintain current 13.59% growth momentum in Q4.
NEW
ECL impact of INR 10,000 crore amortized over 4 years
Expected credit loss implementation from April 2027 will require additional provisions of ~INR 10,000 crore, to be spread over four years, with annual impact of INR 2,000-2,500 crore.
NEW
Recovery from written-off accounts to continue at INR 2,000+ crore per quarter
Management expects to maintain recovery run-rate of over INR 2,000 crore per quarter from written-off accounts, supported by multiple recovery channels.
DROPPED
Net profit to cross INR 20,000 crore in FY26
Management expects net profit to exceed INR 20,000 crore for the full fiscal year, up from INR 17,400 crore last year.
DROPPED
CASA ratio target of 32% by March 2026
Management reiterated its guidance to achieve a CASA ratio of 32% by end of FY26, despite balance sheet growing at 14%.
DROPPED
RAM to corporate ratio of 60:40 by March 2027
The bank aims to reach a 60:40 split between RAM (retail, agriculture, MSME) and corporate loans by next fiscal year.
DROPPED
Credit cost to remain below 1%
Management expects credit cost to stay well below 1% going forward, even with ECL implementation in March 2027.
NEW RISK
CASA ratio remains low
CASA ratio at ~30% is lower than peers, pressuring NIM. Management acknowledged this as an industry challenge and a key drag on margins.
NEW RISK
ECL implementation could pressure capital
Although management downplays impact, ECL provisions of INR 10,000 crore could reduce CET1 by ~1 percentage point if not amortized, though amortization mitigates this.
NEW RISK
One-off treasury gains may not recur
Q3 profit included INR 2,006 crore from stake sales in subsidiaries. Such gains are non-recurring, and treasury income may normalize if yields do not soften.
RISK GONE
ECL implementation impact on provisions
New expected credit loss norms from March 2027 may require higher provisions, especially for smaller accounts below ₹5 crore.
RISK GONE
CASA ratio target may be missed due to high balance sheet growth
With balance sheet growing at 14%, maintaining CASA at 32% is challenging; management acknowledged the difficulty.
RISK GONE
Concentration in state government project exposure
The bank made a precautionary provision of INR 380 crore on a Telangana drinking water project in SMA, indicating potential stress in state-level exposures.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q1 FY26
Two large accounts (real estate and irrigation) in SMA-2 for six quarters; management provided INR 1,200 crore extra provisions but risk remains if they slip.
Mentioned in Q1 FY25, Q4 FY25
CASA ratio declined to 31.17% from 32%+ in FY24 due to high interest rate regime and digital shift.
Mentioned in Q1 FY26, Q3 FY25
CASA dropped to 29% due to institutional deposit outflows; management expects recovery but structural improvement remains a challenge.
Mentioned in Q2 FY25, Q3 FY25
RBI's potential changes to gold loan norms (collateral-free for PSL) may affect the bank's large gold loan portfolio, though management sees no immediate issue.
Mentioned in Q1 FY26, Q4 FY25
Management reiterated ROA target of 1.05% for the full year, with Q1 already at 1.14%.
Fast read
Guidance and risk preview
Management expects net interest margin to stabilize at 2.45-2.50% even if further repo rate cuts occur, supported by RAM growth and deposit repricing.
CASA ratio at ~30% is lower than peers, pressuring NIM.
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