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What the record says.
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.
Colored figures show movement against the previous available record.
Guidance to track
- 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.
- Advances growth guidance of 10-11% has been surpassed; management expects to maintain current 13.59% growth momentum in Q4.
- 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.
- Management expects to maintain recovery run-rate of over INR 2,000 crore per quarter from written-off accounts, supported by multiple recovery channels.
Risks flagged
- CASA ratio at ~30% is lower than peers, pressuring NIM. Management acknowledged this as an industry challenge and a key drag on margins.
- With 49% of advances linked to repo rate, any further rate cuts could compress NIM further, though management expects stabilization at 2.45-2.50%.
- 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.
- 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.
Key quotes
- Our slippage ratio is 0.64%, which is the industry best, if you can compare with our peers.
- We don't see any reason that this growth will not continue. It will continue in the last quarter also.
- Our NIM will be in the range of 2.45%-2.50%.
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