Earnings Outlook
Low provisions, treasury gains to push Canara Bk PAT up 9%
This story was originally published at 14:01 IST on 10 July 2025
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By Priyasmita Dutta
NEW DELHI - State-owned Canara Bank is expected to report a profit of nearly 9% on year for Apr-Jun, supported by lower provisions and robust treasury income, which may help the lender offset the impact of subdued net interest income and margin contraction. According to estimates from five brokerages, the bank's net profit for the quarter is seen at INR 42.47 billion. Sequentially, the net profit is expected to decline over 15%. Profit estimates range between INR 37.75 billion and INR 44.77 billion.
Kotak Institutional Equities expects provisions for bad loans to fall sharply to INR 12.82 billion in Apr-Jun, compared with INR 22.82 billion in the same quarter last year and INR 18.32 billion in the March quarter.
Canara Bank is yet to announce the date when it will detail its financial results for Apr-Jun. At 1332 IST, shares of the bank were 1.6% down at INR 112.08 on the National Stock Exchange.
In Jan–Mar, the bank's bottom line was INR 50.03 billion, driven by a similar combination of lower provisioning and treasury gains. The provisions for bad assets were down over 26% on year in the March quarter.
Brokerages broadly agree that asset quality remained stable during the quarter. However, Emkay Global Financial Services Ltd. flagged a potential sequential rise in slippages, particularly from agriculture-related loans due to seasonal factors.
Kotak Institutional Equities said non-performing asset ratios have been declining over the past few quarters and may continue to be so in the June quarter too. However, there is a divergence in projection as Motilal Oswal Financial Services Ltd. expects the net non-performing asset ratio to remain unchanged at 0.7% at the end of June and the gross non-performing asset ratio to be 2.9%, whereas Kotak Institutional Equities sees them inching up to 1.2% and 4.1%, respectively.
Even as the asset quality is expected to improve, the bank's net interest income is seen at INR 91.90 billion, up 0.3% on year and down 2.7% sequentially. In Jan-Mar, the bank's net interest income had fallen 1.4% on year to INR 94.42 billion.
Brokerages unanimously see a contraction in the net interest margin during the quarter under focus. Dolat Capital Ltd. and Emkay Global project the net interest margin at 2.60% for Apr-Jun, lower than the 2.73% in the March quarter, whereas Kotak Institutional Equities expects it to be significantly lower at 2.20%. For FY26, the state-owned bank has projected its net interest margin to be in the range of 2.75-2.80%.
Margins are broadly expected to be lower in the June quarter following the Reserve Bank of India's 75 basis points cut in the headline repo rate in April and June.
The business growth of the bank is likely to be "modest" as per Motilal Oswal. The brokerage projected a loan growth of 12.6% in the June quarter and a deposit growth of 10.6%. Motilal Oswal's view about business growth is better than the bank's projection –it expects global advances to rise 10-11% in FY26 and global deposits to rise 9-10%.
Treasury income, which Emkay expects will support Canara Bank's net profit in Apr–Jun, had been a key contributor for the bank in the March quarter. The bank's other income for the March quarter rose over 22% to INR 63.51 billion, led by treasury income of INR 30.48 billion, more than double the year-ago figure.
Following are the Apr-Jun earnings estimates for Canara Bank based on reports from five brokerage firms in descending order of the estimate of net profit:
Brokerages: | Net interest income (INR million) | Net profit (INR million) |
Antique Stock Broking Ltd | 91,830.00 | 37,746.00 |
Motilal Oswal Financial Services Ltd | 91,448.00 | 41,444.00 |
Dolat Capital Market Pvt Ltd | 91,996.00 | 43,614.00 |
Emkay Global Financial Services Ltd | 93,749.00 | 44,762.00 |
Kotak Institutional Equities | 90,488.00 | 44,772.00 |
Average: | 91,902.20 | 42,467.60 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Subhojit Sarkar
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