Canara Bank — Q4 FY26 earnings call

Call held 11 May 2026

Management summary

Canara Bank reported strong growth in global business and advances for Q4 FY26, with full-year net profit increasing by 12.69%. Asset quality showed significant improvement with declining GNPA and NNPA, and a robust Provision Coverage Ratio. However, quarterly profitability was impacted by the absence of one-time listing gains from the prior quarter and MTM losses due to bond market volatility. The bank remains confident in its capital adequacy and ability to manage future ECL provisioning.

Highlights

  • Global business grew by 12.11% to ₹28.0 lakh crore.

  • Global advances grew by 15.30% to ₹12.37 lakh crore, led by RAM credit growth of 19.73%.

  • Net profit for the full year was ₹19,187 crore, growing by 12.69%.

  • Provision Coverage Ratio improved by 151 basis points to 94.21%.

  • GNPA declined by 110 basis points YoY to 1.84%, and Net NPA declined by 27 basis points YoY to 0.43%.

  • CRAR improved by 71 basis points to 17.04%, well above regulatory levels.

Concerns

  • Operating profit and net profit for the quarter dropped by ₹2,300 crores QoQ due to absence of ₹1,930 crores one-time listing gains from previous quarter.

  • Incurred MTM losses of ₹800 crores due to geopolitical situation impacting bond yields.

  • Potential additional provisioning of ₹10,000 crores for ECL, though manageable over 4 years or in one go with a 1% CRAR drop.

Key financials

2 periods

Headline

  • Global Business
    ₹28.00L Cr
    YoY +12.1%
  • Global Advances
    ₹12.37L Cr
    YoY +15.3%
  • Net Profit (FY)
    ₹19,187 Cr
    YoY +12.7%
  • GNPA
    1.8%
    YoY -37%
  • Net NPA
    0.43%
    YoY -38.6%
  • Provision Coverage Ratio
    94.2%
  • CRAR
    17%
  • EPS
    ₹21.15
    YoY +12.7%
  • LCR
    118%

Q4

  • Net Interest Income
    ₹9,808 Cr
    YoY +3.9%
  • NIM
    2.5%

What they filed

Q1 FY27: revenue up 4.5%, net profit up 60.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue30,182 30,751 31,496 31,523 32,072 +6%30,938 +1%31,839 +1%32,957 +5%
Net profit4,227 4,256 5,111 3,233 4,896 +16%5,174 +22%4,575 −10%5,182 +60%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Dividend ₹4.2/share (final)
    We are proposing a dividend of 210 percent of paid up capital and our share face value price is 2. So, the proposed dividend is Rs. 4.20 per share.
  • Liquidity Liquidity disclosed LCR was 118%, which is much above the regulatory level of 100%.
    So, LCR was 118%. It is much above the regulatory level of 100%.

Guidance & targets

Profitability

  • Net Interest Margin (NIM) Profitability · going forward · High confidence 2.5-2.6%
    So, the combined effect, our NIM has taken an uptake of 9 basis point on this quarter and 1 basis point cumulative. So, we presume that it will hover around 2.5 to 2.6 here.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

  • Return on Assets (RoA) Profitability · current year looks like · High confidence 1% plus
    Okay. And you mentioned that the NIM trajectory will be 2.5 to 2.6 and the ROA will be in the trajectory of 1%. This is what for the current year looks like. ... Yes sir. Yes sir.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

Asset Quality

  • ECL Provisioning Asset Quality · staggered to 4 years · High confidence 10,000 crores
    Total requirement will be 10,000. And it can be staggered to 4 years. And our profit is in the range of 19,000 to 20,000 crores. So, bank is in a very, very good position to absorb the entire in the first go itself. If we absorb in the first go itself, then there will be a drop of 1% in the CRAR.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

Asset Mix

  • RAM to Corporate Mix Asset Mix · High confidence 60-40
    We endeavour to reach at 60-40. 59 RAM and 40 corporate.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

Corporate Book

  • Undisbursed Corporate Credit Corporate Book · High confidence around 20,000 crores
    So corporate demands are already NBG that is sanctioned by us. So, we have to finalize the proposals. That is lined up at around 20,000 crores.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

  • ECL-5 related exposure Corporate Book · High confidence 18,000 to 20,000 crores
    And the additional exposure will be around 18,000 to 20,000 crores. Definitely, it will give some flip to the advances.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

Other Income

  • PSLC Income Other Income · next year · High confidence around 2500 crores
    Sir, PSLC, continuously our PSLC income is around 2500 crores. We derive that income. And this year also we are confident that we will derive this PSLC income.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

  • TWO Recovery Other Income · per quarter · High confidence 1500 to 1600 crores
    And TWO recovery also it hovers around 1500 to 1600 crores in a quarter that may vary because of one big ticket resolution. If you see for the financial year 25, it was 6800 crores and this year it is 6500 crores, almost at same level. So, it will continue. This will also continue.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

Market context

  • Global Advances Growth Credit Growth · next year · Medium confidence 11-12%
    Firstly, on the advances growth guidance that you have given of 11% to 12%, so we have closed this year with 15+. So, any reason we are calling for a moderation in the credit growth next year? ... No, sir. Actually, bank has a tradition of giving some conservative numbers because GDP growth is projected at 6.9%. And we have seen what earlier guidance has been given by us. And accordingly, it has been projected. I am confident that bank will end up much above the guidance numbers as it ended up in this financial year.

    — Mr. Hardeep Singh Ahluwalia - MD and CEO, Canara Bank

What to watch in Q1 FY27

ECL implementation impact on CRAR

next quarter
Current Potential 1% drop if absorbed in one go
Target Actual CRAR impact post ECL implementation

Why it matters

To assess the actual capital impact of the new ECL provisioning norms on the bank's capital adequacy.

Total requirement will be 10,000. And it can be staggered to 4 years. And our profit is in the range of 19,000 to 20,000 crores. So, bank is in a very, very good position to absorb the entire in the first go itself. If we absorb in the first go itself, then there will be a drop of 1% in the CRAR.

Risks & concerns

  • Geopolitical situation and MTM losses

    medium

    Geopolitical situation led to bond yields moving from 6.59% to 7.05%, resulting in MTM losses of ₹800 crores.

    Secondly, due to geopolitical situation, the bond yields moved from 6.59 to 7.05 and the share market corrected by 4000 basis point. So, this has resulted into MTM losses of 800 crores.

    Management acknowledged

  • ECL implementation provisioning

    medium

    Potential additional provisioning of ₹10,000 crores required for ECL, which can be staggered over 4 years or absorbed in one go with a 1% CRAR drop.

    Total requirement will be 10,000. And it can be staggered to 4 years. And our profit is in the range of 19,000 to 20,000 crores. So, bank is in a very, very good position to absorb the entire in the first go itself. If we absorb in the first go itself, then there will be a drop of 1% in the CRAR.

    Management acknowledged

  • MSME slippages

    low

    MSME segment contributed ₹1,333 crores to the total slippage of ₹2,771 crores this quarter, indicating some stress.

    And out of this 2771, 1333 is for MSME. So, MSME, some slippage has been observed, but not that much.

    Management acknowledged

  • Gold loan frauds

    low

    Concerns about gold loan frauds are addressed by panel appraisers, quarterly reappraisals, enhanced security systems, and insurance.

    So, we have panel appraisers in place. So, every quarter the same whatever gold loans we have done that will be reappraised by a different valuer. That will be sent by a regional office. So, regarding spurious quotes and all that will be immediately detected after reappraisal, it goes for reappraisal.

    Analyst acknowledged

Q&A highlights

8 direct
Profitability drop and NIM trajectory Direct
So, sir, last quarter we had listing gains from Canara HSBC and Canara Robeco of 1930 crores. So, that was substantial enough. Secondly, due to geopolitical situation, the bond yields moved from 6.59 to 7.05 and the share market corrected by 4000 basis point. So, this has resulted into MTM losses of 800 crores.

Clarified the reasons for the QoQ drop in operating and net profit, attributing it to one-time gains in the previous quarter and MTM losses this quarter, rather than core business performance.

Asked by Mr. Ashok Ajmera

ECL provisioning and impact on CRAR Direct
Total requirement will be 10,000. And it can be staggered to 4 years. And our profit is in the range of 19,000 to 20,000 crores. So, bank is in a very, very good position to absorb the entire in the first go itself. If we absorb in the first go itself, then there will be a drop of 1% in the CRAR.

Provided a clear estimate of the potential ECL provisioning requirement and management's confidence in absorbing it without significant capital strain, highlighting the bank's strong profitability and CRAR.

Asked by Mr. Ashok Ajmera

Credit growth guidance moderation Direct
No, sir. Actually, bank has a tradition of giving some conservative numbers because GDP growth is projected at 6.9%. And we have seen what earlier guidance has been given by us. And accordingly, it has been projected. I am confident that bank will end up much above the guidance numbers as it ended up in this financial year.

Addressed concerns about lower credit growth guidance, explaining it as a conservative approach based on GDP projections and historical trends, while expressing confidence in exceeding targets.

Asked by Mr. Param Subramaniam

Gold loan portfolio growth and strategy Direct
Sir, it will be in double digit because traditionally our number of branches are high in South India, sir. Here, people don't place on deposits. That is why we are lacking. On one side, we are struggling on CASA. But on asset side, we have this advantage of gold loans. People are more comfortable going to branches availing this gold loan. So, that is why we are confident that it will grow with the same pace.

Provided insight into the strategic importance of gold loans, particularly in South India, and the expectation of continued double-digit growth, leveraging the bank's branch network.

Asked by Mr. Jai Mundra

Negative provision in P&L Direct
So, provision in the large borrower framework, there is a release. As per the RBI guidelines, some 307-crore release is there. Because it is no more required. So, that is one of the factors. ... See, in standard accounts, also in three big accounts, we were maintaining additional provision. Their balances have gone down. So, that is why some release is also there.

Clarified the source of the negative provision, attributing it to the release of provisions under the large borrower framework and for certain standard accounts, indicating improved asset quality or reduced risk.

Asked by Mr. Ashlesh Sonje

Segmental breakup of slippages Direct
Segmental, I can tell you, 2,771 is the total slippage that has happened in this quarter. Out of which, 1,333 is for MSME. Agriculture is 886. Corporate 80. Gold loan 41. Retail some 431 crores.

Provided a detailed breakdown of slippages, highlighting MSME as the largest contributor, which is crucial for assessing segment-specific asset quality trends.

Asked by Mr. Ashlesh Sonje

Checks for gold loan frauds Direct
So, we have panel appraisers in place. So, every quarter the same whatever gold loans we have done that will be reappraised by a different valuer. That will be sent by a regional office. So, regarding spurious quotes and all that will be immediately detected after reappraisal, it goes for reappraisal.

Addressed concerns about gold loan frauds by detailing the robust appraisal and reappraisal mechanisms in place, reassuring investors about risk management in this growing portfolio.

Asked by Mr. Dixit Doshi

EPS and RoE marked down for next year Direct
Yes madam, you see this year we had a gain of 1,930 crores from delisting.... listing benefits of Canara Robeco and Canara HSBC where we diluted our share in Canara HSBC 14.5% and in Canara Robeco 13%. So, this 1,930 crores will not be there because it is a one-time income. So next year it won't be there. That is why it has been kept at conservative level.

Explained the conservative projection for next year's EPS and RoE, attributing it to the absence of one-time listing gains realized in the current year, providing clarity on the underlying profitability trend.

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Detailed narrative

Robust Business and Advances Growth

Canara Bank demonstrated strong business momentum in Q4 FY26, with global business reaching ₹28.0 lakh crore, marking a 12.11% YoY growth. Global advances grew significantly by 15.30% to ₹12.37 lakh crore. This growth was primarily driven by RAM (Retail, Agriculture, MSME) credit, which expanded by 19.73% to ₹7.30 lakh crore, with retail credit growing by 32.93% to ₹2.96 lakh crore.

Improved Asset Quality and Capital Adequacy

The bank's asset quality showed substantial improvement, with GNPA declining by 110 basis points YoY to 1.84% and Net NPA falling by 27 basis points YoY to 0.43%. The Provision Coverage Ratio (PCR) strengthened by 151 basis points to 94.21%, indicating robust provisioning. Capital Adequacy Ratio (CRAR) also improved by 71 basis points, standing at a healthy 17.04%, well above regulatory requirements.

Quarterly Profitability Impacted by One-offs and MTM Losses

While full-year net profit grew by 12.69% to ₹19,187 crore, the operating profit and net profit for Q4 FY26 saw a QoQ decline of approximately ₹2,300 crores. This was primarily due to the absence of ₹1,930 crores in one-time listing gains from stake dilutions in Canara HSBC and Canara Robeco in the previous quarter. Additionally, MTM losses of ₹800 crores were incurred due to adverse movements in bond yields influenced by geopolitical situations.

ECL Provisioning and Management Strategy

The bank anticipates a total provisioning requirement of ₹10,000 crores for the implementation of Expected Credit Loss (ECL) norms. Management expressed confidence in absorbing this, either staggered over four years or in one go, which would result in a manageable 1% drop in CRAR. The bank's strong annual profit of ₹19,000-20,000 crores positions it well to handle this transition.

Conservative Guidance with Optimistic Outlook

Canara Bank provided a credit growth guidance of 11-12% for the next year, which management noted is conservative, expecting to exceed it based on historical performance and a projected GDP growth of 6.9%. The Net Interest Margin (NIM) is expected to hover around 2.5-2.6%, and the Return on Assets (RoA) is targeted at 1% plus. The bank aims to achieve a 60-40 RAM to corporate mix.

Gold Loan Portfolio and Risk Management

The gold loan portfolio stands at ₹2.45 lakh crore, with ₹1.54 lakh crore in agri gold and ₹91,000 crore in non-agri gold. Management expects continued double-digit growth in this segment, particularly in South India. To mitigate risks, the bank employs panel appraisers for quarterly reappraisals, dedicated officers for high-value gold branches, enhanced security systems, and ensures all gold loans are insured.

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