The Board of Directors of Canara Bank announced earnings for the April-June quarter on Monday, July 27. The government-owned institutional lender recorded profit growth of over 2%, supported by rising interest income, lower provisions for bad loans and improved asset quality.
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Shares of Canara Bank jumped over 3% to an intraday high of ₹129.64 after announcing first-quarter earnings in the market on Monday, up from ₹125.65 apiece in the previous session of the stock market, according to NSE data.
After an intraday high, PSU Bank shares were trading 2.3% higher at ₹128.57 apiece on July 27.
NSE filings showed that Canara Bank’s standalone net profit after tax (PAT) for the first quarter rose 2.1 per cent to ₹4,855.82 crore from ₹4,752 crore in the same period a year earlier.
The institutional lender’s total interest income increased 6.3 per cent to ₹32,957 crore in the June quarter of FY 2026-27 as against ₹31,003 crore in the same quarter of the previous fiscal.
The bank’s interest income rose 9% to ₹24,684.75 crore from ₹22,618.32 crore in June of the previous financial year, while investment income recorded decent growth during the period under review.
Canara Bank’s investment income rose 4.3 per cent to ₹6,463.53 crore from ₹6,193.19 crore a year ago.
Segment snapshot
Segmental earnings data from public sector bank Canara Bank showed that while retail banking operations recorded healthy growth in the June quarter, wholesale banking earnings increased marginally while treasury operations declined year-on-year.
Treasury transactions fell nearly 21% year-on-year to ₹7,286.64 crore from ₹9,202.13 crore in the same period a year earlier, according to stock exchange filings.
In contrast, retail banking revenue rose 20% to ₹19,908.64 crore from ₹16,537.06 crore in the same period a year earlier. Retail banking revenues, followed by wholesale banking revenues, account for the largest portion of the company’s total revenues.
Canara Bank’s wholesale banking earnings rose 1.3 per cent to ₹12,488.98 crore from ₹12,324.12 crore in the same period a year earlier, exchange data showed.
Reduction of reserves
The PSU lender’s first-quarter earnings report showed the bank reduced its provision for bad loans by 24% year-on-year to ₹1,399.33 crore in the June quarter from ₹1,845.26 crore in the same period a year earlier.
Banks typically reduce their provisions for bad loans depending on their estimates of non-performing assets (NPAs) in a particular period.
Asset quality is improving
Canara Bank’s overall asset quality recorded a significant improvement of 112 basis points (bps) in the April-June quarter, as evidenced by a decline in gross NPAs, as per separate financial statements.
NSE reports showed that PSU bank’s gross NPAs declined by 112 bps. to 1.57% in the June quarter from 2.69% in the same period of the previous fiscal year. On a sequential basis, NPAs fell from 1.84%.
However, on the margin front, the reporting data also showed that the lender’s net profit and operating margin contracted year-on-year in the first quarter of FY27.
While net profit margin fell to 12.24% from 12.48% a year earlier, operating margin also fell to 21.76% from 22.47% a year earlier, according to stock exchange data.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice from Upstox. Please consult your financial advisor before making any investment decisions.