R ARIVANANTHAM
BENGALURU, MAY 11
The public sector lender Canara Bank wrapped up FY26 with a solid combination of annual profit growth, cleaner asset quality and strong business expansion even as pressure on margins pulled down its fourth-quarter earnings performance.
The public sector lender on Monday reported a 12.7 per cent increase in annual net profit to Rs 19,187 crore for the financial year ended March 2026, compared to Rs 17,027 crore recorded during FY25.
- Canara Bank posts Rs 19,187 crore annual net profit, up 12.7% for FY26
- Q4 profit slips 10% to Rs 4,506 crore as margins tighten across banking sector
- Asset quality strengthens sharply with GNPA falling to 1.84% and NNPA to 0.43%
- Bank declares dividend of Rs 4.20 per share despite quarterly earnings moderation
- Advances jump 15.12% while deposits cross massive Rs 14.36 lakh crore mark
However, for the January-March quarter, the bank’s standalone net profit declined nearly 10 per cent to Rs 4,506 crore, against Rs 5,004 crore posted in the corresponding quarter last year.
Margins Under Pressure Across Banking Sector
Canara Bank witnessed moderation in Net Interest Margins (NIM), mirroring the broader trend seen across major Indian banks amid tightening spreads and rising cost of funds.
The bank’s NIM for Q4 FY26 stood at 2.54 per cent, lower than 2.73 per cent reported in the corresponding quarter of FY25.
Despite the pressure on margins, the lender maintained strong operational momentum through steady credit growth and improving balance sheet strength.
Speaking during a virtual press conference on Monday, Hardeep Singh Ahluwalia, MD & CEO (I/c) said the bank remained focused on sustainable growth and prudent risk management.
“Our focus continues to remain on quality credit growth, improving profitability and maintaining strong asset quality. Despite margin pressures, the bank has delivered healthy business growth and improved recoveries during the year,” Ahluwalia said.
Sharp Improvement in Asset Quality
One of the standout highlights of the PSU lender’s FY26 performance was the substantial strengthening of its asset quality profile.
The Gross Non-Performing Asset (GNPA) ratio declined sharply to 1.84 per cent in Q4 FY26 from 2.94 per cent recorded a year ago.
Sequentially too, the bank improved its GNPA ratio by 24 basis points from 2.08 per cent in Q3 FY26.
The Net Non-Performing Asset (NNPA) ratio also improved significantly to 0.43 per cent, compared to 0.70 per cent in the corresponding quarter of FY25.
Analysts said the reduction in stressed assets reflected stronger recoveries, disciplined lending and effective monitoring of loan portfolios.
Provisioning Burden Eases
Canara Bank also reported a sharp fall in provisioning costs during the quarter, indicating lower stress accretion in its loan book.
Total provisions stood at Rs 2,252 crore in Q4 FY26, compared to Rs 3,964 crore in the previous quarter and Rs 3,280 crore in Q4 FY25.
The bank’s capital position strengthened further, with its Common Equity Tier-1 (CET-1) ratio improving to 12.44 per cent as of March 2026 from 12.03 per cent a year earlier.
Strong Credit and Deposit Growth Continues
The public sector lender continued to witness healthy traction in core banking operations.
Domestic deposits rose to Rs 14.36 lakh crore, registering a year-on-year growth of 7.95 per cent.
Advances expanded strongly by 15.12 per cent year-on-year to touch Rs 11.61 lakh crore, underlining sustained credit demand across retail, agriculture and corporate sectors.
The bank also marginally improved its Return on Assets (RoA) to 1.10 per cent as of March 2026 from 1.09 per cent in the previous year.
Dividend Cheer, But Market Turns Cautious
In a move likely to cheer investors, Canara Bank announced a dividend of Rs 4.20 per equity share for FY26.
However, investor sentiment remained cautious amid concerns over margin compression and softer quarterly earnings.
Shares of the PSU lender were trading nearly 3.85 per cent lower at Rs 129.17 apiece during afternoon trade.
Banking sector experts believe Canara Bank’s improved asset quality, stronger capital buffers and sustained business momentum position it well for long-term growth despite near-term profitability pressures.
