Canara Bank Q3 Results: Net Profit Surges 12% to ₹4,104 Crore Amid Strong Growth
Public sector lender Canara Bank has reported an impressive 12.25% year-on-year (YoY) increase in standalone net profit, reaching ₹4,104 crore for the December quarter of FY25 (Q3 FY25). This growth was primarily driven by higher total income and improved asset quality.
The bank’s Gross and Net Non-Performing Assets (NPA) ratios improved, reflecting strong financial management. Despite a marginal decline in net interest income (NII), Canara Bank maintained solid business expansion and exceeded its targets in priority sector lending and agricultural credit.
Let’s take a deep dive into Canara Bank’s Q3 FY25 performance, key financial metrics, NPA trends, deposit growth, and future outlook.
Canara Bank Q3 FY25 Financial Performance
1. Strong Net Profit Growth of 12.25% YoY
For the October-December 2024 quarter, Canara Bank reported a net profit of ₹4,104 crore, up from ₹3,656 crore in Q3 FY24. The profit growth was fueled by:
- Higher total income
- Lower provisioning for bad loans
- Efficient cost management
The steady rise in profit showcases Canara Bank’s resilience in navigating economic uncertainties while maintaining healthy earnings growth.
2. Total Income Jumps 11.71% YoY
The bank’s total income increased to ₹36,114 crore, marking an 11.71% rise from ₹32,334 crore in the same quarter last year. Key contributors to this growth include:
- Higher interest income from loans and advances
- Increased income from treasury operations
- Stronger fee-based revenue
3. Net Interest Income (NII) Declines Slightly
Despite overall revenue growth, net interest income (NII)—the difference between interest earned and interest expended—declined 2.85% YoY to ₹9,149 crore. This decline may be attributed to:
- Higher deposit costs impacting margins
- Changes in loan pricing strategies
- Increased competition in the banking sector
However, the bank’s net interest margin (NIM) remained stable, ensuring that profitability was not significantly impacted.
Asset Quality Improvement: GNPA & NNPA Ratios Decline
A major highlight of Canara Bank’s Q3 FY25 results is the substantial improvement in its asset quality.
1. Gross NPA (GNPA) Improves to 3.34%
The Gross NPA ratio stood at 3.34% as of December 31, 2024, showing a significant improvement from:
- 3.73% in the September 2024 quarter (Q2 FY25)
- 4.39% in the December 2023 quarter (Q3 FY24)
This indicates better loan recoveries, lower slippages, and enhanced risk management strategies.
2. Net NPA (NNPA) Drops to 0.89%
Similarly, the Net NPA ratio declined to 0.89% in Q3 FY25, compared to:
- 0.99% in Q2 FY25
- 1.32% in Q3 FY24
This decline highlights Canara Bank’s strong provisioning policies and effective bad loan management.
3. Provision Coverage Ratio (PCR) Strengthens to 91.26%
The Provision Coverage Ratio (PCR), which measures the bank’s ability to cover bad loans, improved to 91.26% in Q3 FY25 from:
- 90.89% in the previous quarter (Q2 FY25)
- 89.01% in Q3 FY24
This high PCR indicates that Canara Bank has strong financial buffers against potential future bad loans.
4. Management’s Guidance on NPA Reduction
Canara Bank’s Managing Director and CEO, K Satyanarayana Raju, expressed confidence in further reducing Gross NPA levels to below 3% in the coming quarters.
He stated,
“We have given a guidance of 3.5% Gross NPA. Already we are at 3.34%… One more quarter is there, and we may touch 3% or go below it. Our guidance is 3.5%, and we have already achieved that.”
This positive outlook reassures investors about Canara Bank’s proactive approach to risk management.
Deposit and Advances Growth
1. Global Business Crosses ₹24 Lakh Crore
Canara Bank’s total global business (deposits + advances) expanded by 9.30% YoY, reaching ₹24.19 lakh crore as of December 31, 2024.
2. Global Deposits Surge by 8.44% YoY
The bank’s global deposits increased to ₹13.69 lakh crore, reflecting an 8.44% YoY growth. The growth was driven by:
- Higher term deposits from retail customers
- Stable current account and savings account (CASA) deposits
- Increased corporate banking relationships
3. Global Advances Rise by 10.45% YoY
Canara Bank’s global advances (gross) increased by 10.45% YoY to ₹10.49 lakh crore. This growth was fueled by:
- Higher credit demand from retail and MSME sectors
- Increased lending to infrastructure and corporate segments
- Growth in home loans and personal loans
4. Domestic Business Performance
- Domestic Deposits: ₹12.57 lakh crore (7.76% YoY growth)
- Domestic Advances: ₹9.87 lakh crore (9.55% YoY growth)
This shows a strong credit expansion within India, aligning with overall economic growth trends.
Priority Sector Lending & Regulatory Compliance
1. Priority Sector Lending Targets Achieved
Canara Bank exceeded its regulatory targets in priority sector lending (PSL) and agricultural credit:
- Priority Sector Lending: 44.33% (against the required 40%)
- Agricultural Credit: 21.04% (against the required 18%)
This achievement highlights Canara Bank’s commitment to financial inclusion and rural development.
Capital Adequacy & Branch Expansion
1. Strong Capital Adequacy Ratio (CAR)
The Capital Adequacy Ratio (CAR) stood at 16.44% as of December 31, 2024, ensuring financial stability and regulatory compliance.
2. Expanding Branch Network
As of Q3 FY25, Canara Bank had:
- 9,816 branches (including rural, semi-urban, urban, and metro branches)
- 9,715 ATMs
- 4 overseas branches (London, New York, Dubai, and IBU Gift City)
The bank’s widespread presence enhances customer reach and business expansion opportunities.
Future Outlook & Market Expectations
1. Focus on Loan Growth & Asset Quality
Canara Bank aims to:
- Maintain strong credit growth above 10%
- Reduce Gross NPA below 3%
- Continue improving operating efficiency
2. Strengthening Digital Banking & Fintech Partnerships
The bank is investing in digital banking, fintech collaborations, and AI-driven customer services to enhance operational efficiency.
3. Potential for Further Profitability Growth
With rising total income, declining NPAs, and stable margins, analysts expect Canara Bank’s earnings to remain strong in upcoming quarters.
Conclusion: Strong Financial Performance Despite NII Decline
Canara Bank delivered a robust Q3 FY25 performance, driven by:
- 12.25% YoY net profit growth to ₹4,104 crore
- 11.71% increase in total income to ₹36,114 crore
- Strong asset quality improvement (GNPA: 3.34%, NNPA: 0.89%)
- Healthy deposit and loan growth trends
Despite a slight dip in net interest income (NII), the bank’s overall financial health remains solid. With a strong growth trajectory and lower bad loans, Canara Bank is well-positioned for long-term success.
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