Canara Bank Q1 Results: 22% Profit Surge Despite NII Dip
Canara Bank reports a 22% rise in net profit for Q1 FY25 despite a slight dip in Net Interest Income (NII). Here’s an in-depth analysis of the results, asset quality improvements, and market outlook.
Table of Contents
Introduction
On July 20, 2025, Canara Bank announced its Q1 FY25 results, posting a strong 22% year-on-year (YoY) growth in net profit despite a marginal decline in Net Interest Income. The bank’s improved asset quality and stable operational metrics signal resilience in a challenging macroeconomic environment.
Highlights of Canara Bank Q1 Results
Net Profit: ₹4,075 crore (+22% YoY)
Net Interest Income (NII): ₹8,666 crore (-1.7% YoY)
Gross NPA: Reduced to 4.36% from 5.15% YoY
Net NPA: Declined to 1.32% from 1.57% YoY
Provision Coverage Ratio (PCR): Improved to 89.82%
Net Profit Analysis
Canara Bank’s net profit for the quarter stood at ₹4,075 crore, up from ₹3,331 crore in the same period last year. The growth was driven by:
Higher treasury income
Stable operational expenses
Improved asset quality reducing provisioning needs
Net Interest Income Performance
While net profit rose, NII fell 1.7% YoY to ₹8,666 crore due to:
Marginal compression in net interest margins (NIM)
Elevated cost of funds amid high deposit competition
However, sequential NII showed stability, indicating that the worst may be over for margin pressures.
Other Income and Operational Metrics
Non-interest income: ₹5,023 crore, up 9.6% YoY
Operating profit: ₹7,779 crore, marginally higher than previous year
Cost-to-income ratio: Improved to 41.20% from 42.10% YoY
Asset Quality: GNPA and NNPA
Canara Bank’s asset quality showed notable improvement:
Gross NPA (GNPA): Fell to 4.36%, lowest in recent years
Net NPA (NNPA): Improved to 1.32%
Slippages: Controlled due to better recovery and write-offs
This demonstrates robust underwriting and recovery performance despite sector-wide stress pockets.
Capital Adequacy and Liquidity
CRAR (Capital to Risk-Weighted Assets Ratio): 16.80%
Tier-1 Capital: 13.09%
These figures reflect comfortable capital levels to support growth plans and regulatory requirements.
Management Commentary
The Canara Bank MD & CEO stated:
“We remain focused on credit growth with a prudent approach, while maintaining strong asset quality. Our digital initiatives are gaining traction, ensuring better operational efficiency.”
Analyst Views and Market Reaction
After results, Canara Bank shares traded mildly positive, reflecting market confidence in its fundamentals despite margin pressure.
Brokerage opinions:
Motilal Oswal: Maintain Buy, target ₹480 citing strong business growth visibility
ICICI Securities: Neutral; watch for further NII improvement before re-rating
Growth Strategy Ahead
Retail and MSME lending expansion
Digital banking upgrades and AI integrations
Focus on CASA growth to improve margins
Strengthening risk management practices
FAQs
1. What was Canara Bank’s Q1 FY25 net profit?
₹4,075 crore, a 22% increase YoY.
2. Why did Canara Bank’s NII fall in Q1?
Due to slight NIM compression and higher cost of funds amid tight liquidity.
3. How is Canara Bank’s asset quality now?
GNPA reduced to 4.36%, NNPA to 1.32%, showing consistent improvement.
4. What is Canara Bank’s growth outlook?
Strong focus on retail, MSME lending, and digital expansion to drive future growth.
Helpful Resources
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Conclusion
Canara Bank’s Q1 FY25 results highlight a resilient performance despite NII challenges. Its improved asset quality, stable profit growth, and strategic focus on digital banking provide optimism for the upcoming quarters. Investors may continue tracking margin improvement trends before further allocations.
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