Canara Bank expects its Return on Assets (ROA) to surpass current projections, driven by strong Net Interest Income (NII). This positive outlook accompanies the bank's Q2FY27 results, where standalone net profit rose 8.4% YoY to ₹5,174.76 crore.

Management has guided that profits are anticipated to increase further. The bank’s confidence stems from robust NII performance and continued asset quality improvements observed in the second quarter of FY27.

Asset quality metrics

The bank demonstrated strong control over credit risks during the quarter. Gross non-performing assets (GNPA) declined to 1.33% from 2.35% in Q2FY26. Net non-performing assets (NNPA) also saw a reduction, dropping to 0.30% from 0.54% on a year-on-year basis.

Provisions for non-performing assets decreased to ₹1,338.66 crore in Q2FY27 from ₹1,399 crore in the previous quarter (QoQ). This sequential decline in provisioning costs contributed to the bottom-line growth, alongside a YoY reduction from ₹1,503.63 crore in Q2FY26.

New data indicates that the Provision Coverage Ratio (PCR) improved by 175 bps to 95.34%, while the credit cost stood at 0.47%, an improvement of 21 bps. The slippage ratio also improved by 18 bps to 0.58%.

Financial performance and business growth

Interest earned rose to ₹35,159.39 crore in Q2FY27 from ₹31,543.89 crore in Q2FY26, driven by higher interest on advances and investments. Total income reached ₹40,931.19 crore, up from ₹38,597.73 crore in the corresponding quarter last year.

Operating profit before provisions and contingencies stood at ₹8,758.13 crore, compared to ₹8,588.13 crore in Q2FY26, reflecting a 1.98% YoY growth.

The bank’s global business expanded significantly, growing 15.88% YoY to ₹30,72,365 crore. Global deposits rose 13.13% YoY to ₹16,97,305 crore, while global advances surged 19.46% YoY to ₹13,75,060 crore.

Retail credit demonstrated robust momentum, growing 31.61% YoY. Within this segment, housing loans grew 17.35% and vehicle loans expanded 25.50%. RAM credit also recorded a strong 21.03% YoY increase. Earnings per share stood at ₹22.06, up 5% YoY.

Capital adequacy and ratios

The bank’s Capital Adequacy Ratio (Basel III) improved to 17.19% in Q2FY27, up from 16.20% in Q2FY26. The Common Equity Tier I Ratio stood at 12.80%. Return on Assets (annualised) was recorded at 1.05%.

What the numbers show

The simultaneous improvement in bottom-line growth and asset quality indicators suggests a healthy operational trajectory. The 102 basis point drop in GNPA and 24 basis point decline in NNPA indicate effective recovery mechanisms and prudent lending standards. Management’s projection that ROA will stay well above 1% aligns with the current annualised ROA of 1.05%, signalling confidence in sustaining profitability levels.

However, the fresh slippages rising to ₹1,840 crore from ₹1,780 crore QoQ presents a divergence. While the stock of NPAs is shrinking due to recoveries and write-offs, the flow of new stressed assets has marginally increased sequentially. Despite this, the overall provisioning burden fell to ₹1,338.66 crore, suggesting that existing provisions were sufficient to absorb the new slippages without additional drag on profitability.

A notable divergence exists between the rapid expansion of the loan book and the modest growth in operating profit. Global advances grew 19.46% YoY, yet operating profit before provisions rose only 1.98% YoY. This gap suggests that while volume growth is strong, margins may be under pressure or operating expenses are rising faster than revenue, preventing the top-line surge from translating fully into pre-provision earnings.

Canara Bank reported outstanding debt securities totaling ₹53,445 crore as on September 30, 2026. The disclosure covers 17 distinct bond issuances, comprising both perpetual instruments with call options and fixed-term debt securities.

The filing was submitted to the BSE and NSE pursuant to SEBI Circular No. CIR/IMD/DF-1/67/2017 dated June 30, 2017, and subsequent clarifications including Circular No. SEBI/HO/DDHS/P/CIR/2024/54 dated May 22, 2024. The statement details the issuance dates, maturity or option dates, coupon rates, payment frequencies, and credit ratings for each security.

Composition of debt portfolio

The bank’s outstanding debt is diversified across multiple tenors and coupon structures. A significant portion consists of perpetual bonds with embedded call options, allowing the bank flexibility in managing its capital structure. Fixed-term bonds also form a substantial part of the liability profile.

Key features of the outstanding securities include:

• Coupon Range: Interest rates vary from a low of 7.09% to a high of 8.40%.
• Payment Frequency: All listed securities pay interest annually.
• Credit Ratings: Most instruments carry high-quality ratings, primarily AA+ or AAA/Stable from agencies such as CRISIL, India Ratings, ICRA, and CARE.
• Embedded Options: Several perpetual bonds have call options exercisable in fiscal years ranging from FY26-27 to FY31-32.

Outstanding bond details

What the numbers show

The data reveals a concentration in long-dated liabilities, with the single largest issuance being the ₹10,000 crore bond maturing in July 2034, issued at a 7.40% coupon. This instrument alone accounts for approximately 18.7% of the total outstanding debt securities. Additionally, two separate ₹5,000 crore tranches issued in late 2023 contribute significantly to the base, both carrying coupons below 7.7%. The presence of multiple perpetual bonds with near-term call options (FY26-27 and FY27-28) suggests active management of capital adequacy ratios, allowing the bank to redeem these instruments if regulatory conditions permit.