MD, CEO, and Executive Director Hardeep Singh Ahluwalia
Canara Bank is recalibrating its loan mix to shield profitability from faster repricing triggered by rate cuts, leaning harder on high-margin retail, agriculture, and MSME loans, even as corporate credit remains selective.
With nearly half its loan book linked to the repo rate, MD, CEO, and Executive Director Hardeep Singh Ahluwalia says sharper RAM growth, tighter pricing discipline, and improved asset quality are central to defending margins in a softer rate cycle.
The bank posted a 25.6 per cent year-on-year (y-o-y) jump in net profit at ₹5,155 crore for the third quarter of FY26. The bank’s net interest income (NII) rose marginally by 1.1 per cent to ₹9,252 crore, while net interest margin (NIM) for the quarter stood at 2.50 per cent.
The management indicated that margins are expected to stabilise in the 2.45-2.50 per cent range going forward.
The slippages during the quarter were contained at 0.64 per cent, with total fresh slippages of ₹1,857 crore, largely from the agriculture and MSME segments.
During the quarter, the bank accelerated growth in retail, agriculture and MSME credit, which offer structurally higher spreads. RAM credit grew 18.7 per cent y-o-y to ₹7,04,041 crore during the quarter, and now accounts for 59 per cent of total advances, up from 57 per cent a year earlier. The sharper mix tilt is aimed at cushioning net interest margins at a time when asset-side repricing is faster than adjustments on the liability side.
Selective on corporate credit
While RAM lending has emerged as the primary growth engine, the bank stressed that this does not signal a pull-back from corporate credit. Around ₹20,000 crore of corporate loans have already been sanctioned and are awaiting disbursement, with corporate advances continuing to grow at a measured pace. However, the bank is being selective on pricing and returns, prioritising profitability over volume growth in large-ticket lending.
Canara Bank has also managed to hold its ground on deposits despite intense competition across the banking system. The CASA ratio stood at around 30 per cent during the quarter at ₹4,12,359 crore, with savings deposits growing 8.51 per cent y-o-y and individual savings deposits rising over 10 per cent. Retail term deposits grew close to 10 per cent, largely driven by granular customers, helping strengthen the stability of the funding profile.
Ahluwalia said the strength of the balance sheet and improving asset quality provide room to recalibrate growth as the rate cycle turns. With provision coverage above 94 per cent and a sharper focus on mix and pricing, the bank expects to absorb near-term margin pressure while sustaining profitable growth.
Published on January 30, 2026
