Canara Bank Share Price Soars 5%, What is the Cause?

2025-08-07

Canara Bank share price rose sharply in Thursday’s trading session, registering a 5% gain after the bank released its financial results for the June quarter.

The public sector lender reported solid growth in net profit and continued improvement in asset quality, catching the attention of both institutional and retail investors.

This increase in Canara Bank share price reflects growing market confidence in the bank’s operational strength and future prospects.

Strong Quarterly Earnings Drive Market Optimism

The key reason behind the surge in Canara Bank price was the bank’s better-than-expected quarterly earnings.

For the first quarter of the financial year, Canara Bank reported a 21.69% year-on-year increase in net profit, rising to ₹4,752 crore from ₹3,905 crore in the same quarter last year. This significant jump in profitability came despite a decline in net interest income (NII), which fell by 1.71% to ₹9,009 crore.

Although the net interest margin (NIM) shrank to 2.55% from 2.73% in the previous quarter and 2.9% in the same period last year, the increase in overall earnings demonstrated the bank's effective cost and credit management.

As a result, the Canara Bank share price touched ₹112.90, up by nearly 5% on the Bombay Stock Exchange.

Improvements in Asset Quality and Provisions

Another critical factor behind the positive investor sentiment is Canara Bank’s consistent improvement in asset quality. The gross non-performing assets (NPA) ratio declined to 2.69%, compared to 2.94% in the previous quarter and 4.14% a year ago.

This marks the fourth consecutive quarter of improvement, showing the bank’s focused efforts in reducing bad loans.

Furthermore, the net NPA ratio improved to 0.63%, and the provision coverage ratio (PCR) rose significantly to 93.17%, an increase of 395 basis points year-on-year.

Despite a sequential rise in provisions to ₹3,802 crore in Q1 from ₹3,280 crore in Q4 of the previous year, the improved PCR and reduced NPAs signal stronger financial stability.

Growth Across Core Business Segments

Canara Bank’s global business grew by 10.98% year-on-year, reaching ₹25.64 lakh crore. This includes global deposits of ₹14.68 lakh crore, up by 9.92%, and gross advances of ₹10.96 lakh crore, which grew by 12.42%.

The bank’s RAM portfolio (Retail, Agriculture, and MSME) showed a healthy 14.90% growth. In particular, retail credit grew by 33.92%, boosted by strong demand in housing and vehicle loans.

Housing loans increased by 13.92%, while vehicle loans expanded by 22.09%, indicating robust retail banking momentum.

Additionally, fee-based income rose by 16.39% to ₹2,223 crore, contributing to the overall earnings boost. Earnings per share (EPS) increased by 21.66% to ₹21.01, while return on assets (RoA) rose by 9 basis points to 1.14%.

Capital Position Remains Strong

Canara Bank maintained a solid capital position, with its Common Equity Tier-1 (CET-1) ratio at 12.29%, showing a 24 basis point year-on-year improvement.

A strong CET-1 ratio provides the bank with a comfortable buffer for future lending and risk absorption, supporting further growth in the coming quarters.

Find other interesting articles on Bitrue blog! You can also directly buy selected assets on Bitrue by registering here!

FAQ

Is Canara Bank merged with HSBC?

No, Canara Bank has not merged with HSBC. However, they are partners in a joint venture called Canara HSBC Life Insurance Company Limited. Canara Bank owns 51% of this company, while HSBC Insurance owns 26%.

Is Canara Bank now an Indian Bank?

Yes, Canara Bank is an Indian public sector bank. It was founded in 1906 and was nationalized by the Indian government in 1969. It is headquartered in Bengaluru.