Watch Shri Brajesh Kumar Singh, MD & CEO, discuss Canara Bank's Q1 FY 2026-27 Results, the drivers behind the bank's performance and the road ahead in an exclusive interview with ET Now.
[Canara Bank, Q1 FY 2026-27, Financial Results]
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What Brajesh Singh said
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Brajesh Singh, Managing Director and CEO of Canara Bank, discussed the bank's Q1 FY 2026-27 results. He said the bank's 10-12% full-year credit growth guidance, set in March, will be bettered, with Q1 year-on-year growth at 17.97% driven by retail, agriculture, and MSME lending and an emergency line of credit. He stated net interest margin of 2.52% has bottomed out, supported by stabilized deposit costs and shedding bulk deposits. Singh noted the credit-deposit ratio rose to 80% from 75% a year ago, and net interest income crossed Rs 10,000 crore for the first time. On ECL provisioning, he said the bank will absorb the Rs 10,000-12,000 crore impact within two years, not the five-year government dispensation, with only a 1.2% dent to capital adequacy. He projected FY profit of Rs 19,000-20,000 crore and maintained return on assets above 1%.
Key takeaways
Full-year credit growth guidance of 10-12% will be bettered, with Q1 YoY growth at 17.97%.
Net interest margin of 2.52% has bottomed out and should improve.
ECL provisioning impact of Rs 10,000-12,000 crore will be absorbed in two years, not five.
FY profit expected to be Rs 19,000-20,000 crore, with Q1 profit at Rs 4,856 crore.
Capital adequacy ratio of 17.17% can absorb ECL impact without raising capital.
In terms of numbers at least, which have come out is Canara Bank. Stock is also up 2% on the back of those numbers. We have with us the managing director and CEO of Canara Bank, Mr. Brajesh Kumar Singh, joining us this afternoon to give us a sense as to how should one expect the numbers going forward. Great having you here, Mr. Singh, first off. First conversation with you, so good of you to come in. So, give us a sense with regard to growth. 4 and 1/2% sequential, that's not something that we're used to seeing PSU banks do in Q1, let alone even the privates. But it's surely not. Is this sustainable? What's the kind of growth that we're penciling in for full year? Because your guidance seems to suggest a 12-ish percent growth. You're clearly beating that. So, trying to get a sense as to what's playing out.
Thank you, Harsh, for having me on your distinct channel. Yes, we have given guidance of say 10 to 12%, but those guidance were given in the month of March. That time, considering GDP growth was 7%, so we thought of having it. That time I have not joined, that thought of giving 150% of that. But still we have bettered in the first quarter, rightly said. And the YOY growth is around 17.97%. So, going further also, there is good credit demand also. And then there was an emergency line of credit also, which has helped. And other RAM also, we have had good growth in retail, agriculture, and MSME also. So, going further also, though we have given guidance of 10 to 12%, we will be further bettering it also only. We'll keep that guidance there only, but we'll better it for sure.
I guess yes. Secondly, we gave guidance of 2.5 to 2.60% and I guess it is bottomed out considering the last year, this thing, 100 basis point of repo cut was there, so which is I think, I mean, we have all transferred. And then cost of deposit has also, I mean, started, it has started regularizing, stabilizing. And again, there was a last MPC also, there was no cut or hike, so there is always benefit of a stability. So, and our dependency was much on this thing, bulk deposits, which we have started shedding off with the help of growth in 10 to 12% in CASA and the retail term deposit also. So going further there will be synergy in cost of funds and at the same time we are gainfully deploying it into with good credit underwriting, gainfully deploying it so that our NIM is protected and even little bit better.
Sir, just curiosity. I've got two questions. One is on cost of funds. It's cooled off by around 22 basis points in this quarter. That's the first part. The second part is your deposit growth has lagged your loan growth by quite a bit when I'm looking at the QOQ number. It's basically half the loan growth. So you've got a double benefit of a lower cost of funds and of course some part due to the deposit growth not being as fast as the advances growth. Are you doing more secured lending? Is that what's playing out on the margin as well?
No, see, I mean, you have to see our CD ratio. Last June our CD ratio was at 75%. Now we have raised it up to 80%, so that's how our growth of advances were little more than the growth of deposits. So both are in line of market only. But you see in cost of this, see yield on investment is 6.90 but our yield on advances around 8%, so 110 basis points margin is there, that synergy is there. So we just wanted to have traction on that synergy and that's how, I mean, you first time we have crossed the net interest income mark of 10,000 crores. So that was a very conscious to give a boost to our advances. And then resources we are listing them in equally giving importance and this quarter we will be having better growth in resources also.
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