Canara Bank Jumps 3% as NPAs Shrink, Profit Rises 8%

Canara Bank shares rose over 3% to around Rs 124.50 on Wednesday after the public sector lender reported September quarter results showing steady profit growth alongside a sharp improvement in asset quality, a combination that cheered investors into the close. Net profit rose 8.4% year on year to Rs 5,175 crore, while operating profit grew a more modest 1.98% to Rs 8,758 crore, suggesting provisions helped the bottom line more than core operations did. The standout was asset quality: gross NPA fell sharply to 1.33% from 2.35% a year earlier, net NPA dropped to 0.30% from 0.54%, and provision coverage improved to 95.34%. Global business crossed Rs 30.72 lakh crore, up nearly 16%, with retail credit growing a stronger 31.6%, led by vehicle loans up 25.5% and housing loans up 17.35%. For a public sector bank, a near-halving of gross NPA in a year is a meaningful structural improvement, not just a seasonal blip, and it eases the provisioning burden that has weighed on PSU bank earnings for years. The gap between slower operating profit growth and faster net profit growth shows falling credit costs are doing more work than core income right now, a dynamic that can’t repeat indefinitely once NPAs reach low levels. The stock has ranged between Rs 116.51 and Rs 162.89 over the past 52 weeks, with a market cap of around Rs 1.09 lakh crore, still well below its yearly high despite today’s gains. With credit costs already at a low 0.47%, the key question ahead is whether loan growth alone can sustain this profit momentum. Disclosure: Palash Kag, Proprietor, Sarathi Research (SEBI Reg. No. INH000012740). No position held in Canara Bank. This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Please consult a registered advisor before making investment decisions.