Canara Bank's Financial Review: Assessing Performance and Projecting Growth

Canara Bank's Financial Review: Assessing Performance and Projecting Growth

 Motilal Oswal mentioned that Canara Bank's earnings were solid, but they were pretty much in line with expectations. The boost came from increased other income but this was somewhat balanced out by higher provisions compared to what was anticipated. There was a slight expansion of 4 basis points in the quarter-on-quarter margin due to healthy growth in Net Interest Income (NII).

Canara Bank's performance in the March quarter met the street's expectations. Despite facing rising fund costs, Canara Bank managed to increase its Q4 net interest margin (NIM), though only slightly. This increase was either due to the repricing of older, less profitable corporate book exposures or the sequential efforts made to improve current yields. These efforts were counter balanced by other products that offer better returns. Analysts suggest that everyone will be closely watching for any changes in provisions moving forward.

Looking ahead, the management anticipates that the net interest margin will stay between 2.9% to 3% in the fiscal year 2025. The growth in loans was mainly driven by the retail segment and there was robust growth in deposits, particularly from Current Account Savings Account (CASA) deposits, with a positive outlook. While there was a sequential increase in fresh slippages, there has been an improvement in the asset quality ratio. Overall, analysts maintain their earnings estimates and predict that Canara Bank will achieve Return on Average Equity (RoAE) and Return on Average Assets (RoAA) of 1.1% and 18.4%, respectively, by the fiscal year 2026.

Brokerages have reiterated their 'buy' rating on the stock with a target price of ₹650. On Thursday, the stock was trading at ₹559.90 on the Bombay Stock Exchange (BSE), marking a 0.32% increase.