Mobilising low-cost deposits will be the key lever for Canara Bank's growth, profitability and margin expansion, Managing Director and Chief Executive Officer Brajesh Kumar Singh said, asserting that strengthening the bank's current account and savings account (CASA) franchise would help address several challenges simultaneously.
In an interaction with TNIE, Singh said the state-owned lender is prioritising resource mobilisation, particularly low-cost deposits, as it seeks to improve operational efficiency and sustain growth.
Canara Bank on Monday reported a 2.2% year-on-year rise in standalone net profit to Rs 4,856 crore for the quarter ended June 30, 2026, while net interest income (NII) increased 13.4% to Rs 10,215 crore. However, net interest margin (NIM) narrowed to 2.52% from 2.55% a year ago.
Despite the modest rise in quarterly profit, Singh defended the bank's performance, saying it had consciously prioritised balance sheet strength through higher provisioning, an improved provision coverage ratio and write-offs.
“We have not gone wrong. We have made ourselves stronger. Our capital adequacy, slippages and asset quality have all improved,” he said.
The bank's provision coverage ratio improved to 94.76%, while net non-performing assets declined to 0.36% during the quarter.
“There is always scope for improvement and nobody is satisfied; otherwise, our growth will stop. The area where I would like to improve is low-cost CASA deposits. From there, all synergies will come. First and foremost are our resources, particularly low-cost resources,” Singh said.
Canara Bank's CASA ratio stood at 29.7% at the end of the June quarter, and the lender remains confident of achieving its guidance of 30-32% by March 2027. While acknowledging that some peers have a higher CASA ratio, Singh said a 35% CASA level is achievable over the longer term, given the bank's size.
“It is achievable, but not in a shorter span, considering the size of our Rs 16.11 lakh crore deposit base,” he said.
Singh said a stronger CASA base would lower the bank's cost of funds, reduce dependence on bulk deposits and certificates of deposit (CDs), and help protect net interest margins.
“We are trying to reduce our cost of deposits. Our CASA percentage is lower, and that translates into a higher cost of deposits. That is where we are trying to correct ourselves,” he said.
The bank has maintained its NIM guidance of 2.5-2.6% despite a 100-basis-point reduction in the repo rate over the past year. Singh said Canara Bank has been able to protect margins through better underwriting, calibrated deployment of funds and an improved credit-deposit ratio.
“We gave guidance of 2.5-2.6% and have maintained it at 2.52%. We are working on both fronts—yield on advances and cost of deposits—to protect our NIM,” he said.
Singh added that the bank is undertaking multiple initiatives to improve deposit mobilisation, including product innovation, digital onboarding and leveraging its network of more than 10,100 branches.
According to him, early signs of progress are visible, with individual savings bank deposits rising 12.63% and retail term deposits growing 9.1%.
