Canara Bank Q4 FY25: Profit Jumps 18%, Asset Quality Strengthens
Day 78 of tracking the Indian banking sector
Canara Bank, one of India’s prominent public sector banks, recently released its financial results for the fourth quarter (Q4) of the financial year 2024-25.
The bank showcased a solid performance, with its net profit rising by 18.33% year-on-year (YoY), driven by growth in core income, higher other income, and better management of bad loans.
This article breaks down the bank’s performance using the latest figures, compares key metrics over time, and offers insights into its future outlook.
Financial Performance: A Numbers-Driven Breakdown
Net Profit Growth
In Q4 FY25 (January–March 2025), Canara Bank’s net profit reached Rs 3,757 crore, an increase of 18.33% from Rs 3,175 crore in Q4 FY24 (January–March 2024). For the full year FY25, the bank’s net profit soared by 37.25% to Rs 14,554 crore, up from Rs 10,604 crore in FY24. This bigger annual growth highlights a consistent upward trend throughout the year.
Key Drivers of Profit
The profit boost came from three main areas:
Net Interest Income (NII): This is the difference between interest earned from loans and interest paid on deposits. NII grew by 11.18% to Rs 9,580 crore in Q4 FY25, up from Rs 8,617 crore in Q4 FY24, an increase of Rs 963 crore.
Other Income: This includes money from fees, commissions, and investments. It rose by 9.23% to Rs 5,217 crore from Rs 4,776 crore, adding Rs 441 crore to the bank’s revenue.
Lower Provisions: Provisions are funds set aside for loans that might not be repaid (bad loans). These dropped to Rs 2,280 crore from Rs 2,399 crore, a reduction of Rs 119 crore, which directly boosted the profit.
Together, these factors, higher NII, more other income, and fewer provisions explain the Rs 582 crore profit increase.
Asset Quality: Fewer Bad Loans, More Stability
Asset quality measures how healthy a bank’s loans are. Canara Bank showed impressive improvement here. The gross non-performing assets (GNPA) ratio fell to 4.23% in Q4 FY25 from 5.35% in Q4 FY24, and it was slightly lower than the 4.39% seen in Q3 FY25, marking a year-on-year drop of 1.12 percentage points and a sequential decline of 0.16.
The net NPA ratio fell to 1.27% in Q4 FY25 from 1.73% a year earlier and 1.32% in the prior quarter, a reduction of 0.46 percentage points YoY and 0.05 sequentially. Meanwhile, the provision coverage ratio (PCR) rose to 89.1% in March 2025 from 87.31% in March 2024, an increase of 1.79 percentage points, showing the bank is better prepared for potential loan defaults.
Capital Position: A Strong Foundation
The bank’s capital adequacy ratio (CAR), a measure of its financial strength, was 16.28% in March 2025, with its common equity Tier 1 (CET1) ratio at 11.58%. These figures are well above India’s regulatory minimums of 11.5% for CAR and 8% for CET1.
A high CAR means the bank has a solid cushion to handle losses and grow its loan portfolio. Compared to last year, this stability suggests Canara Bank is in a strong position to face economic challenges or expand its business.
Dividend: Rewarding Shareholders
Canara Bank’s board proposed a dividend income of Rs 16.10 per share for FY25 , up from Rs 12 per share in FY24. This increase reflects the bank’s confidence in its earnings and its commitment to shareholders.
Key Metrics: Profitability and Efficiency
The net interest margin (NIM) improved to 3.05% in Q4 FY25, compared with 2.95% in Q4 FY24 and 3.02% in Q3 FY25, a year-on-year rise of 0.10 percentage points.
The cost of deposits increased to 5.50%, up by 1.12 percentage points from 4.38% in Q4 FY24. The yield on advances jumped to 8.71% from 7.70% a year earlier, a gain of 1.01 percentage points.
These shifts show the bank successfully passed higher funding costs onto borrowers while preserving its profit margins.
Comparative Analysis with Industry Standards and Peer Banks
To understand Canara Bank’s performance better, it helps to compare key ratios:
Net profit growth of 18.33% YoY in Q4 FY25 is comparable to ICICI Bank’s 17.4% rise to Rs 10,708 crore; SBI also posted strong gains.
Canara Bank’s GNPA ratio of 4.23% is in line with SBI’s typical range of 4–5%, though private banks like ICICI Bank (around 2.5%) and HDFC Bank (about 1.2%) maintain lower ratios.
With a CAR of 16.28%, Canara Bank is well-capitalized alongside peers: ICICI Bank (18%), HDFC Bank (19%), and SBI (13%).
A NIM of 3.05% sits within the industry’s 2.5–3.5% range; private banks often report around 4%, while SBI is closer to 3.2%.
Projected loan growth of 11–12% and deposit growth of 9% for FY26 aligns with the banking sector’s expected 14–15% credit growth.
Overall, Canara Bank’s Q4 FY25 results show significant strides in profitability and asset quality, placing it competitively among public sector banks and narrowing the gap with private-sector leaders.
Future Outlook: What Lies Ahead
For FY26 (April 2025–March 2026), management expects loan growth of 11–12% and deposit growth of 9%, building on a domestic deposit base that grew 11% YoY to Rs 12.1 lakh crore in Q4 FY25.
Key strategic moves include continued digital transformation, boosting low-cost CASA deposits, and leveraging stakes in subsidiaries like Canara HSBC Life Insurance and Canara Robeco Asset Management to diversify income streams.
With improving asset quality, a high provision coverage ratio (89.1%), and a strong CAR (16.28%), the bank is well-equipped to manage risks and pursue sustainable growth.
Conclusion
Canara Bank’s Q4 FY25 performance reflects a bank on the rise. Net profit grew by 18.33% to Rs 3,757 crore, driven by strong NII and other income gains, while asset quality improved markedly.
Annual profit jumped 37.25% to Rs 14,554 crore, and the proposed 161% dividend demonstrates confidence in future earnings. Looking ahead, the bank’s growth targets and strategic initiatives signal a bright future.