Canara Bank chief says core income to support stability after profit decline on treasury losses

reported a 10% drop in net profit for the fourth quarter, largely on account of treasury losses. Interim managing director and chief executive officer Hardeep Singh Ahluwalia told Atmadip Ray the bank is trying to protect its net interest margins (NIM) by focusing on core income. He expects treasury operations to boost profits when bond yields-and geopolitical tensions-eventually cool. Edited excerpts

The rise in bond yields weighed heavily on your fourth quarter earnings and profitability. What is your assessment of the situation?

The bond yields have risen, the equity market came under pressure-all these adverse movements led to a ₹800 crore mark-to-market loss. However, once the geopolitical tension eases, when yields cool down, the MTM loss will translate into profit. Most important aspect is that our annual net interest income grew 6% over FY25. The core income will lend stability to the bank’s earnings and profitability.

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Canara Bank’s advances growth at 15.3% significantly outpaced deposits growth of 9.7%. What is the guidance this year?

Last year, we had given a guidance of 10-11% growth in advances which was surpassed significantly. So, this time we are giving an advance growth guidance of 11-12%. On the liability side, the guidance will remain the same at 9-10%.

What is your guidance on net interest margin?

The NIM was 2.51% for FY26. We are looking to keep in the range of 2.5-2.6%. We are trying to rationalise the cost of deposit by shedding bulk deposits, which is costlier than retail deposits. There has been a continuous effort to reduce the share of bulk deposits. Out of ₹10.08 lakh crore of term deposits, ₹4.20 lakh crore is bulk and certificate of deposits. As I said, we are trying to boost retail deposits including current and savings accounts. Our field force will be working on this. On the asset side, our main focus in lending remains in the RAM (retail agriculture and MSME) sector where spread is high.

Is the gap in credit-deposit growth concerning?

Our credit-deposit ratio stood at 78%, lower than the industry average of 82%. So, there is no concern on that front.

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Is geopolitical uncertainty a concern? Is there any evidence of building stress in any borrower segment?

So far, we have not come across any war-related stress in any borrower segment. In fact, we have identified some accounts where we will give additional advances of ₹18,000-20,000 crore under the emergency credit line guarantee scheme announced by the governmentOur slippage ratio is 0.69% which is one of the best in the industry. In general our asset quality remained robust. The gross non-performing ratio has improved by 110 basis points to 1.84% at the end of March from 2.94% a year ago.

The bank wrote off nearly ₹7,000 crore in the last two quarters. What is the total write-off pool? How much do you expect to recover from this pool this year?

We have a write-off pool of ₹67,000 crore. We expect to recover ₹6,500-6,800 crore this year.