Canara Bank Q2 Results Review- Net Interest Income Inline; Controlled Opex Drives Earnings Beat: Motilal Oswal

Motilal Oswal Report

Canara Bank reported an earnings beat led by controlled opex, though net interest margin moderated 4 bp sequentially. Loan growth was led by the retail segment, especially the gold loan book, while deposit growth was modest. The current account and savings account ratio witnessed sequential improvement.

There has been an improvement in overall asset quality ratios, with slippages also seeing an improvement. Management expects credit costs to be <1% for FY25. However, SMA book increased due to one central government account (metal sector) and another state government guaranteed account.

We broadly retain our numbers and estimate Canara Bank to deliver FY26E RoA/RoE of 1.08%/18.9%. Reiterate Buy with a target price of Rs 125 (premised on 1.1 times FY26E adjusted book value).

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