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Planning to sell excess priority sector loans in Q2 FY26: MD Canara Bank
The total priority debt stands at 45.63 per cent of total loans, compared to the regulatory requirement of 40 per cent, Canara Bank MD and CEO K Satyanarayana Raju told PTI.
As of FY26 June quarter, the bank has surpassed the mandated targets, achieving 45.63 per cent in priority sector lending and 23.25 per cent in agricultural credit, compared to the regulatory norms of 40 per cent and 18 per cent respectively, as per an exchange filing.
Raju said: "We have a cushion under the priority sector space. There is demand in the market, and we may take advantage of the Priority Sector Lending Certificate (PSLC) sale."
The company's net interest income declined by 4.59 per cent quarter-on-quarter (QoQ) to ₹9,009 crore, compared to ₹9,166 crore in the first quarter of the previous financial year.
The CEO expressed concerns over net interest margin (NIM) in the current financial year, stating, "The guidance of 2.75 per cent seems difficult at the current juncture due to the 100 basis point rate cut by the RBI so far this year and the expectation of another one as inflation has come down below 3 per cent."
Raju added, "Whether the rate cut happens in August or October policy, one has to wait and watch." Due to the interest rate cut, he expects pressure in Q2 FY26 but remains optimistic about improvement in the third and fourth quarters.
Subsidiary IPOs
The public sector bank (PSB) is also targeting the listing of one of its subsidiaries, Canara Robeco AMC, on the stock market in Q2, with another listing planned for the next quarter. It has already initiated the process for the listing of the asset management joint venture. The bank is planning to offload 13 per cent of its stake in the AMC via an initial public offering (IPO).
Moreover, Canara Bank has already initiated the process to divest 14.5 per cent of its stake in its life insurance subsidiary, Canara HSBC Life Insurance Company, through a public listing.
Q1 Results
The PSB posted a 22 per cent year-on-year (YoY) increase in net profit to ₹4,752 crore for the April–June quarter of FY26, supported by a strong rise in other income despite pressure on its net interest margin.
Other income, comprising fees, commissions, and treasury gains, surged 32.73 per cent YoY to ₹7,060 crore. Fee-based income grew by 16.39 per cent, while treasury income saw a sharp jump of 296.22 per cent.
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