Canara Bank stock in focus: Lender to raise funds via debt

Shares of Canara Bank are in focus today as the bank's board has approved a capital raising plan amounting to ₹9,500 crore for the financial year 2025-26. The bank stated in a stock exchange filing, "This is to inform the Stock Exchanges that the Board of Directors of the Bank, in its meeting held today on 12.06.2025 has approved the Capital Raising Plan of the Bank for the financial year 2025-26 amounting up to Rs 9,500 Crore by way of Debt Instruments (Additional Tier I/Tier II Bonds), " said the bank. 

Canara Bank's stock ended 1.20% lower at  Rs 115.70 on BSE. Market cap of bank slipped to Rs 1.04 lakh crore on Thursday.

The capital raise will be conducted via Basel III-compliant bonds, with ₹6,000 crore in Tier II bonds and ₹3,500 crore in additional Tier I (AT1) bonds. The completion of this capital raising is contingent upon market conditions and obtaining necessary regulatory approvals. This move is aimed at strengthening the bank's capital base and supporting its future growth aspirations, as it navigates through the evolving financial landscape. The strategic decision to raise capital through these bonds underscores the bank's commitment to maintaining a strong financial foundation.

Canara Bank announced a significant rise in its net profit, reporting a 33% year-on-year increase to ₹5,002.7 crore for the March quarter, compared to ₹3,757 crore in the same period last year. The bank's net interest income (NII) also showed a modest increase of 1.4%, reaching ₹9,442 crore.

Analyst estimates were surpassed by the bank's NII and operating profit, indicating robust financial performance. Additionally, Canara Bank's gross non-performing assets (GNPA) ratio improved to 2.94%, down from 3.34% in December 2024, while the net NPA ratio improved to 0.70% from 0.89% in the previous quarter.

The bank's provision coverage ratio (PCR) also saw an improvement, standing at 92.70% in Q4 compared to 91.26% in Q3FY25. This reflects the bank's enhanced ability to cover potential losses, further strengthening its financial position.