Canara Bank shares climbed to a day high of ₹129.70 on Monday, after the state run lender posted Q1 results showing better asset quality.

The stock had actually opened lower and touched a low point earlier in the session, before recovering and gaining ground once the market digested the details of the results.

What stood out most was the improvement in bad loans, which is usually the first thing investors look at with public sector banks.

Canara Bank net profit rose 2% year on year to ₹4,856 crore for the June quarter, a touch ahead of what analysts on the Street were expecting. Net interest income, the core money the bank makes from lending, grew a healthier 13% to ₹10,216 crore.

The bigger story though was on the asset quality side. Gross bad loans fell to 1.57% of total advances, down from 1.84% in the March quarter and a sharp improvement from 2.69% a year earlier.

Net bad loans dropped to 0.36% from 0.43% sequentially. Fresh slippages, meaning new loans turning bad during the quarter, also eased to ₹1,781 crore from ₹2,771 crore in the previous quarter.

Provisions for the quarter increased to ₹2,080 crore, though this was largely a sequential rise from the March quarter’s lower base, and overall the bank’s capital position stayed strong with a capital adequacy ratio of 17.17%, up from 16.52% a year ago.

Looking ahead, Canara Bank has guided for its CASA ratio to reach 30 to 32% by March 2027, up from 29.70% as of June.

It has also guided for global net interest margins in the 2.50 to 2.60% range and business growth of 10 to 11% for the year.

As of 13:58 pm on NSE, Canara Bank shares were trading at ₹127.13, up 1.18% for the day.

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