On Thursday, 15 October 2026, the Canara Bank share price slipped almost 7% in early trade, just a day after the bank reported its highest-ever quarterly profit. Sounds strange, right? A bank earns more, and its stock still falls.
The reason is simple. Investors weren’t reacting to what the bank earned. They were worried about what could hit its profit next. Three things stood out: a sharp drop in treasury income, a bigger provisioning bill coming from new ECL rules, and deposits growing slower than loans. Let’s go through each one in plain words.
Why Did Canara Bank Shares Fall Today?
According to Business Standard, the stock opened slightly lower at ₹123.70 on the NSE and then kept sliding, touching an intraday low of ₹116.71, which is nearly 7% down. By 9:40 AM it was trading around ₹117, about 6.2% lower. It was the biggest loser in the Nifty PSU Bank index, which fell 2.2% while the Nifty 50 actually rose 0.65%. More than 21 million shares changed hands in the first 25 minutes, so the selling was heavy.
Here’s the whole story at a glance:
| Reason | What happened | Why it worried investors |
|---|---|---|
| Treasury income fell | Dropped to ₹499 crore from ₹1,583 crore a year ago | The bank’s earnings from its bond portfolio shrank, so overall profit growth looked weak |
| Bigger ECL provisioning hit | Estimated extra provisions raised to ₹12,000 to ₹15,000 crore from ₹10,000 to ₹12,000 crore | A large one-time provision could reduce profit and capital in the coming quarters |
| Deposits lagging loans | Loans grew 19%, deposits grew 13% | The bank may find it harder to fund its loan growth smoothly and cheaply |
One thing worth noting: the quarter itself wasn’t bad. Profit rose and bad loans fell. The market simply sold on what might come next, not on what had already happened.
Canara Bank Q2 Results FY27: Profit and Revenue
Canara Bank posted a net profit of ₹5,175 crore for the September quarter, up 8% from ₹4,774 crore a year ago. Net interest income, which is the money the bank earns from lending after paying interest on deposits, jumped 20%. Asset quality also got better.
| Metric | Q2 FY27 | How it compares |
|---|---|---|
| Net profit | ₹5,175 crore | Up 8% from ₹4,774 crore |
| Total income | ₹40,931 crore | Up from ₹38,598 crore |
| Net interest income | ₹11,005 crore | Up 20% year on year |
| Net interest margin | 2.53% | Slightly better than 2.52% |
| Operating profit | ₹8,758 crore | Up just 2% from ₹8,588 crore |
| Gross NPA | 1.33% | Down from 2.35% |
| Net NPA | 0.3% | Down from 0.54% |
| Provisions for bad loans | ₹1,339 crore | Down from ₹1,504 crore |
Notice the odd one out? Net interest income rose 20%, yet operating profit grew only 2%. That gap is the first clue to why the stock fell, and it comes down to treasury income.
Treasury Income Decline and ECL Provisioning Impact
Treasury income: why it dropped
Banks hold a large pile of government and other bonds. When bond yields rise, the prices of existing bonds fall, and the bank has to show a mark-to-market loss on paper. That’s what happened this quarter.
Bond yields rise → bond prices fall → bank books a paper loss → treasury income drops
Treasury income fell to ₹499 crore from ₹1,583 crore, a drop of roughly 68%. Non-interest income as a whole fell about 18% to ₹5,772 crore. This ate up most of the gain from higher interest income, which is why operating profit barely moved.
ECL provisioning: the bigger worry
ECL stands for Expected Credit Loss. Here’s the idea in simple terms. Today, a bank usually sets money aside after a borrower starts missing payments. Under the ECL approach, the bank has to set money aside earlier, based on how likely loans are to go bad in the future. It’s a bit like paying for a repair before the car actually breaks down.
Switching to this system means extra provisions. Canara Bank now expects the one-time hit to be ₹12,000 to ₹15,000 crore, higher than the earlier estimate of ₹10,000 to ₹12,000 crore. Motilal Oswal estimates this could reduce the bank’s capital adequacy ratio by 1.0% to 1.2%. The final impact depends on how and when the new rules are applied, and the RBI allows banks to phase in the change over several years. Still, a bigger number scared investors.
Deposits growing slower than loans
A third, quieter worry is that loans grew 19% while deposits grew only 13%. When loans race ahead of deposits, a bank may have to raise money at a higher cost, which can squeeze its margins. SBI Securities also pointed out that a planned wage revision in FY28 could add to the pressure on sentiment.
Canara Bank Share Price Target: What Analysts Say?
Interestingly, most brokerages stayed positive even after the fall. They like the bank’s valuation, growth, and improving asset quality, though a few flagged the ECL impact as the key risk.
| Brokerage | Rating | Target price |
|---|---|---|
| JM Financial | Buy (upgraded from Add) | ₹150 (raised from ₹142) |
| Elara Capital | Buy | ₹155 |
| Motilal Oswal | Buy | ₹160 |
| Morgan Stanley | Underweight | ₹109 |
JM Financial pointed out that the stock has stayed flat over the past year even though the bank’s book value rose 14%. It expects return on assets of around 1% and return on equity of about 17.6% over FY27 to FY29, with ECL as the key swing factor. Elara Capital warned that ECL outcomes and a heavy reliance on non-core income are the main risks. Morgan Stanley, which has a more cautious view, has been reported to keep its Underweight rating.
These are the brokerages’ own views, not guarantees. Targets can change quickly as new information comes in.
What Should Investors Watch Next?
If you follow the Canara Bank share price, these are the things worth keeping an eye on:
- ECL details: How much the bank provides, how fast, and what the RBI’s final rules say
- Bond yields: Rising yields hurt treasury income, while easing yields help it
- Deposit growth: Whether deposits start catching up with loan growth
- Net interest margin: Brokerages expect it to stay around 2.5% to 2.6% for FY27
- Wage revision: The expected cost in FY28
- Next quarterly results: To see whether treasury income recovers and asset quality holds
Disclaimer: This article is for information only and is not investment advice. Stock prices move during the day, so check the live Canara Bank share price and speak to a SEBI-registered advisor before making any decision.
