Indian Bank vs Canara Bank (2026): ROA, NIM, Growth, NPAs & Which Is Better?
One bank owns almost twice the balance sheet. The stock market gives both almost the same value.
Indian Bank versus Canara Bank becomes much more interesting once market capitalisation is placed beside balance-sheet scale.
Bull Run's August 25 snapshot valued Indian Bank at roughly ₹1.12 lakh crore and Canara Bank at roughly ₹1.15 lakh crore—almost identical.
Yet Canara Bank has approximately ₹16.12 lakh crore of deposits and ₹12.93 lakh crore of advances.
Indian Bank has only ₹8.45 lakh crore of deposits and ₹6.85 lakh crore of advances.
In other words, investors place nearly the same equity value on two franchises even though Canara's banking balance sheet is almost twice as large.
That is not because the market has missed Canara's size.
It is because size and earnings quality are not the same thing.
Do not compare PAT first. Follow the earnings bridge.
A bank's quarterly profit is the result of several economic layers. The useful sequence is: interest income becomes NII, NII and fee income become operating profit, operating profit absorbs credit provisions and tax, and the remaining profit is measured against assets and equity.
This earnings bridge is the most important difference in Q1 FY2027.
Indian Bank vs Canara Bank: Q1 FY2027 scorecard
| Metric | Indian Bank | Canara Bank | Current Edge |
|---|---|---|---|
| Q1 PAT | ₹3,273 Cr | ₹4,856 Cr | Canara absolute scale |
| PAT growth | +10.09% | +2.19% | Indian Bank |
| Operating profit | ₹5,557 Cr | ₹8,636 Cr | Canara scale |
| Operating profit growth | +16.50% | +0.96% | Indian Bank |
| NII | ₹7,435 Cr | ₹10,215 Cr | Canara scale |
| NII growth | +16.92% | +13.39% | Indian Bank |
| Global deposits | ₹8.45 lakh Cr | ₹16.12 lakh Cr | Canara |
| Deposit growth | +13.47% | +11.63% | Indian Bank |
| Global advances | ₹6.85 lakh Cr | ₹12.93 lakh Cr | Canara |
| Advance growth | +13.89% | +17.97% | Canara |
| Credit-deposit ratio | 81.06% | 80.25% | Effectively tied |
| Domestic CASA | 39.73% | 29.70% | Indian Bank |
| Global NIM | 3.29% | 2.52% | Indian Bank |
| Cost of deposits | 4.80% | 5.27% | Indian Bank |
| Yield on advances | 8.09% | 8.00% | Indian Bank slightly |
| ROA | 1.31% | 1.04% | Indian Bank |
| ROE | 19.48% | 18.31% | Indian Bank |
| Cost-to-income | 44.80% | 49.03% | Indian Bank |
| GNPA | 1.86% | 1.57% | Canara |
| NNPA | 0.15% | 0.36% | Indian Bank |
| Provision coverage | 98.22% | 94.76% | Indian Bank |
| Annualised credit cost | 0.23% | 0.49% | Indian Bank |
| Annualised slippage ratio | 0.77% | 0.60% | Canara |
| CRAR | 17.58% | 17.17% | Indian Bank slightly |
| CET1 | 16.51% | 12.91% | Indian Bank |
| 28 Aug P/E | 9.28x | 5.85x | Canara cheaper |
| 28 Aug P/B | 1.54x | 0.99x | Canara cheaper |
The balance-sheet paradox: Canara is almost twice as large
Canara Bank's global deposits of ₹16.12 lakh crore are roughly 1.9 times Indian Bank's ₹8.45 lakh crore. Advances show almost the same ratio: ₹12.93 lakh crore versus ₹6.85 lakh crore.
Absolute quarterly profit also favours Canara: ₹4,856 crore versus ₹3,273 crore.
If banking size and current profit were the only determinants of stock valuation, Canara should be worth materially more.
It is not.
The market assigns Indian Bank far more value to every rupee of assets, equity and book value because those assets currently earn more efficiently.
Indian Bank's 3.29% NIM is the first explanation
Canara Bank reported 2.52% NIM. Indian Bank reported 3.29% globally and 3.41% domestically.
A 77-basis-point global margin advantage across a bank balance sheet is substantial. It means Indian Bank does not need Canara's scale to produce attractive shareholder economics.
The difference begins with liabilities. Indian Bank's domestic CASA ratio is 39.73% compared with Canara's 29.70%, while cost of deposits is 4.80% versus 5.27%.
Indian Bank therefore starts with a cheaper funding mix and then earns a slightly higher yield on advances.
Cheaper input plus slightly better asset yield creates a much wider final spread.
Canara's biggest structural opportunity is already visible in that comparison
Canara does not need to chase riskier loans to improve profitability. It can improve the liability franchise.
Management's FY27 CASA guidance is 30%-32%. Q1 came in at 29.70%.
If the bank gradually moves the mix into the low-30s while term-deposit repricing reduces funding costs, some of the 77-basis-point NIM gap can narrow without changing borrower risk.
That is one of the most attractive improvement levers available to a bank because it works through funding rather than underwriting.
Indian Bank is already near the point Canara is trying to reach
Indian Bank's liability franchise is not merely cheaper. Its revenue also converts into profit more efficiently.
Cost-to-income is 44.80%, compared with Canara at 49.03%.
That four-percentage-point operating-cost advantage combines with the NIM advantage before credit provisions are even considered.
By the time profit reaches the bottom line, Indian Bank has already protected more of each rupee of banking income at two separate stages.
This is why ROA matters more than total profit
Indian Bank produces 1.31% ROA. Canara produces 1.04%.
Canara earns more absolute rupees because it owns far more assets. Indian Bank earns substantially more relative to the asset base supporting those profits.
A 27-basis-point ROA difference is economically meaningful. If Canara eventually closes only part of that gap while retaining its larger balance sheet, absolute profit can grow substantially even without maintaining the current 18% credit-growth rate.
The ROE difference is smaller
Indian Bank reported 19.48% return on average net worth. Canara reported 18.31%.
Both are strong.
The narrow ROE gap tells us Canara's equity is already being used reasonably efficiently even though its assets earn less ROA. The difference comes partly from capital structure.
Indian Bank carries substantially more common-equity capital relative to risk-weighted assets—16.51% CET1 versus Canara at 12.91%—yet still produces the higher ROE.
That combination of higher capital and higher ROE is a strong quality signal.
Canara's answer is growth—and it is not small
Global advances increased 17.97% year on year, compared with Indian Bank at 13.89%.
Canara's retail credit increased 35.88%. RAM credit grew 21.20%. Housing loans increased 17.85%, vehicle finance 26.34% and MSME credit 15.12%.
The bank is therefore not relying solely on one giant corporate cycle. Growth is being distributed through granular categories as well.
This gives Canara greater near-term balance-sheet compounding torque.
But Q1 credit growth is running well above Canara's own full-year guidance
Management guidance for FY27 global advance growth is 11%-12%.
Q1 actual growth was 17.97%.
That difference matters because investors should not automatically extrapolate an 18% pace across the full year.
The first quarter may represent unusually strong deployment, timing differences or an intentional front-loading of growth. A commercial stock comparison should use management's guidance as a reality check rather than simply annualising the strongest observed rate.
Indian Bank is also running slightly ahead of its stated growth band
Indian Bank reported 13.89% advances growth against FY27 guidance of 11%-13%.
Deposits grew 13.47%, above guidance of 9%-11%.
That means both banks entered FY27 with stronger balance-sheet momentum than their formal full-year assumptions.
The difference is that Indian Bank combines this above-guidance start with far stronger NIM and ROA.
The first-quarter profit bridge favours Indian Bank
Indian Bank's NII rose 16.92%. Operating profit rose 16.50%. PAT rose 10.09%.
The progression is fairly coherent: banking income growth translated into operating earnings growth before higher provisions and tax moderated the final PAT increase.
Canara's NII rose 13.39%, but operating profit increased only 0.96% and PAT 2.19%.
That does not mean Canara had a poor quarter. It means the bank's excellent lending growth did not convert into bottom-line growth as cleanly as Indian Bank's.
For a quality-of-earnings comparison, Indian Bank wins Q1.
Canara still produced ₹1,583 crore more quarterly profit
Scale should not disappear from the analysis.
Canara's ₹4,856 crore PAT is roughly 48% above Indian Bank's ₹3,273 crore.
Canara also produced ₹10,215 crore of NII against Indian Bank's ₹7,435 crore.
This is why the valuation debate remains interesting. Investors buying Canara receive much more absolute banking income for nearly the same market capitalisation.
Asset quality complicates the ranking again
Canara has the lower gross NPA ratio:
1.57% versus Indian Bank at 1.86%.
Yet Indian Bank has the lower net NPA:
0.15% versus Canara at 0.36%.
The apparent contradiction comes from provisioning.
Indian Bank has almost completely provisioned recognised stress
Provision coverage is 98.22%.
Canara is also strong at 94.76%, but the difference is enough to explain why Indian Bank's residual net NPA exposure is so small.
For shareholders, old recognised bad loans therefore present less unprovided risk at Indian Bank.
That does not guarantee future credit quality; new slippages depend on recent underwriting.
Canara's gross-NPA trajectory is exceptionally strong
GNPA fell from 2.69% in June 2025 to 1.57% in June 2026.
Net NPA declined from 0.63% to 0.36%.
That is not merely cosmetic improvement. It removes one of the most important historical reasons public-sector banks traded at deep book-value discounts.
If Canara can maintain this asset quality while growing the loan book, the current approximately 1x book valuation becomes much more interesting.
Canara's lower annualised slippage ratio is worth noting
Canara reported approximately 0.60% annualised slippage against Indian Bank at 0.77%.
Indian Bank still has the lower credit cost at 0.23% versus Canara at 0.49%.
The two measures answer different questions. Slippage measures new stress entering the NPA pool; credit cost reflects the provision expense absorbed in current profitability.
Canara currently wins the first. Indian Bank wins the second.
Indian Bank has an unusually large capital advantage
Total CRAR is similar—17.58% versus Canara's 17.17%.
But CET1 is not.
Indian Bank: 16.51%.
Canara Bank: 12.91%.
Indian Bank therefore holds considerably more highest-quality common-equity capital relative to risk-weighted assets.
This provides flexibility for growth, provisioning and future accounting transitions while reducing the risk of dilutive capital raising.
Canara's lower CET1 is not currently a growth constraint
12.91% remains comfortably above regulatory requirements, and retained profits continue rebuilding equity.
The important question is whether 18% advance growth consumes capital faster than profits replenish it.
If growth normalises toward management's 11%-12% guidance, the capital equation becomes considerably easier.
Then comes the valuation: Canara is dramatically cheaper
On August 28, 2026:
- Indian Bank P/E: approximately 9.28x.
- Indian Bank P/B: approximately 1.54x.
- Canara Bank P/E: approximately 5.85x.
- Canara Bank P/B: approximately 0.99x.
Indian Bank costs roughly 59% more on earnings and about 56% more on book value.
The quality advantage is real. So is the price already being charged for it.
What does 1.54x book require from Indian Bank?
It does not require spectacular loan growth. It requires durability.
The bank needs to keep delivering something close to:
- 1.2%-1.3% ROA.
- High-teens ROE.
- 3.1%-3.3% NIM.
- Sub-0.2% NNPA.
- Cost-to-income around 45%.
- Double-digit loan growth.
If that combination survives another full credit cycle, the premium can be justified by book-value compounding rather than additional rerating.
What does approximately 1x book require from Canara?
A much lower hurdle.
Canara does not need to reach Indian Bank's 1.31% ROA immediately. It needs to prove that current 18% ROE is sustainable and that its stronger loan growth is not being purchased through future credit losses.
A successful path could look like:
- CASA rises above 30%.
- NIM moves toward 2.6%.
- ROA remains above 1%.
- GNPA stays around 1.5%.
- Credit cost stays below 0.75%.
- Growth normalises without collapsing.
Canara's valuation offers two possible return engines
The first is book-value growth through retained earnings.
The second is multiple expansion if investors conclude that an 18% ROE bank with sub-2% GNPA deserves more than roughly 1x book.
Indian Bank has less obvious rerating headroom because the market already acknowledges its superior quality.
Canara therefore has more valuation torque. Indian Bank has more operating certainty.
The Bull Run market snapshot makes the relative-value question unusually visible
| Bull Run Snapshot — 25 Aug 2026 | Indian Bank | Canara Bank |
|---|---|---|
| Price | ₹878.00 | ₹128.81 |
| Market capitalisation | ₹1,11,845 Cr | ₹1,14,753 Cr |
| 1-month return | +6.28% | +2.51% |
| 3-month return | +5.36% | -3.99% |
| 6-month return | -11.45% | -18.93% |
| 1-year return | +31.43% | +18.37% |
| 52-week high | ₹1,000.90 | ₹162.89 |
| 52-week low | ₹642.60 | ₹103.55 |
| RSI 14 | 70.45 | 61.86 |
| Dividend yield | 2.20% | 3.32% |
| Bull Run Score | 57.5/100 | 48.8/100 |
The similar market capitalisations are the important observation. The share prices themselves are irrelevant for relative valuation because the number of shares outstanding differs.
What could make Indian Bank remain the clear winner?
Indian Bank's advantage becomes more durable if NIM remains above 3.2%, ROA stays near 1.3%, CET1 remains very high and recent RAM growth does not produce higher slippages.
Most importantly, the bank must keep its earnings bridge intact: NII growth should continue converting into operating-profit growth rather than being consumed by costs.
What could make Canara close the gap?
Canara's most attractive route does not require 20% credit growth. It requires better monetisation of the massive balance sheet already in place.
CASA improvement, lower deposit costs, slightly higher NIM and continued sub-2% GNPA could raise ROA significantly across a ₹29 lakh crore global business franchise.
Small efficiency improvements become extremely valuable when applied to a balance sheet this large.
What can break each thesis?
Indian Bank
- ROA falls materially below 1.2%.
- NIM drops below the guided range.
- Current high ROE proves cyclical.
- Recent infrastructure or RAM growth creates delayed stress.
- The 1.5x book premium compresses toward PSU peers.
Canara Bank
- High-teens credit growth generates future retail or MSME NPAs.
- CASA remains below 30%.
- NIM remains stuck near 2.5%.
- Credit cost rises materially.
- ROA does not improve despite the larger balance sheet.
Indian Bank vs Canara Bank: current conclusion
Indian Bank currently has the stronger economics. Canara Bank currently offers more balance-sheet scale for each rupee of stock-market value.
Those are not the same proposition.
Indian Bank vs Canara Bank FAQs
Which bank is larger?
Canara Bank by almost two times on deposits and advances.
Which has higher NIM?
Indian Bank at 3.29% globally versus Canara Bank at 2.52%.
Which has higher ROA?
Indian Bank at 1.31% versus Canara Bank at 1.04%.
Which has higher ROE?
Indian Bank at 19.48% versus Canara Bank at 18.31%.
Which is growing loans faster?
Canara Bank at approximately 17.97% versus Indian Bank at 13.89%.
Which has better CASA?
Indian Bank at approximately 39.73% domestically versus Canara at 29.70%.
Which has lower GNPA?
Canara Bank at 1.57% versus Indian Bank at 1.86%.
Which has lower NNPA?
Indian Bank at 0.15% versus Canara Bank at 0.36%.
Which is better capitalised on CET1?
Indian Bank by a wide margin, 16.51% versus Canara Bank at 12.91%.
Which stock is cheaper?
Canara Bank on both late-August P/E and P/B.
Where can investors compare them on Bull Run?
Use the Indian Bank stock page, Canara Bank stock page and Public Sector Bank sector page.
Research sources
Disclaimer
This article is educational and informational only. Indian Bank and Canara Bank operate with materially different balance-sheet sizes, so absolute profit and percentage-return metrics should be considered together rather than in isolation. Q1 FY2027 advance growth at both banks was above portions of their full-year management guidance and should not simply be extrapolated for four quarters. Current PSU-bank credit costs and NPAs are strong relative to historical cycles and may normalise. Bull Run market-price data is a dated August 25 snapshot, while valuation multiples are dated August 28, 2026 and are labelled separately. Nothing here recommends buying, selling or holding Indian Bank, Canara Bank or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.