PNB vs Canara Bank (2026): NIM, ROA, NPAs, Growth & Which Is Better?

PNB vs Canara Bank: Q1 FY2027 operating comparison

PNB's ₹17.24 lakh crore deposit base is its biggest unused asset

PNB owns more deposits than Canara but lends less. Its 73.8% credit-deposit ratio is unusually low compared with many large Indian banks.

That has two interpretations.

The conservative interpretation is positive: PNB is not stretching its liability base, has substantial liquidity headroom and can fund additional loan growth without immediately competing aggressively for deposits.

The less flattering interpretation is that some of the funding franchise remains under-monetised. Deposits cost money even when they are not deployed into sufficiently productive earning assets.

PNB's next rerating phase therefore depends on turning balance-sheet capacity into risk-adjusted credit growth.

Canara has already made that allocation decision

Canara's 80.25% credit-deposit ratio shows a much greater proportion of deposits has already become loans. Global advances grew nearly 18%, materially faster than PNB's 12.7%.

The advantage is immediate: faster interest-earning asset growth.

The disadvantage arrives later if deposit growth fails to catch up. Canara deposits increased 11.63%, healthy in isolation but six percentage points slower than advances.

If the gap persists, the bank must eventually choose between paying more for deposits, increasing wholesale funding or slowing credit growth.

PNB has the reverse problem: PAT growth looks much better than the core engine

Reported profit increased 213.6%, but NII increased only 2.1%.

The enormous PAT percentage is partly the result of a distorted Q1 FY2026 tax base after PNB moved to the new tax regime.

PNB's current ₹5,253 crore quarterly profit is real. The 214% growth rate is not a sensible number to extrapolate.

Operating profit increased approximately 6.2%, which is much closer to the recurring earnings trajectory.

Put the two quarters side by side and the earnings message reverses

Reported PAT says:

• PNB growth: +214%.
• Canara growth: +2%.

Core NII says:

• PNB growth: +2.1%.
• Canara growth: +13.39%.

For estimating future operating momentum, the second comparison is more informative.

The NIM contest is almost meaningless today because it is effectively tied

PNB's global NIM was 2.50%.

Canara reported 2.52%.

A two-basis-point difference is noise compared with differences in loan growth, credit cost and funding mix.

This makes the comparison unusually clean. Neither bank can claim a major spread advantage. The winner must create value elsewhere.

Canara's lower CASA is simultaneously its weakness and its opportunity

Only around 30% of domestic deposits sit in current and savings accounts.

If Canara can move that ratio higher while maintaining the same loan book, the economics can improve without taking additional credit risk.

Lower funding cost flows directly into NIM.

This is one of the cleaner ways a bank can increase ROA: improve the liability mix rather than chase riskier assets.

Canara's cost of deposits is already falling

Official Q1 material shows cost of deposits declining from 5.74% a year earlier to approximately 5.27%.

Yield on advances also fell, to roughly 8.00%.

That explains why NIM remained near 2.52% rather than expanding sharply despite cheaper funding.

The timing of deposit repricing versus asset repricing will remain a major margin driver.

PNB has the same repricing opportunity from a stronger starting CASA base

PNB's cost of deposits declined materially year on year as well.

Management has indicated that further term-deposit repricing could support global NIM moving toward roughly 2.6%-2.7% over the year.

If that happens while loan utilisation rises from the current 73.8% CD ratio, earnings could accelerate without requiring Canara-like 18% balance-sheet growth.

Asset quality produces a split decision

Canara wins on gross NPA. PNB wins on net NPA.

Canara GNPA is 1.57%.

PNB is 2.78%.

That is a large gross-quality advantage for Canara.

But PNB NNPA is only 0.28%, compared with Canara at 0.36%.

The reason is provisioning.

PNB has provisioned exceptionally aggressively against recognised stress

Provision coverage including technical write-offs is approximately 97.23%.

Canara's is 94.76%.

Both are very high.

PNB therefore has more gross problem loans, but very little of that recognised stress remains unprovided on a net basis.

This is a much safer balance sheet than PNB's historic reputation suggests.

Canara's gross cleanup has been faster

Canara GNPA fell from 2.69% to 1.57% in twelve months.

PNB fell from 3.78% to 2.78%.

Both improved by roughly one percentage point.

Because Canara started lower, it now sits much closer to the best large-bank gross NPA levels.

PNB's lower credit cost makes the current quarter more profitable than GNPA suggests

PNB's credit cost is around 0.25% versus Canara around 0.49%.

This matters because credit cost directly consumes operating profit.

If PNB maintains a roughly 25-basis-point provision burden while deploying more of its deposit base, profitability can improve quickly.

The risk is assuming today's unusually benign credit environment will persist forever.

Canara's 0.49% credit cost is still extremely healthy

The number should not be interpreted as problematic merely because PNB is lower.

Historically, PSU bank profitability was often destroyed by credit costs several times today's levels.

Canara's current sub-0.5% figure and 94.76% provision coverage show a very different credit franchise from the old NPA cycle.

ROA produces the cleanest draw in the entire article

PNB: 1.04%.

Canara: 1.04%.

Both banks currently produce the same annualised profit from each ₹100 of assets.

Yet they arrive there differently.

PNB has a stronger funding mix and lower credit cost but under-deploys deposits.

Canara deploys more assets and grows faster but carries weaker CASA and somewhat higher credit cost.

ROE gives Canara a modest lead

Canara reported 18.31%.

PNB reported 17.33%.

The difference is less than one percentage point, so it should not drive the investment decision alone.

Both banks are now producing returns that would have looked unusually strong during the old PSU-bank restructuring years.

PNB has the stronger total capital cushion

CRAR is 18.13% versus Canara at 17.17%.

Both have ample regulatory capital.

PNB's additional cushion is valuable because it gives the bank capacity to increase risk-weighted assets as it deploys the underused deposit franchise.

Canara's capital is still sufficient for high-teens growth

17.17% total capital is not an obvious constraint.

The more relevant issue is whether retained earnings can keep pace if advances continue compounding near 18%.

High growth consumes capital even when loans perform perfectly.

Canara's retail growth deserves special attention

Retail credit increased 35.88% year on year.

Housing loans increased 17.85% and vehicle loans 26.34%.

This makes Canara's 18% overall loan growth more granular than a corporate-led credit boom.

That can reduce concentration risk and improve customer cross-sell.

It also means millions of new retail exposures will need to season before investors know the true through-cycle credit cost.

PNB's granular books are growing quickly too, just not as quickly

Core retail advances grew 17.5%.

Vehicle loans grew 34.4%.

MSME advances increased 19.8%.

Agriculture priority-sector advances increased 16.4%.

This shows PNB is not simply sitting on the low CD ratio. It is reallocating toward granular credit, but overall deployment remains more conservative.

There is an interesting strategic asymmetry here

Canara must improve deposit quality.

PNB must improve deposit utilisation.

Canara already has an aggressively deployed balance sheet, so the cleaner earnings lever is CASA and cheaper funding.

PNB already has good CASA and excess funding capacity, so the cleaner earnings lever is profitable loan deployment.

Those are very different execution challenges.

Canara at roughly book value with 18% ROE is not obviously expensive

If the bank can sustain high-teens ROE through a full credit cycle, a valuation near 1x book is difficult to describe as demanding.

The market's scepticism appears to be about durability.

Canara needs to prove that today's low NPAs and low credit cost survive the rapid expansion in retail and RAM credit.

PNB below book has a different rerating path

PNB does not need 18% loan growth.

Its balance sheet already contains substantial unused funding capacity.

If management can move the credit-deposit ratio upward while keeping credit cost near current levels and raising NIM toward guidance, ROA can improve above today's 1.04%.

That would strengthen the case for a book multiple above 1x.

The danger in PNB is confusing repaired NPAs with completed transformation

The bad-loan cleanup is largely advanced.

That was the old problem.

The new problem is revenue productivity.

NII growing only 2.1% is not enough for a permanent rerating if the bank has already harvested most of the provision-related upside.

The danger in Canara is confusing rapid growth with free growth

Every 18% increase in advances creates new future credit vintages.

Today's NPAs reflect yesterday's underwriting.

If rapid retail and NBFC expansion remains clean over the next several years, Canara's present valuation could look cheap.

If credit costs normalise sharply higher, today's ROE can fall even if NII keeps growing.

PNB vs Canara Bank FAQs

Which bank has more deposits?

PNB, with approximately ₹17.24 lakh crore versus Canara Bank at ₹16.12 lakh crore.

Which bank has more advances?

Canara Bank slightly, at approximately ₹12.93 lakh crore versus PNB at ₹12.73 lakh crore.

Which is growing loans faster?

Canara Bank at approximately 17.97% versus PNB at 12.7%.

Which has better CASA?

PNB at approximately 36.7% versus Canara Bank's domestic CASA ratio of 29.7%.

Which has higher NIM?

Canara Bank by only two basis points, 2.52% versus PNB at 2.50%. Economically they are effectively tied.

Which has better gross NPAs?

Canara Bank at 1.57% versus PNB at 2.78%.

Which has lower net NPA?

PNB at 0.28% versus Canara Bank at 0.36%.

Which has higher ROA?

Neither. Both reported approximately 1.04% in Q1 FY2027.

Which has higher ROE?

Canara Bank at approximately 18.31% versus PNB at 17.33%.

Which stock is cheaper?

Canara Bank was slightly cheaper on P/E on August 28, while PNB was slightly cheaper on P/B.

Where can investors compare them on Bull Run?

Use the PNB stock page, Canara Bank stock page and Public Sector Bank sector page.

Research sources

• Bull Run — Punjab National Bank
• Bull Run — Canara Bank
• Bull Run — Public Sector Bank sector research
• Punjab National Bank official Q1 FY2027 financials and investor presentation
• Canara Bank official Q1 FY2027 investor presentation
• Canara Bank official financial results