SBI vs Canara Bank (2026): NIM, ROE, Credit Growth, NPAs & Which Is Better?

SBI vs Canara Bank: Q1 FY2027 scoreboard

Factory stage one: SBI starts with the better raw material

Deposits are the raw material of banking.

The cheapest deposits usually produce the strongest economics.

SBI's CASA ratio is approximately 39.24%.

Canara's domestic CASA ratio is only about 29.70%.

That is almost a ten-percentage-point gap.

SBI therefore has roughly ₹22 lakh crore of CASA deposits

Canara's entire deposit base is only around ₹16.12 lakh crore.

This is the scale of SBI's liability advantage.

Its low-cost deposit pool alone is larger than Canara's complete deposit franchise.

Why doesn't SBI completely dominate Canara's profitability then?

Because cheap deposits do not automatically create high ROE.

SBI operates a much broader balance sheet:

• Large corporate lending.
• Government-related business.
• International banking.
• Agriculture.
• SME.
• Prime mortgages.

Many of these products are huge but lower margin.

Canara is using foreign-currency deposits as another funding lever

The bank has been raising FCNR(B) and other overseas funding during the current RBI window.

Management believes properly swapped foreign-currency deposits can be cheaper than some domestic bulk funding.

This is a tactical margin tool.

It does not solve the strategic CASA gap.

Factory stage two: both banks are deploying deposits aggressively

SBI advances increased 18.63%.

Canara global advances increased 17.97%.

The rates are almost identical.

Canara deposits grew 11.63%.

SBI deposits grew only 9.73%.

Both therefore have loans growing materially faster than liabilities.

Canara has slightly more deployment headroom

Global CD ratio stood around 80.25%.

SBI's simple gross-advances-to-deposit relationship is closer to the mid-80s.

This gives Canara more immediate room to grow credit before funding becomes as tight a constraint.

But Canara's CD ratio is moving up quickly

It increased from approximately 75.9% a year earlier to 80.25%.

That is the direct consequence of loans growing much faster than deposits.

The bank cannot repeat that gap indefinitely without:

• Faster deposit growth.
• More market borrowing.
• More overseas funding.
• Slower loan growth.

SBI faces the same equation at four times the scale

Every one percentage point of SBI credit growth requires an enormous amount of incremental funding.

That is why the current gap between 18.6% credit growth and sub-10% deposit growth deserves attention.

SBI's funding advantage is quality.

Its challenge is quantity.

Factory stage three: SBI keeps more spread

SBI domestic NIM is around 3.00%.

Canara's NIM is 2.52%.

The difference is roughly 48 basis points.

That is substantial.

Canara's NIM looks modest partly because more than half its book reprices quickly

A large share of Canara's loans is linked to external benchmarks and policy rates.

When benchmark rates fall, asset yields can reprice before older term deposits become cheaper.

This creates temporary margin compression.

Canara Q1 shows exactly that transmission effect

Yield on advances declined while deposit cost also declined.

The bank protected NIM at approximately 2.52%.

Management's full-year guidance remains around 2.50%-2.60%.

The upside case depends on deposit repricing eventually catching up.

NII still grew more than 13%

Canara crossed ₹10,000 crore of quarterly NII for the first time.

NII reached ₹10,215 crore.

That demonstrates why balance-sheet growth can partly offset a relatively modest margin.

SBI combines higher margin with comparable credit growth

This is a major operating advantage.

SBI does not need Canara's margin to improve merely to defend its current earnings engine.

The risk is whether funding pressure eventually pulls the 3% domestic margin lower.

Factory stage four: both banks now lose very little to bad credit

This is the biggest change in the PSU-bank sector.

SBI credit cost is approximately 0.27%.

Canara's is around 0.49%.

Both are exceptionally low relative to historical PSU-bank credit cycles.

SBI has the lower current credit cost

0.27% means only 27 basis points of the asset base is currently being consumed by credit provisions on the bank's reported measure.

This is one reason SBI can generate very high ROE despite only 1.11% ROA.

Canara's credit cost has fallen sharply too

It is down materially from the prior-year level and below management's full-year guidance.

Slippage ratio is around 0.60%.

Provision coverage is approximately 94.76%.

The existing stressed book is therefore heavily covered.

Headline asset quality is almost a tie

SBI GNPA: 1.47%.

Canara GNPA: 1.57%.

SBI NNPA: 0.38%.

Canara NNPA: 0.36%.

The differences are tiny by historical PSU-bank standards.

Canara has repaired its balance sheet dramatically

GNPA declined from 2.69% a year earlier to 1.57%.

NNPA declined from 0.63% to 0.36%.

This is one of the most important reasons the stock now deserves to be evaluated differently from the old PSU-bank cycle.

The remaining credit question is forward-looking, not backward-looking

Today's NPA ratio reflects yesterday's loans.

Both banks are now growing advances around 18%.

The loans originated today determine:

• FY2028 slippages.
• Future restructuring.
• Future credit cost.
• Future ROE.

Canara's fastest-growing segment is retail

Retail credit increased roughly 36% year on year.

Housing loans grew approximately 18%.

Vehicle loans increased about 26%.

RAM credit increased around 21%.

This is a meaningful shift toward more granular lending.

Granularity improves concentration risk but can change operating intensity

One ₹500 crore corporate loan is operationally easier to service than tens of thousands of small retail loans.

Retail growth therefore creates:

• More customers.
• More branches and digital interactions.
• More collection infrastructure.
• More cross-sell.
• Lower concentration risk.

The economics depend on whether fee income and yields compensate for the extra operating load.

Canara's cost-to-income moved the wrong way in Q1

It increased to approximately 49.03% from 46.77% a year earlier.

Operating expenses increased faster than operating profit.

This partly explains why PAT grew only 2.2% even though NII grew 13.4%.

Treasury income also created a difficult comparison

Profit on sale of investments fell sharply from the prior-year quarter.

Q1 FY2026 benefited from stronger treasury opportunities.

That means Canara's current 2% PAT growth understates improvement in the core lending engine.

This is the opposite kind of base effect from PNB's tax distortion.

Core Canara earnings therefore look better than the PAT headline

NII +13.39%.

Global advances +17.97%.

GNPA down 112 basis points year on year.

Credit cost lower.

These are healthy banking trends even though reported PAT grew only 2%.

Factory stage five: Canara converts slightly more equity into profit

Canara reported ROE around 18%.

SBI reported 17.87%.

The difference is small enough to call the current comparison effectively tied.

ROA tells a slightly different story

SBI ROA: 1.11%.

Canara ROA: 1.04%.

SBI therefore earns more from every rupee of assets.

Canara generates comparable ROE because its capital structure and equity deployment differ.

Canara currently has the higher total capital ratio

CRAR is approximately 17.17% versus SBI at 15.67%.

CET1 is almost identical:

Canara 12.91%.

SBI 12.89%.

So most of the total-capital difference sits outside common equity.

Why would management front-load ECL?

Because stronger provisioning early can create a cleaner future earnings base.

A bank that absorbs transition pain quickly may emerge with:

• More transparent credit costs.
• Less future provision overhang.
• Better comparability.
• A cleaner balance sheet.

The trade-off is near-term reported profitability.

SBI will face the same broad accounting regime

The exact impact depends on portfolio composition and transition choices.

Investors should therefore avoid comparing current capital ratios as if they are static forever.

ECL can change provisioning timing materially across the sector.

The valuation difference is much larger than the operating difference

Canara Bank closed around ₹128 on August 28, 2026.

Fresh valuation data:

• P/E: approximately 5.85x.
• P/B: approximately 0.99x.
• Dividend yield: roughly 3.3%.

SBI traded around ₹1,046:

• P/E: roughly 10x.
• P/B: approximately 1.62x.

Why does the market remain sceptical?

Because PSU bank profitability has historically been cyclical.

Investors remember periods when:

• Corporate NPAs surged.
• Credit costs consumed operating profit.
• Government capital infusions became necessary.
• ROE collapsed.

Canara needs to demonstrate that the current 18% ROE belongs to a structurally different bank, not merely a favourable point in the cycle.

SBI has already earned more of that trust

Its 1.6x book multiple reflects a stronger belief in sustainable earnings.

SBI has:

• Lower GNPA.
• Lower credit cost.
• Higher NIM.
• Higher ROA.
• A stronger CASA franchise.
• Valuable listed and unlisted subsidiaries.

The premium is not only about size.

Canara does not need to become SBI to rerate

It only needs to prove that 1%+ ROA and mid-to-high-teens ROE are sustainable.

A modest move from roughly 1x book toward 1.2x-1.4x would represent meaningful valuation expansion without approaching SBI's multiple.

The stock-price paths show very different expectations

SBI's strongest forward catalyst is corporate credit

The bank has discussed a very large corporate loan pipeline across areas including infrastructure, renewables, battery storage and data centres.

Conversion of that pipeline can keep credit growth elevated.

The risk is concentration and future underwriting quality.

Canara's strongest catalyst is a more profitable liability mix

If CASA moves from 29.7% toward 32% while expensive deposits reprice lower, NIM can improve even without faster loan growth.

That could raise ROA without requiring additional credit risk.

This is potentially a cleaner profitability catalyst than simply accelerating assets.

The most important Canara metric may therefore be CASA, not advances

17.97% credit growth is already strong.

The bank does not need 25% growth.

It needs cheaper funding attached to the growth it already has.

The most important SBI metric is deposit growth

Its CASA franchise is already excellent.

The constraint is whether total deposits can catch up with high-teens loan growth.

This makes the two banks almost mirror images on funding:

SBI needs more deposits.

Canara needs better deposits.

What would strengthen SBI from here?

• Deposit growth returns toward the low teens.
• Domestic NIM stays near 3%.
• ROA remains above 1.1%.
• Credit cost stays below 0.5%.
• Corporate pipeline converts without slippages.
• Subsidiaries continue compounding value.

What would strengthen Canara Bank?

• CASA moves above 30% and continues toward 32%.
• NIM improves toward the upper end of guidance.
• ROA stays at or above 1%.
• ROE remains above 16%.
• GNPA moves toward 1.5% or below.
• ECL is absorbed without requiring dilutive capital.

SBI vs Canara Bank FAQs

Which bank is larger?

SBI by a wide margin, with roughly ₹60 lakh crore of deposits versus Canara Bank at ₹16.12 lakh crore.

Which is growing loans faster?

They are almost tied: SBI around 18.63% and Canara around 17.97%.

Which is growing deposits faster?

Canara Bank, at approximately 11.63% versus SBI at 9.73%.

Which has the higher CASA ratio?

SBI, around 39.24% versus Canara's domestic CASA ratio around 29.70%.

Which has the higher NIM?

SBI, around 3.00% domestically versus Canara at 2.52%.

Which has better asset quality?

SBI has slightly lower GNPA, while Canara has slightly lower NNPA. Both are currently very strong compared with their historical PSU-bank cycles.

Which has the higher ROA?

SBI at approximately 1.11% versus Canara at 1.04%.

Which has the higher ROE?

Canara was slightly ahead around 18%, versus SBI at 17.87%.

Which stock is cheaper?

Canara Bank on both late-August P/E and P/B.

Where can investors check Bull Run data?

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

Research sources

• Bull Run — SBI
• Bull Run — Canara Bank
• Bull Run — Public Sector Bank sector research
• SBI official investor presentations
• SBI official Q1 FY2027 earnings materials
• Canara Bank official financial results
• Canara Bank official investor presentations