PSU banks off to a strong start? Early Q1 updates from Canara Bank and Indian Bank suggest so

The June quarter (Q1 FY27) business update season has begun, and initial numbers from state-run lenders paint an encouraging picture. Early disclosures suggest PSU banks have maintained healthy business momentum, with robust growth in advances and deposits.

Canara Bank

The lender said that its global business surged 3.55% QoQ and 14.40% YoY to ₹29,05,820 crore. Global Deposits saw a growth of 2.80% on a sequential basis and 11.69% on an annual basis to ₹16,12,604 crore.

Domestic Deposits stood at ₹14,73,447 crore, up 2.54% QoQ and 10.06% YoY.

Further, Canara Bank stated that its Global Advances came in at ₹12,93,216 crore in the June quarter, up 4.50% QoQ and 17.96% YoY.

Domestic Advances jumped 3.94% QoQ and 16.93% YoY to ₹12,06,875 crore.

RAM (Domestic) stood at ₹7,65,061 crore, up 4.73% QoQ and 21.27% YoY.

RAM (Domestic) refers to the Retail, Agriculture, and MSME (Micro, Small, and Medium Enterprises) loan and deposit segments within the country. It is a vital metric used by major public and private banks to categorize, track, and target their core domestic lending portfolios.

Indian Bank

The bank's Total Business surged 13.6% YoY to ₹15.28 lakh crore, while Total Deposits rallied 13.3% YoY to ₹8.43 lakh crore. SB Deposit stood at ₹2.70 lakh crore, up 12.9% YoY, while CA Deposit jumped 26.3% to ₹0.43 lakh crore.

CASA% (Domestic) stood at 39.64% in the June quarter. It was 39.67% in the March 2026 quarter and 38.97% in the year-ago period.

Gross Advances increased by 13.9% YoY to ₹6.85 lakh crore, while RAM (Domestic) stood at ₹4.17 lakh crore, up 14.8%.

It is important to note that these are provisional business updates. The final audited or reviewed financial results will be announced when the companies report their Q1 FY27 earnings.

These are deposits held in savings accounts by individual customers. They earn interest and are mainly used for saving money while allowing easy withdrawals and day-to-day transactions. Growth in SB deposits indicates that a bank is attracting more retail customers and low-cost deposits.

These are deposits held in current accounts, typically by businesses, companies, traders, and professionals. Current accounts usually do not earn interest but allow unlimited transactions. Since banks pay little or no interest on these deposits, they are among the cheapest sources of funding for a bank.

What the RBI has said on Indian banks

The Reserve Bank of India (RBI) on Tuesday, June 30, said the Indian financial system remains resilient, underpinned by strong bank and non-bank balance sheets, as gross non-performing assets of banks have touched a multi-decadal low of 1.8% at end-March 2026.

Despite repeated shocks, the global financial system has thus far demonstrated notable resilience, with markets remaining orderly after an initial bout of volatility following the outbreak of the West Asia conflict, said the Financial Stability Report (FSR).

"India's sound macroeconomic fundamentals place it in a stronger position than many of its peers and provide greater resilience to external shocks than in past crisis episodes," said the half-yearly publication, with contributions from all financial sector regulators.

The report, however, flagged that exchange rate volatility may rise if oil prices increase due to the delayed normalisation of supply chain disruptions and additional demand to replenish inventory.

At the same time, it added that the interim peace deal between Iran and the US can provide tailwinds to Indian economic growth.

"The domestic financial system remains resilient, underpinned by strong bank and non-bank balance sheets. Scheduled Commercial Banks (SCBs) remain safe and sound, supported by strong capital and liquidity buffers, continued improvement in asset quality, and stable profitability," the report said.

The gross non-performing assets of Indian banks came down to a multi-decadal low of 1.8% as of March 2026. The stock of NPAs is expected to inch up to 1.9% in the baseline scenario, the central bank added.

"The aggregate GNPA ratio of 46 banks may edge up from 1.8% in March 2026 to 1.9% by March 2028 under the baseline scenario," it said in the report, which comes amid headwinds from the West Asia conflict.