Page 6 - Banking Finance September 2025

BANK UPDATE

tember 2025. The initiative aims to issue after strong Q1 earn- panding its retail and digital banking
promote financial inclusion and ensure footprint, further boosting investor
equitable access to basic banking ser- ings sentiment and stakeholder trust.
vices, particularly for underserved and Karur Vysya Bank has announced a
rural segments. bonus issue of one equity share for Canara Bank posts 22%
every five shares held, marking its first
However, this waiver excludes custom- profit growth, strong asset
such issuance in seven years. The bo-
ized savings account products. The
move aligns Union Bank with other nus shares, having a face value of Rs. quality in Q1 FY26
public sector banks-including State 2 each, are subject to shareholder ap- Canara Bank reported a 21.6% year-
Bank of India, Indian Bank, Canara proval at the upcoming Annual Gen- on-year rise in net profit to Rs. 4,752
Bank, Punjab National Bank, and Bank eral Meeting and necessary regulatory crore for the April-June quarter of
of Baroda-that have previously elimi- clearances. FY26, driven by robust loan growth,
nated such charges. The record date will be communicated increased fee-based income, and im-
in due course. The announcement proved asset quality. The bank's global
Notably, accounts under the Pradhan business expanded 11% YoY, reaching
Mantri Jan Dhan Yojana, and those came alongside the bank's robust Q1 Rs. 25.6 lakh crore, reflecting sus-
belonging to pensioners and senior citi- FY26 earnings, reflecting continued tained momentum across both depos-
zens, were already exempt. The bank growth momentum. This move is its and advances.
stated that this measure will foster aimed at rewarding shareholders and
fairness and deepen customer engage- enhancing stock liquidity. Market ana- Analysts have attributed this perfor-
ment. The waiver reflects a broader lysts view the bonus issue as a sign of mance to the bank's stable margins,
trend in the Indian banking sector to confidence in the bank's future perfor- efficient cost management, and proac-
remove entry-level financial barriers mance. tive risk control measures. Canara
and encourage wider savings account Investors have reacted positively, con- Bank's consistent profitability and
ownership. sidering the combination of bonus issue sound asset quality underline its im-
and healthy financial performance an proved operational metrics, especially
in a challenging economic environ-
encouraging development. Karur Vysya
Karur Vysya Bank an- ment. The bank has also shown strong
Bank continues to strengthen its capi-
nounces 1:5 bonus share tal position while also focusing on ex- progress in retail lending and
digitisation initiatives.

PSB savings account rates hit record low since de- Market observers expect the bank to
maintain a steady trajectory for the
regulation, says RBI remainder of the fiscal year, sup-
Savings account interest rates at several public sector banks (PSBs) are now ported by its strategic focus on finan-
at their lowest levels since deregulation in 2011, according to the Reserve cial inclusion, technology adoption, and
Bank of India's (RBI) July bulletin. The bulletin highlights that weighted av- balanced loan growth. The first-quar-
erage domestic term deposit rates have fallen for both PSBs and private ter performance solidifies Canara
sector banks. Bank's position among the better-per-
forming public sector banks in India.
This decline coincides with the RBI's 100 basis point policy repo rate cut
since February 2025, prompting banks to reduce their repo-linked lending
rates by 100 bps and marginal cost-based lending rates by 10 bps. Conse- Bank of Maharashtra Q1
quently, weighted average lending rates on new and outstanding rupee loans profit rises 23% on strong
dropped by 26 and 18 basis points, respectively.
interest income
Meanwhile, small savings scheme rates remained unchanged for the Sep- Bank of Maharashtra posted a 23.2%
tember quarter and are currently 33-118 bps higher than the formula-based year-on-year rise in net profit to Rs.
benchmark. The data underscores the downward interest rate environment 1,593 crore for Q1 FY26, propelled by
and its impact on savings returns, especially within the public banking a 17.6% increase in net interest in-
sector. come (NII), which reached Rs. 3,292

6 | 2025 | SEPTEMBER | BANKING FINANCE