Canara Bank has implemented a selective rate hike on its lending rates, effective from Wednesday, August 12. According to an exchange filing on Tuesday, August 11, the bank has revised its Marginal Cost of Funds-based Lending Rate (MCLR) for specific tenures while maintaining rates for others. The latest revision brings MCLR rates to range from 7.95% to 9.10%, up from the previous range of 7.95% to 9.05%.
The bank has revised rates across multiple tenures with varying increases. One-month MCLR has been increased by 5 basis points to 8.05% from 8.00%, while three-month lending rate has been raised to 8.30% from 8.25%. Six-month rate has been increased to 8.65% from 8.60%, and one-year rate has been hiked by 5 basis points to 8.80% from 8.75%. Two-year MCLR has been revised to 9.05% from 9.00%, and three-year MCLR has been increased by 5 basis points to 9.10% from 9.05%. Notably, MCLR for overnight tenure remains unchanged at 7.95%.
Punjab National Bank is shifting focus from volume growth to quality-focused lending, with foreign brokerage Jefferies maintaining its 'Buy' rating after recent management meetings. According to Jefferies analysts Prakhar Sharma and Vinayak Agarwal, PNB's strategy of prioritising better-yielding loans could support margin expansion, with the bank expecting 13% loan CAGR through FY26-29 and ROA reaching 0.9% in FY27. The bank is reducing low-yield corporate loans and bulk deposits while focusing on customers with CIBIL scores above 750 and expanding fee-generating businesses like credit cards and wealth management. Net loan growth stood at 14% year-on-year, but IBPC exposure has fallen 34% YoY to ₹28,800 crore, or around 2% of loans, while bulk deposits/CDs have declined by around 28% YoY.
Management expects credit growth to accelerate towards 14-15% in FY28, with the bank maintaining domestic loan-to-deposit ratio at 72% and liquidity coverage ratio at 141%. PNB sources around 85% of its loans internally, with only 15% coming through direct selling agents, while simultaneously investing in retail and SME franchise expansion. The transition to expected credit loss (ECL) provisioning could result in a one-time ₹9,500-10,000 crore impact on net worth, equivalent to around 6% of net worth, which Jefferies expects to be amortised over five years from FY28-30. Jefferies retained its 'Buy' rating and ₹130 target price, implying around 15% upside from ₹113.50, valuing PNB at 0.9x FY27 adjusted book value and 7x earnings.
