Synopsis: Canara Bank and Union Bank of India both saw investor reactions after the Q2 FY26 results were declared. However, Canara Bank’s profitability was strong and Union Bank maintained strong asset quality.
In this article, we will compare two of the leading PS banks, namely Canara Bank and Union Bank of India, across key parameters like profitability, asset quality, deposits, and advances etc, and in the end, we will look at which one of the two performed better.
Revenue and Profitability
Canara Bank reported a Net Interest Income (NII) of Rs 9,141 crore in Q2 FY26, representing a 1.87 percent decline from Rs 9,315 crore in Q2 FY25. However, it recorded a growth of 1.47 percent from its previous quarter figure of Rs 9,009 crore.
Coming to its profitability front, Canara Bank reported a net profit growth of 19 percent to Rs 4,774 crore in Q2 FY26 as compared to Rs 4,014 crore in Q2 FY25. Additionally, on a quarterly basis, it recorded a slight growth of 0.46 percent from Rs 4,752 crore.
On the other hand, Union Bank of India reported a Net Interest Income (NII) of Rs 8,812 crore in Q2 FY26, which is a decline of 2.6 percent from Rs 9,047 crore in Q2 FY25. Additionally, it recorded a decline of 3.3 percent from its previous quarter figure of Rs 9,113 crore.
Coming to its profitability front, Union Bank of India reported a net profit decline of 10 percent to Rs 4,249 crore in Q2 FY26 as compared to Rs 4,720 crore in Q2 FY25. However, on a quarterly basis, it recorded a slight growth of 3 percent from Rs 4,116 crore.
Overall, Canara Bank clearly outperformed Union Bank during the period, as it reported a higher net profit growth of 19 percent as compared to Union Bank’s decline of 10 percent during the same period.
Asset Quality
Canara Bank’s asset quality strengthened during the period. GNPA declined by 138 bps to 2.35 percent as compared to 3.73 percent in Q2 FY25. Also, NNPA declined by 45 bps and currently stands at 0.54 percent as compared to 0.99 percent in Q2 FY25.
Provision Coverage Ratio increased by 270 bps to 93.59 percent. Credit cost also declined by 29 bps to 0.68, and the Slippage ratio also declined by 6 bps to 0.19 percent during the same period.
On the other hand, Union Bank of India’s asset quality also followed the same trend. GNPA decreased by 107 bps to 3.29 percent as compared to 4.36 percent in Q2 FY25. Also, NNPA decreased by 43 bps and currently stands at 0.55 percent as compared to 0.98 percent in Q2 FY25.
Provision Coverage Ratio increased by 234 bps to 95.13 percent. Credit cost ratio also declined by 87 bps to 0.22 percent, and the Slippage ratio declined significantly by 149 bps to 0.91 percent during the same period.
The improvements were seen in both banks, but Union Bank of India performed a little better, as it carries fewer non-performing loans, has a higher provision coverage ratio, and a more significant decrease in slippages. In general, Union Bank’s asset quality and risk management seem to be a little better than Canara Bank’s this quarter.
Deposits and Advances Growth
Canara Bank’s total deposits grew by 13.4 percent to Rs 15,27,922 crore in Q2 FY26 as against Rs 13,47,347 crore in Q2 FY25. CASA deposits were Rs 4,28,115 crore, with current account deposits at Rs 75,920 crore and Savings Account deposits at Rs 3,52,195 crore. CASA deposits accounted for 28 percent of the total deposits as of September 30, 2025.
Coming to total advances, it has a total loan book of Rs 11,51,041 crore, which grew by 14 percent YoY and 5 percent QoQ, where 58 percent of its loan book is exposed to RAM (Retail, Agriculture, and MSME) and the remaining 42 percent to Corporate & others.
On the other hand, Union Bank of India’s total deposits have increased by 2 percent to Rs 12,34,621 crore in Q2 FY26 as against Rs 12,11,603 crore in Q2 FY25. CASA deposits were Rs 4,01,854 crore, with current account deposits at Rs 63,010 crore and Savings Account deposits at Rs 3,38,844 crore. CASA deposits accounted for 32.56 percent of the total deposits as of September 30, 2025.
Coming to total advances, it has a total loan book of Rs 9,75,207 crore, which grew by 5 percent YoY and 0.07 percent QoQ, where 57 percent of its loan book is exposed to RAM (Retail, Agriculture, and MSME) and the remaining 33 percent to LC & Others.
Canara Bank outperformed Union Bank in terms of growth of both deposits and loans. Although Union Bank kept a higher CASA ratio, Canara’s quicker expansion in advances and deposits is indicative of a healthier business trend.
Other Key Ratios
Canara Bank reported a Net Interest Margin of 2.52 percent, which declined 36 bps YoY and 3 bps QoQ. It reported a robust ROE and ROA of 20.56 percent and 1.12 percent respectively. Cost to Income increased by 51 bps YoY and by 20 bps QoQ to 46.97 percent.
On the other hand, Union Bank of India reported a Net Interest Margin of 2.67 percent, which declined 23 bps YoY and by 9 bps QoQ. It reported an ROE and ROA of 15.08 percent and 1.16 percent respectively. Cost to Income also increased significantly by 709 bps YoY and by 146 bps QoQ to 50.65 percent.
Both Canara Bank and Union Bank of India delivered steady performances in Q2 FY26; however, Canara Bank emerged slightly stronger overall. It showed better profit growth, faster expansion in deposits and advances, and maintained higher return ratios despite minor margin pressure.
Union Bank, on the other hand, demonstrated superior asset quality improvement and risk control. However, considering Canara’s stronger profitability and growth momentum, it appears to be the better performer this quarter.
Written by Satyajeet Mukherjee
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