Credit Ratings by India Ratings & Research

Ref: SD: 252/253/11/12:2026-27 04.09.2026 The Vice President The Vice President BSE Limited Listing Department Phiroze Jeejeebhoy Towers National Stock Exchange of India Ltd Dalal Street Exchange Plaza Mumbai - 400 001 Bandra-Kurla Complex, Bandra [E] Scrip Code: 532483 Mumbai - 400051 Scrip Code: CANBK Dear Sir/Madam, Sub: Credit Ratings by India Ratings & Research Ref: Disclosure under Regulation 30 of SEBI (LODR) Regulations, 2015 The Stock Exchanges are hereby informed that Bank received credit rating from India Ratings & Research, Fitch Group (Rating Agency) today i.e. 04.09.2026 as follows: Rating assigned Size of Issue Instrument with Rating Action (billion) Outlook/Watch Issuer Rating - IND AAA/Stable Affirmed Basel III AT1 INR 45.0 IND AA+/Stable Assigned Bonds Infrastructure INR 100 IND AAA/Stable Affirmed Bonds Basel III tier 2 INR 95.0 IND AAA/Stable Affirmed Instruments Basel III AT1 INR 120.0 IND AA+/Stable Affirmed Bonds A copy of the credit rating rationale issued by India Ratings & Research, Fitch Group (Rating Agency) is enclosed herewith. This is for your information and records. Thanking You, Santosh Kumar Barik Company Secretary (cid:366)धान काया(cid:330)लय Head Office F +91 80 22248831 112, जे सी रोड, ब(cid:336)गलू(cid:348) - 560002 112 J C Road, Bengaluru - 560002 T +91 80 22100250 E-Mail - hosecretarial@canarabank.com www.canarabank.bank.in India Ratings Assigns Canara Bank’s AT1 Bonds ‘IND AA+’; Affirms Existing Ratings Sep 04, 2026 | Canara Bank | Public Sector Bank India Ratings and Research (Ind-Ra) has taken the following rating actions on Canara Bank and its debt instruments: Details of Instruments Size of Rating Regulator of Date of Coupon Maturity Rating Instrument Type Issue (INR Assigned with Instrument Issuance Rate Date Action billion) Outlook/Watch Issuer rating # - - - - Affirmed AAA/Stable Basel III AT1 Refer ISIN IND - - - 45 Assigned bonds* annexure AA+/Stable Infrastructure Refer ISIN IND - - - 100 Affirmed bonds* annexure AAA/Stable Basel III Tier 2 Refer ISIN IND - - - 95 Affirmed Instruments* annexure AAA/Stable Basel III AT1 Refer ISIN IND - - - 120 Affirmed bonds* annexure AA+/Stable *Details in annexure # There is no instrument being rated and hence, Regulator of the instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. Analytical Approach Ind-Ra continues to take a fully consolidated view of Canara and its subsidiaries while arriving at the ratings. Detailed Rationale of the Rating Action The ratings factor in Canara’s systemically important position and the likelihood of the bank continuing to receive support from the government of India (GoI). The ratings also factor in Canara’s moderate equity raising ability and the likelihood of a continued improvement in profitability in the near to medium term, which could help the bank maintain its market share in advances and deposits. For AT1 instruments, the agency considers the discretionary component, coupon omission risk and the write- down/conversion risk as key parameters to arrive at the rating. The agency recognises the unique going-concern loss absorption features that these bonds carry and differentiates them from the bank’s senior debt, factoring in a higher probability of an ultimate loss for investors in these bonds. List of Key Rating Drivers Strengths High systemic importance - large pan-India franchise Adequate capital buffers; internal accruals improved High provision coverage provides comfort Stable operational metrics Weaknesses Deposit profile improvement to be seen Detailed Description of Key Rating Drivers High Systemic Importance - Large Pan-India Franchise: Canara is the fourth-largest public sector bank (PSB) and the sixth-largest bank in India in terms of assets. Its share in net advances improved to 5.9% as of 1QFY27 (FY26: 5.8%; FY25: 5.8%) and that in deposits stood at 6.3% (6.2%; 6.4%). At end-1QFY27, the bank ranked fourth as a lead bank across states, union territories and districts. This, in the agency’s view, indicates its role in financial inclusion in the country. It had 10,131 Indian branches and four international branches at end-1QFY27. The bank’s common equity tier 1 (CET1) improved to 12.91% in 1QFY27 (FY26: 12.44%; FY25: 12.0%; FY24: 11.6%), it however remained lower than that of most PSBs with comparable net non-performing assets (NPAs). Canara maintains high systemic importance for the GoI, leading to a high likelihood of ordinary and extraordinary support from the GoI, if required Adequate Capital Buffers; Internal Accruals Improved: The improvement in Canara's CET1 was on the back of an improvement in its return on assets (RoA) to 1.04% in 1QFY27 (FY26: 1.10%; FY25: 1.09%; FY24: 1.01%), which is enhancing the existing capital buffers and serving as growth capital. However, the capital levels remained lower than that of its peers and even larger PSBs. The agency believes Canara’s adequate capital buffers, improved operating profits (ROAs at over 1%), and the ability to raise funds from the equity markets provide it adequate leeway to target a credit growth rate of 11%-12% yoy and absorb higher-than-expected credit costs in the medium term. High Provision Coverage Provides Comfort: Canara’s gross NPAs and net NPAs fell to 1.57% at 1QFY27 (FY26: 1.84%; FY25: 2.94%; FYE24: 4.23%) and 0.36% (0.43%; 0.70%; 1.27%), respectively. The bank’s gross slippage reduced materially to 0.15% in 1QFY27 (FY26: 0.24%; FY25: 0.26%, FY24: 0.34%). Ind-Ra does not expect the gross slippages trend to significantly deviate from the FY26 levels in the near to medium term. Moreover, Canara’s provision cover (excluding technical write-offs) stood at 77.14% in 1QFY27 (FY26: 77.09 %; FY25: 76.7%; FY24: 70.9%). The bank’s special mention account assets of over INR50 million accounted for 0.58% of the gross advances as of June 2026, and its restructured assets accounted for a negligible portion of the gross advances. As a result, Ind-Ra expects a limited slippage from these pools. The bank has guided for gross NPAs of 1.50% and net NPA of 0.40% for FY27. Stable Operational Metrics: Directionally, Canara’s operating metrics have been improving since its amalgamation with Syndicate Bank; however, there has been a fair amount of volatility on a quarterly basis, some of which can be attributed to the impact of the COVID-19 pandemic. Owing to a moderation in interest rates in FY25-FY26, Canara’s treasury income rose 91.3% yoy to INR69.0 billion and recovery income decline by 4.3% yoy to INR65.4 billion. Its credit cost stood at 59bp in FY26 (FY25: 92bp; FY24: 96bp), supported a 12.7% yoy increase in the overall profitability to INR191.87 billion with ROA of 1.10% (1.09%; 1.01%). As of 1QFY27, credit cost stood at 49 bp. The bank’s net interest margins (NIMs) have moderated recently, largely due to the differences in timing in repricing of advances and deposits. However, the management expects NIM to recover to 2.50%-2.60% in FY27 (FY26: 2.51%; FY25: 2.8%). Even though NIM was under pressure, Canara maintained overall profitability with an ROA of 1.04% in 1QFY27, largely supported by a 19.05% increase in recovery income, which constituted 20% of the overall non-interest income. Ind- Ra considers the levels of stressed corporate assets and special mention accounts as modest, suggesting incremental slippages could be below trend levels, leading to lower credit costs. The agency expects the bank to maintain adequate profitability in the near to medium term with an RoA of around 1%. Deposit Profile Improvement to be Seen: Canara’s low-cost current account and savings account (CASA) deposits stood at 29.7% at 1QFY27 (FY26: 29.8%; FY25: 31.2%; FY24: 32.4%) which were lower than that of most PSBs. The bank is implementing various measures to enhance its CASA ratio and expects it to improve to 32% in FY27. CASA grew about 10.59% yoy in 1QFY27, while total deposits increased 10.06% [Showing first 8,000 characters — download PDF for full document]