Good afternoon, everyone. On behalf of Antique Stock Broking Limited, we welcome you all to the FY 2024 post earnings conference call of Canara Bank Limited. From the bank side, we have, from the management team, we have Mr. K. Satyanarayana Raju, MD & CEO, sir, Mr. Debashish Mukherjee, Executive Director, Mr. Ashok Chandra, Executive Director, Mr. Hardeep Singh Ahluwalia, Executive Director, and Mr. Bhavendra Kumar, Executive Director. Without further ado, I hand over the call to MD, sir, for his opening remarks, post which we can open the floor for any queries. Thank you, sir, and over to you.
Good afternoon to all of you. I am here to share, share some few performance highlights of the December quarter of Canara Bank. Our net profit has increased and reached to 3,656- We request all of you to mute your mics. First time we have crossed a five-digit figure. The net profit, last year net profit was INR 10,604 crore. In the first, this current financial year, in the first three quarters itself, nine months, we could surpass that last entire year's the net profit of 10,000. Now, the current nine months net profit is INR 10,797 crore. This could be possible because of our net interest income at nine point- Sir? Namaste, sir. Shall I continue, sir?
Yes, sir, please continue.
Our global business has crossed 22 lakhs and reached to the 22.13 lakhs, with a 9.87% year-on-year growth. Our domestic advances are growing at 12.56%. Our total global advances have crossed INR 950,000 crore. Our total PCR has improved 269 basis points and stood at 89.01%. And the return on asset, we are continuing to maintain above 1%. The current quarter also, return on asset is at 1.01%, with an improvement of 25 basis points year-on-year. First time, our credit cost has gone below 1%.
Now, our credit cost is at 0.97%, with a year-on-year decline of 24 basis points, with a healthy portfolio and improvement in the recoveries in the NPAs and the written- off accounts. Our gross NPA has come down to 4.39, as against our guidelines of 4.50 for the entire financial year, with a decline of 150 basis points year-on-year. Our net NPA also has further down to 1.32%, year-on-year decline of 64 basis points. This global business and the global advances, what we achieved, INR 950,000 crore, is led by RAM sector, as we have given the guidance that we focus more on the RAM sector. Our RAM sector has grown at 14.56% and stood at INR 530,000 crore.
This was led by retail credit growth of 12.14%, agriculture and allied activities, including the gold loan, 19.26%. MSME, first time for the last three, four years, we are touching almost 10% year-on-year growth. Within the retail credit also, the major growth is in the housing loan and the vehicle loan, at 12.07% and 13.22%. Our earnings per share is improved 45.74% year-on-year, and reached to the INR 79.21. Our return on equity, still we are maintaining at 21.95%, with a year-on-year improvement of 357 basis points. Our net interest margin, though there is a stress on the cost of deposits, still we are able to maintain above 3%.
Our net interest margin is at 3.02%. We are initially itself is we have given a guidance that we are focusing more on high-yielding advances, like in a RAM sector. More focus will be given on the RAM sector. Accordingly, just one year back, our RAM sector was at 54% and corporate was at 46%. Because of the higher growth rate shown in the RAM sector, our RAM sector composition has become 56% and corporate has reduced to 44%. But more or less, every parameter is growing in the double digit, near to the double digit, including the corporate also has grown year-on-year at 8.26%.
You can see this, the ratios, part of specific ratios, net profit is continuously increasing, and the PCR also is increasing from 86.32%-89.01%. Gross NPA also is continuously reducing from 5.89%-4.39%, and net NPA also is coming down gradually from 1.96%-1.32%. Certain key ratios I wish to share with you that this reflects the, consistency and the stability of the balance sheet of the Canara Bank. Return on asset above 1%, that's both quarterly as well as cumulative, is 1.01%. Return on net worth is quarterly at 21.06%, and cumulative it is 21.95%. Cost to income ratio, quarterly 50.37%, but cumulative 45.93%.
But here I would like to clarify itself here itself, that why the cost to income ratio for the quarter is 50.37%. There is no much increase in the operating expenses, but you are aware that the current quarter, the Bipartite Settlement has been signed between the Employees Association and the IBA. They signed the agreement at a 17% incremental growth in the wages, and it is effective from November 2022. That means up to December 2023, it's a total 14 months. When we have started our journey from November 2022, initial first quarter, we have provided in the anticipation of incremental growth in the salary bill, we have provided 10%.
in two quarters, we have provided 15%, 15%, because the last time the wage revision was happened between 14%-15%. But now the settlement has happened at 17%, which demanded a higher provision. So up to December 31, 2023, that means a total entire 14 months period, we calculated the burden on the employee cost because of this wage revision at 17%. And the entire amount, whatever it is, up to December 31, the gap, we have provided in this quarter itself. In addition to this, because of this wage revision, there will be an actuarial on the retirement benefits also. Out of that also, INR 250 crore we have provided in this quarter itself.
So totally, in addition to that regular provision of 15%-17%, INR 700 crore extra we have provided towards the staff, meeting the requirements of the staff wage revision impact, so that there will not be any much pressure on the next two quarters on this particular issue. Entire that expenditure, whatever it is in actual, we have calculated it, and the entire amount has been provided in this quarter itself. That's the reason the cost to benefit income, cost to income ratio, has shown little more in the 50%, in the current quarter, but overall cumulative is 45.93%. We have given a guidelines, guidance at 45%. We are sure that by March, we will maintain that at 45% below. Our CD ratio is just above the 75%, 75.26%.
Our EPS, earning per share, is current quarter, it is 80.17, and cumulative, it is 79.21. Our book value is further improved, INR 390.78, and our NIM is maintained above 3%. So that's our capital funds. Here, again, I want to clarify that last continuously three quarters, we are able to maintain above 16%. But because in the December quarter, the regulator has changed the risk weightage on certain NBFC exposures and the personal loans exposures of all the banking industry, that has affected, impacted the Canara Bank's capital in a downward 52 basis points. But because of our internal accruals in the current quarter also, after meeting the current quarter advances growth, we could have a surplus of 10 basis points.
That's why the net impact for us, though it is initially because of that, higher risk weightage, it was impacted 52 basis points, but it has reflected finally at the end of the quarter, is only 42 basis points. That is 16.20 became a 15.78. And of course, here, let me clarify to you that the board has already approved the bank to go to the market for raising AT1 under Tier 2 bonds to the extent of INR 7,500 crore. Out of that, AT1 bonds is INR 3,500 crore, and Tier 2 bonds is INR 4,000 crore. In the just concluded quarter, we have gone to the market for INR 1,000 crore, raising INR 1,000 crore AT1 bonds, keeping in the mind the rate of interest at 8.4%.
So we got biddings at 8.4, almost to the extent of INR 1,443 crore, and the entire INR 1,443 crore has been observed. The remaining INR 6,100 crore is yet to raise from the market. We are watching the market because we are very rate sensitive and rate concerned about that rate of interest. Whenever we feel that it is favorable to us, definitely we'll raise the remaining INR 6,100 crore in the next two months, if the market favors us. And this is actually the guidelines at the initial financial year that's given the guidance to the analyst as well as the media, sir. And actually, what we have given is, we have given the business growth globally at 10%. We are maintaining that 10%.
Advanced growth, we have given it 10.5, but we are growing at 11.69. We are sure that we maintain that to 12%, whatever it is, the growth rate is there. Deposit, we have given a guidance of 8.5. We are growing at 8.55. CASA is one of the areas of concern still for us, though we have given ambitious 35%, but we are able to maintain only 31.65%. This is because though the deposits are growing at 8.55, our CASA, year on year, it has grown only 5.05. It is not in sync with the total deposits. That's also one reason that we are not able to reach that CASA 35%.
But this current quarter, we have taken it as an exclusive campaign for the deposits, especially in the retail term deposits, and main focus on the CASA. We have initiated several initiatives. We are hopeful that this current year, year-on-year growth, it will also in sync with that, our deposit growth of 8%. And gross NPA, as against 4.5, we already achieved 4.39.... Net NPA as against the guidance of 1.20, we already achieved 1.32. PCR, we have given 90% as a guidance, we already achieved 89.01%. Slippage ratio, this is also another area to show the reflect, the - to reflect the health of the portfolio. As against 1.30, we have achieved 1.24%.
Credit cost, first time that it is also helping indirectly in our NIM also. That's with 1.20 as against that. The first time in the Canara Bank history that we could achieve the credit cost below 1%, that is at 0.97%. Our return on equity, as against the guidance of 19.50%, we achieved 21.95%. Earnings per share, we have given a guidance of INR 65 rupees, but whereas against that, INR 79.21 rupees, what we have given, the results have come, that's so we could achieve that INR 79.21 rupee.
Return on average assets, another strong ratio, which we are able to maintain as given the guidance is 1% for the next financial—this coming financial year end, but we could achieve it well before that, and we are able to maintain at 1.01%. These are all the few highlights of the performance of the December quarter for, from our side, sir. Now it's open. You can ask any questions. We are all along with me, our executive directors and CFO are all available. We are ready to answer your queries, whatever it is there, sir, or the clarifications.
Thank you, sir. Those who wish to ask a question, please raise your hands. In fairness to all participants, we would like to request you to please limit your questions to two per participant. So first, I would first request Maru to ask a question. Please unmute yourself.
Yeah, hi.
Hi, madam.
Hi, hi. So, my first question was on the interest income. If you see other interest, that has gone up a lot. That has gone up nearly by INR 800 crore, the other interests in the total interest income. So what does that comprise of?
Yes, ma'am.
What items does it comprise of?
These are, these are all the actually items, madam. It is related to the income on reverse repo income. Whatever the interest, we keep it for overnight, we lend to the other partners in the market, because when we have a tool of borrowing from the RBI at a cheaper rate, we have a scope to invest wherever the liquidity issues are there with the other partners. There, we can lend overnight or in a short-term basis. These are all the things, and of course, some other is there, interest on swap. Many times whenever the swap interest rates will be there, that income also will be there. Some interest on tax also will be there. These are all the components of that, madam.
So, sir, can you quantify the swap income and tax income so that we know how to forecast this for future? Because it's gone up very sharply by INR 800 crore, so that way.
That's correct, madam, but you can see that there is a steady growth for the last four quarters. So hope you might have seen that the-
Yes.
continuously, that quarter-on-quarter, there is a growth. That means you can understand that we have focused on that particular parameter, and we are working on that. That's why these results are giving that.
Right.
But exactly the item-wise, I don't have the clarification, but we'll come back to you, madam, on that.
Okay. But just, sir, if you could give the tax refund, if not the swap, how much is the income tax?
Definitely. Our CFO will be in touch with you, madam.
Okay. Okay, sir, and my other question is that, now what is the... Earlier you had, you know, indicated in the previous calls that at the 15% high, your wage bill per month was around INR 115 crore. Now that you have provided 17%, what does that move up to?
Madam, actually, already now it has been, settlement has been happened. Final draft guidelines, they are drafting it, but the agreement has been happened between the employees unions and IBA at a 17% load-
Mm-hmm.
on the 2022 November 1 salary bill. Based on that, we are providing it at 17%. If you calculate it, every month, it is calculating around INR 129 crore, approximately INR 130 crore per month. So we calculated from last 14 months on the same basis, INR 129 crore. And whatever the shortfall we have provided earlier, with 15%, whatever the shortfall is there, that entire amount we have absorbed in this quarter itself up to December 31, madam.
Correct.
That's why we have provided INR 700 crore extra in this quarter for employees-
Correct.
-towards the employee.
Correct, sir. Sir, you mentioned that the INR 250 crore of actuarial pensions-
Yes, madam. Yes, madam.
So what is the—so that is up to December, you provided up to-
No, madam, that's actuary sees up to March, madam. So up to March, that is whatever it is there, in that, majority we already provided in the actuaries. A small portion may be there that we'll provide in the March. Very small portion will be left out in the actuaries.
Okay.
In actuaries also, majority portion we already absorbed in this quarter itself.
Okay. So now in the March quarter, most likely you will just see a provision of INR 130 crore in Q3, and very small-
Yes, madam
- pension.
Very small-
Correct
... portion of actuaries. Very small portion of actuaries.
Okay, sir. Thank you. Thanks a lot.
Thank you, madam. Thank you, madam.
Thanks, Maru. We have the next question from the line of Mona Khetan. Please unmute yourself and go ahead.
Yeah. Hi, sir, good evening.
Good evening, madam.
... Yeah, my first question is on the provisions line. So we see a write back of about INR 490 crore during the quarter. What does this, this pertain to?
Actually, madam, you might be aware about that RF 1 and RF 2. When we do that, we have provided, because of that restructuring, some provisions have been made. That when we, it is coming to that accounts have been completed, the tenure, required tenure, as well as the count accounts are now standard assets for that, and it is a, the whatever it is there on those things. Whenever the loans are also closed in this, no, that reversal of this provisioning on RF 1 and RF 2 is the major, that INR 490, madam, whatever it is there.
Okay. So this mainly pertains to restructured book, coming off, et cetera?
That's what. Delayed RP also is there, madam. In resolution process, process is there, no. Wherever delayed RP, we have provided extra provisions. Once that has been admitted in the NCLT, that provision also will be reversed.
Sure. And where does the residual restructured book stand today against about INR 14,000 crore last quarter?
Yes, madam. It is there, as well. Actually, originally, this RF1 and RF2 and MSME, this structure- restructure was happened INR 24,000 crore. As on date, it has come down to that INR 17,000 crore, and out of that, for almost INR 4,900 crore is NPA and INR 12,000 crore is standard asset.
Okay. Sure. And my second question is on the recoveries. So we have seen very strong recoveries over the last two quarters from written-off accounts.
Yes, madam.
What sort of, you know, you know, expectations you have for the coming quarters and the next fiscal as well?
In current financial year, in the initial stages itself, we have told you, we informed to the analyst that our target is, our slippages will be well within the our recoveries towards the NPA and the written off and the upgradation. And the same, guidance we are continuing in that, we are able to maintain for last continuously three quarters. And the December quarter also, we could maintain that. The recoveries, again, the under written off, it is coming not only from the NCLT. NCLT, we got only INR 450 crore odd amount through liquidation or the settlements resolution through. The remaining all is through small loan accounts, madam. Wherever OTS, some OTS is there, every time we have an attractive OTS schemes are there in written-off accounts, and that through OTS in across the 10,000 outlets, we get this recovery.
We are because focused on that recovery especially, we are driving in all the areas, so we are getting a better recoveries under written-off account. And the slippages also, you can see that year-on-year, it is slowly continuously coming down quarter-on-quarter. If you look at that, the fresher slippages, if you look at that. So December, it was INR 3,000 crore; thereafter, it was INR 2,857 crore. September, it is INR 2,894 crore. Now it is INR 2,697 crore. These are all the fresh slippages, madam. We are also controlling our fresh slippages, and these INR 2,697 crore, no, the slippages are INR 1,200 crore towards MSME, INR 1,000 crore towards agriculture, and INR 400 crore towards the retail.
Sure, sir. Can you just repeat the break-up of slippages?
INR 1,200 crore from MSME, INR 1,000 crore from agriculture, INR 400 crore from retail.
Okay, and nothing from corporate?
Small amounts from existing loans under the small, small accounts.
Got it, sir. Thank you so much. That was useful.
Thank you, madam.
Thank you. We have the next question from the line of Rakesh Kumar. Please unmute yourself and go ahead.
Yeah, hi. Thanks, sir. Thanks for the opportunity.
Hi, Rakesh.
Hi, sir. So, sir, first question was pertaining to this wage revision provision that we have made incrementally in this quarter. So-
Sir.
So we understand that, you know, there is a, there was an increase in, the settlement number at 17%, and we were making provision at around 15%. But, like, you know, the rise, the incremental rise in this, in this quarter, like, you know, we have made around INR 740 crore approximately. Correct me if I am wrong.
Yes, sir. I'll explain to you that. Actually, these are already... So this last year, December quarter, then March quarter, June quarter, September quarter. There are four quarters have been completed. In the first quarter, we have provided 10%, and there afterwards, we started providing at 15% in anticipation that it will be in line with the last time wage settlement. But this time, settlement has happened for 17%. So I have to calculate 17% from 14 months, and we calculated that 14 months. When we calculated whatever the shortfall, so the shortfall, it has come around INR 450 crore. That INR 450 crore, in addition to that, regularly, what the every month, perhaps we are supposed to provide INR 129 crore per month. That is for these three months also has been provided.
In addition to that, that INR 450 crore also has been provided. In addition to that, that actuaries, what the towards the retirement benefits, some burden will be there around INR 400 crore or INR 450 crore. There also, we have taken some INR 250 crore in this quarter, because in this quarter we felt that some cushion is there for us. So we absorbed this in this quarter itself, that these two together. So total INR 700 crore we have provided additionally. That has impacted that OP as well as the cost to income ratio, sir.
Previously, we were not making provision on account of actuarial benefits operation?
No, but generally, actuaries, the payment will be once you have finalized only. Actuaries can be, you can arrive what is the actual amount. But since the settlement is not finalized, that will happen only at the time of payment. But now, this also, this time also, but because in anticipation of next quarter, it has to be paid, since we have a cushion in this quarter, we have taken some burden in this quarter in advance. Otherwise, generally, the tendency practice is at the time of payment, only actuaries will reflect in that quarter.
Okay, understood, sir. Understood, and, sir, on the, like, written- off pool is still around, you know, close to around INR 69,000 crore. And, so, firstly, what is the... Like, you know, if you can, you know, give some, you know, picture on this INR 69,000 crore written- off pool. So what is the vintage of this, you know, this pool? Like, so these are two years old, three years old. So if you can categorize, you know, that number by-
No, I can tell you that, broadly, broadly, I can tell that, but the majority will be in already NCLT cases. More than INR 51,000 crore-INR 52,000 crore is in the NCLT cases. The remaining is in the RAM sector, various areas. So where you are already D3 , where you have provided 100% or the loss asset where there is no security. On those matters, only this pool is there. So some efforts, what we are continuing in the NCLT, that is also giving the results. But these, the remaining INR 14,000 crore-INR 15,000 crore, the base is available other than NCLT cases. There we have an attractive OTS system, and we have streamlined our machinery to focus more on that. Like conducting, within the bank, Adalats. We are very going to the villages for conducting village Sabhas and all to encourage them to avail these benefits.
These are all actually, we have provided 100%. Even whatever the money we get, it is a profit for us. That focus we have taken as a main focus, that's why we are getting better results in that.
Correct, sir. Correct. Very nice, sir. So just, just one last question. What is the haircut that we take in the OTS scheme, sir?
No, sir. Actually, haircut is the NCLT. It will be decided by the NCLT. Kind of because based on the resolution process as well as otherwise, it is on the liquidation. Whatever it is there, it is a collective decision, creditors, secured creditors decision, we have to follow according to that. In normal cases, depending on the size of the proper the account or the securities available, there is a board-approved policies are there, written off. Only to that extent, a written off will be there. And a written off means sacrifice will be there. In smaller, may actually, book value sacrifice will be less.
Okay, roughly around, maybe around what, what number, like, the OTS what we are doing now-
So you can see that, you cannot justify that to the exactly, but generally, small values, book values, whatever is there, you can expect 80% to 75%-80% in that book value. But where is the NCLT, that may not be the case.
Correct. Correct. NCLT number we are aware of, sir, but only OTS scheme, I think we are not fully aware of.
Then in some cases, you will get 100% book value. In some cases, maybe where it is a loss, there is no security, and it's very old NPA, we may accept it even 75% of the book value.
Very good, sir. Very good. Superb, sir. Thank you. Thanks a lot, sir. Thanks a lot.
Thank you. Thank you.
We have the next question from the line of Bhavik Shah. Please unmute yourself and go ahead.
Hi, sir. Am I audible?
Hi, Bhavik Ji.
Sir, so I just wanted to understand, so on your interest income, the other line, which is INR 14 million, so how should we think about it? Like, going forward, is this sustainable? Like, what are the levers which will help me sustain or-
See-
Not sustain this?
What we want to tell you is just look at that, the last four quarters, how it is gradually showing that. But I don't think that here, further increment, increase, improve will be there because we already reached to that optimum level. And presently, market, maybe funds are very tight.
Okay.
We cannot generate so much funds to effectively use that. So here afterwards-
Okay.
- Again, further improvement showing in that other income may be very difficult.
Okay. So on steady-state basis, like, should we assume INR 400 crore-INR 500 crore there?
Pardon?
On steady-state basis, this will be INR 400 crore around?
Assume.
Reduction.
Reduction?
No, no. What I'm asking is that the current number is INR 1,400 crore.
Yes, sir.
On a steady-state basis, how should one think about this number?
No, it is all. Predicting is too early. It's a demand and supply.
Okay.
If the demand is high, we get higher incomes. If the demand is not there, we may not get that income. So very difficult to predict that. Mm-hmm.
Understood, sir. And sir, what would be the LCR this quarter?
Pardon? LCR-
Liquidity-
- is 135%, sir. 135.01%.
Thank you, sir. And, sir, good luck.
That's why we are comfortable, that's why we are able to earn that money.
Okay, sir. Understood, sir.
Thank you, sir.
... Thank you, Bhavik. The next question we have from the line of Ashok Ajmera. Please unmute yourself and go ahead.
Good afternoon, sir.
Good afternoon, Ajmera sir.
Congratulations, Raju sir, and the entire team for very good set of numbers. Because if you take away with this additional provisions of you know on the employees, increasing the employees' cost, then the profit would have been-
Yes.
phenomenal, in this. And considering that, shall we consider that from the next quarter, the employee costs-
Sir.
-will come down as against INR 4,533 crore to around INR 4,200 crore?
Sure, sir, definitely.
So that will add to the further profit of the bank. Sir, one small data point, maybe because of-
Sir.
Certain, you know, entries are there. Our net worth, which is shown in the results,
Sir.
That net worth in September was INR 67,480 crore.
If you add this profit of INR 3,656, it becomes INR 71,136 crore.
Net worth, capital.
Net worth shown is INR 7,893. So there is a difference of-
Yes.
reduction in net worth of INR 243 crore. So if I can-
That is because actually, sir. No, let me say to you, sir, that actually, when it has come for that, the expiry of the bonds, whatever it is there, where there's you can see that in the 71,000-74,000 common equity, what we have shown.
Okay.
You are talking from the presentation, sir, or you are talking from any other area?
No, your results.
What you have reflected.
Your results, in that result, net worth-
More results, sir.
INR 70,893 crore.
Sure.
But if you plainly add the profit of this quarter to the last time net worth shown, then there is a difference of INR 243 crore. So as you say, that equity, I mean, the bond value erosion of INR 243 crore or-
No, sir. No bond value erosion will not be there. What only, you are asking about net worth. No. Some expired bonds will be paid, might have been paid, that, that might be the one case. And when you are taking it into, account for that internal accruals, we don't add the entire net profit to that. We keep a 20%-21% to do the proposed dividend. That also we keep aside, we don't add-
Okay.
The entire thing. That might be the root cause for that, sir.
All right. All right. I mean, point taken. We'll take further details. Sir, now, coming on this credit growth, you have given 10.5% of the target for the entire credit.
Sir.
If you look at-
Sir.
-up to December, it's around 7.09%-
Sir
... is the credit growth. So does it mean that in the coming quarter, that is January-March quarter, we will have about INR 40,000 crore of increase in our overall credit book?
Generally, that is the tendency, sir. March, generally, you will find more. Look at that the year-on-year growth, whatever it is there. Now also, it is reflecting almost 11.69. And, that easily we can manage that 11.69 or around 12%, sir, the year-on-year for the current quarter, current year also.
Yeah, current year also, it's around 10.5%-11%, you can say.
Around 11.5%-12%, we can manage.
11.5-12.
Yes, sir.
That's good. Sir, we were talking about that, recovery from the written-off account, because it has become very attractive for every bank, because it just-
Sir.
Plainly, it gets added to the bottom line.
Sir.
What is our overall cumulative book of the written-off amount?
Just now, my friend from another analyst has also has, they discussed about this, around INR 69,000 crore, whatever the books are. Out of that, INR 52,000 crore is NCLT book. The remaining is from the RAM sector, sir. RAM and other, other than NCLT sector.
That is INR 14,000 crore, something.
No, 52,000 in that, the remaining is whatever it is, 14,000 is from other than NCLT accounts.
All right. Sir, on the-
Ajmera, we'll request you to please join back in the queue as there are more participants in the line. Next question would be from the line of Jai Mundra. Please unmute yourself and go ahead.
Hello. Yeah. Hi, good evening, sir, and thanks for the opportunity.
Good evening, Mundra.
Congratulations on 1% ROE, sir. Yeah, hi,
Yeah.
Congratulations on 1% ROE. I have few questions.
Thank you. Thank you, sir.
First is, sir, this actuarial hit that we have taken of around INR 250 crore, the residual-
INR 250.
Hit that could come. Yeah, yeah, INR 250 we have taken. What is the residual, sir? Is it, like, less than INR 250 or it could be-
It will be less than 250, sir.
Number.
Much, much less than 250, sir.
Understood. Okay. And sir, secondly, in terms of your loan growth, right? So especially in the large corporate segment, we see that the NBFC exposure has come down, which is probably due to the, you know, this demand-supply thing. But what is your sense in the total corporate growth only, only the large corporate? Only the-
So large corporate growth, what we have targeted is 10%, sir. We are sure that that will happen, because in the first nine months, if you see that as on December thirty-first, we could achieve 8.69%. Even you can see that without increasing any exposure in the NBFC, NBFC exposure has come down drastically, almost INR 8,000 crore from last quarter to this quarter. The reason behind is when the regulator has increased the risk weightage on certain NBFCs, as a corporate goal, we have taken a corporate call. We have taken a call that that part of that burden has to be passed on to our existing NBFCs, who are enjoying a concessional rate of interest. Wherever they are accepted on negotiations is, the incremental, the increment, there's an increase in that rate of interest.
We have continued that exposure there. Where one or two cases may that it has not happened, there is no mutual agreement between us and the party, we have received back that money, sir. We have asked them to repay it, and they have repaid it. So it's not that there is no demand. There is a huge demand for NBFC for funding, but we are very much, cost consciousness is there, yield consciousness is there. So we don't want to compromise, at the cost of bottom line to show a growth at the top line. That's why we have taken, but even without this, NBFC exposures, but now there are so many applications are pending with us for even NBFC by paying the money, whatever we are demanding it.
But there is a huge demand is there from infrastructure, green energy, and even steel, steel, power, and even data center creation. Several other manufacturing sectors also, it is there. Huge already we have sanctioned and pending for the disbursal also is there, and several proposals are also there on pipeline also. So we are very much confident that the 10% corporate growth will be there.
Okay. And, sir, what about next year? I mean, if you have any ballpark numbers, should it remain stable, or you see any signs of this accelerating to like 15%-20%?
No, we feel that the stable growth will continue next financial year also. But since as a Canara Bank, we have taken a call that we want to grow more faster in the RAM sector than the corporate sector, because we don't want to grow a balance sheet at the cost of bottom line. So, current year, whatever we are, projecting it, the same here, and 1 or 2% here and there may reflect in the next financial year also.
Sir, if you can share your split of the book by benchmark, how much is EBLR, how much is MCLR, and fixed?
MCLR is around 51%, sir, and RLLR is around 39%. The remaining is all remaining, fixed rate will be there, staff will be there, and the old base rate and all will be there, sir.
Sir-
That's majorly 90% is covered with RLLR and MCLR. MCLR is 51%.
Correct, sir. And, sir, if you can share the broad trends in passing on the MCLR. So let's say the card rate from one year back, book which comes for repricing in, let's say, January this year, the card rates would be one year-
No, the MCLR change is ongoing. Every month, we keep on—we change that because, based on our cost of the deposits. Even the just concluded this month, first week also, we increased 5 basis points. One or two months back also, we increased 5 basis points. It depends on that, but it's not that once you increase it, it will be implemented for entire 51%. For effecting that, it takes minimum 12 months to impact that entire portfolio. But still we feel that some 25 basis points difference is still to be collected from around 15% of that MC, 15%-20% of still the portfolio to be passed on to the n-them. That's...
So, sir, if your yield on advances should not stagnate, right? Is that what you're saying, that the yield on overall advances should still rise by whatever the pace they continue?
No, the major concern here is the yield on advances cannot be stagnant, sir. It keep increasing it till the market is a higher rate of interest regime is there. Because it is our cost of MCLR will be defined based on our cost of funds. Since January first onwards, we are experiencing that a much more higher rate of interest on the deposits. So naturally, that will impact on our coming months by MCLR proportionately. It will never be constant, sir. It's totally dependent on our raw material of deposits cost.
Right. Okay. And, sir, on your LDR, you mentioned that we have around 75% LDR. Do you think that from now onwards, you can have loan growth growing at a faster pace than deposit, or now you have to have a balancing act between both?
Now, because the three years back or two years back, our CD ratio was around 67%-68%.
Right.
So we were losing so much money in the interest income. That we felt that we can go up to the 77-78%, but we have reached 75%, but we don't want to neglect the liability growth. That's why we thought that the current quarter, we want to take it, this particular specific quarter growth, we want to match both. The deposits also we want to grow at the rate the advances are growing, maybe 3% or 3.5%, whatever it is there. Whatever we are expecting in the advances, the same percentage we want to grow in the deposit also.
So-
That's why special campaigns have started for the deposit mobilization.
Yeah, so the question is slightly longer term, I mean, 12 months basis. Could you still see an uptick in your LDR ratio, or you think 75% is more or less the peak?
No, there is no hard and fast rule that we should restrict ourselves at 75%, but it is a guidance. Guidance means it's an advisory, that it is a healthy maintenance of balance sheet at 75%-77% is a healthy maintenance of the CD ratio. We want to be in that bracket only.
... Sure, sir. And last two clarifications, sir, our CET was-
Jai, Jai, we would request you to please come back in queue.
Sure. Sure. Thank you.
Next question is from the line of Kunal Shah. Please unmute yourself and go ahead.
Yeah. Hi, sir. Congratulations for good-
Hi, Kunal.
Yeah, hi. So firstly, maybe notes to accounts, what we give with respect to this wage revisions overall provisioning of INR 1,816. So that includes pension as well, or that doesn't include pension?
No, no, no. No, no, no. No, no. INR 250 is extra, sir. INR 1,816 plus INR 250. It's a 20 60 60, sir.
Yeah. I was just looking at it. Maybe last quarter, this 1816 was 1,070. Okay?
Yes.
Now it's becoming 1816.
Yes.
So actually, the increase towards the wage revision would have been INR 730 crore, and over and above that, there would be another INR 250 odd crore of actuary. So-
So you are... Correct, correct.
1,000 crore rather than-
No, no.
450 crore + INR 250 crore?
No, again, you should, you please recall that every quarter we are providing INR 345 crore. This we are maintaining for last three quarters onwards, 15% at 15%, INR 115 per month. INR 345 crore. This INR 700 crore is over and above that 345.
Okay. Okay. So what you're trying to say, anyway, this INR 345 crore was due over and above-
Because last quarter also, we have provided INR 345 crore. So this time, your 345 is in line with the last quarter. But over and above, again, we have provided INR 700 crore.
Okay. Okay. Because last time when we looked at it, INR 1,073 crore, and if you would have provided for 11 months-
That's why-
That would have been about-
You have to deduct this INR 300 crore now.
Yeah.
If you deduct this INR 340 crore, automatically you get 450 only, approximately. That's the same amount you will get.
Got it. Got it. Got it. Okay. Okay.
Okay.
This, when we have seen, you have highlighted that there has been maybe some repayments, but how much we would have tried to pass it on in terms of increasing the rates to the NPAs post the risk-weight increase?
See, you can't pass it on to everybody on the same pricing. It is a negotiated terms. If it is a triple A, we might have passed it on to 10-25 basis points. For double A, a little more, when that's A, it may be a little more. It varies from their risk weightages and all. But it's a party-to-party negotiating system, what the relations they are maintaining with us, what other ancillary business we are enjoying with them. All these factors will be a part of our decision-making.
Okay. But for AAA-rated entity, how much would that be? Around 10-15 basis points, or it would be 30-40 basis points?
Sure, it will be more than 15 basis points. I can say confidently.
Okay, more than 15 basis points. Okay. And, lastly, in terms of branch expansion, so we see some branches getting added after this time. So maybe how we are looking at it in terms of the expansion of the network, because generally we are not seeing that kind of-
Yes.
-from, PSU banks, et cetera. Yeah.
So if you look at that outlets branch network, that increase in the number itself will reflect that there is opening of new branches are there. So though there some closer also branches are there, but opening of branches are there, too. Branches are there. I think already 140, 150 branches we have opened newly, and the remaining also-
Yeah.
will be completed in this quarter.
Okay, okay. So, the only question was we will continue to do that, or how would that be done?
Yes, depending on the business opportunities.
Okay. Okay. Thanks. Thanks, sir. Yeah.
Thanks. Thanks, Kunal. The next question is from the line of Rahil Shah. Please unmute yourself and go ahead.
Hi, sir, good evening. Am I audible?
Good evening. Good evening, Rahil.
Hi, ji. Sir, two questions. This, EPS, so this, the, the run rate we've been at EPS. So what is your outlook there now? Can we sustain this per quarter-wise?
Sure. Sure, sure, sure. We can sustain that.
Okay. So quarter four, we can expect a twenty-
Right.
Okay. And,
No, whatever we are reflected in the December quarter, definitely that will sustain. That much I can tell you that.
All right. And, cost of funds, quarter on quarter have slightly moved up. Do you see any pressure on NIM?
Sure, sir. There is a pressure. Last time also, I shared with you. Actually, we are expecting that our NIM will be around between 2.9%-3.0%, but we are trying our best to manage at a possible extent so that we maintain nearer to the 3%.
Nearer to 3. Okay, okay. Okay, sir. Thank you, and all the best.
Thank you, sir. Thanks, Rahil. The next question is from the line of Pritesh from DAM Capital. Please go ahead. Please unmute yourself and go ahead.
Hi, can you hear me, sir?
Hi, Pritesh.
Hi. Sir, just one clarification needed. When you gave breakup of slippages corporate, you said it is very negligible.
Yes.
But sometime back, there was a report that BGR has been as a default. There, your exposure is about INR 5.6 billion. So was it taken earlier? Is it going to be taken next quarter? What is the stance there?
... No, actually for our bank, what I can comment only on our bank. Our bank slippages are very much under control, because if you look at that one slide we have given it on stressed assets. If you see that, SMA 1 and 2, the entire 5 crore and above, if you take it, is only 0.63%. And if you take entire portfolio including the 10,000 rupees loan also, even then it is less than 3%. So I don't see that that problem will be there in our bank. That's why we are telling that our slippages are, is only gradually, quarter-over-quarter, we are seeing a downward trend, because we are able to maintain when it is in the SMA 1 and 2 itself, we are addressing those accounts. It's only because of our monitoring system we have tightened.
No, no, I appreciate that, sir. I see that the wholesale NPAs are quite, I mean, the asset quality is quite strong. But why we are asking this is that it was noted that it is as per divergence report of RBI. And so one was under the impression that it was a old weakness in the account. Yeah.
That's, that's what I'm telling you. I can comment only on the Canara Bank side. Canara Bank divergence, nothing is there in that aspect. It may be because based on the industry, they might have commented, but it's for Canara Bank, I can comment on that based on our figures.
Sure. Got it. Second, sir, this quarter, we had a slightly higher write-offs than the trend. What is your view on write-off going ahead? We had a INR 3,900 crore write-off this quarter.
See, that's a write-off when you have already provided 100% in D3 and loss asset. Depending on your balance sheet comfort, you can keep doing that, but our call is to the extent what we are recovering towards the written off under the NPA under the upgradation, we don't want to do beyond too much on that. We want to restrict ourselves nearer to that. The second one is this write-off, majority write-off is for NCLT cases. When you are getting something, then you are forced to do the write-off for a balance amount. You can't keep in your books just like that.
Sure. Thank you, sir. Thank you. Those were my two questions.
Thank you.
All the best.
Thank you, Ritesh. The next question is from the line of Sushil Choksey. Please unmute yourself and go ahead.
Congratulations to Canara Bank team for a stable and-
Thank you.
-performance.
Thank you, Choksey Saab.
Thank you, sir. Saab mat bulao, Bhagwan be mare. First question-
Jab aap humko saab bol rahe hai, hum bhi aapko saab hi bolna hai.
First question, you declared that you would monetize some of your subsidiaries?
Yes, sir.
Do you expect something in current year or it will roll over into next year?
No, disinvestment may happen in 2025, sir.
Okay. And are you... As per your plan, you will do two disinvestment or once?
Two, sir.
Two. Okay.
So, one, already our board has approval has come, and we are informed to that SEBI and the market also, sir. Second one also, it is in the process. Once our board has approved, that also we will disclose to the market, sir.
Okay. Second thing, sir, we've taken lots of initiative for digitization, a lot of developments where products are concerned. I am sure I've seen a lot of features which have been. Are you, are you accelerating your spend on digitization further, or the current program is fine, and, when do we see the actual results of the entire process? Within the next 12 months or a year later?
No, already, whatever the two years back with decisions, initiatives we have taken, we are getting some results on that. Let me share some figures to you, sir. Just three years back, our UPI transactions, in a per annum is around 98 crores, sir. But now we have reached to the position that per month it is 83 crores. That's the jump we have seen in our... This is because of our initiatives, what we have taken for last two years. We are onboarding the people. Our Ai1 has gotten, attention of many of the people. Many people are, joining in as a UPI initiatives and all. But simultaneously, the first time we have come out with the CBDC interoperability, we are the first banker. Many such initiatives we have taken.
But then now one more thing is, with the mobile app, we got a very good feedback from our customers. So many demands have come from our corporate clients also that they also need, in addition to that, net banking through laptop and all. They expected that mobile app also should be available to corporates. That we have launched recently, and that also has attracted many people's attention of our clients. Then recently, also, you might have gone through the newspapers and all in the first day of this current calendar year, January first. We have inaugurated a center of excellence for data and analytics, D&A, and along with that data lake also, we have inaugurated those things.
This data analytics, what we are working on for the last two years, is on a small scale, but initially, we thought that first let us clean our existing data, so that we make our data as genuine as possible, so that you get the better results when you use the tools. That's why we worked last two years strongly on the existing legacy data by using the big data analytics. And now we got a confidence that, yes, we have cleaned that data to the maximum extent. Now, if you start using this with the latest AI and machine learning models, tools available in the market. If you can use and you can generate a business and support your outlets for garnering them, when you are aiming for more than 10% growth, definitely you need a support to the branch channel also to supplement that business growth.
This initiative is helping us, and what we have taken that initiative is contributing in the last 9 months period. I can tell you that through this analytics, what the leads we generated based on their expenditure behavior, studying for the last 5 years and 10 years. We are generating in several products, like a savings bank, current account, MSME, housing loan, vehicle loan, personal loan, pension loans, like this. Almost 8%-12% of incremental growth, whatever the growth we are showing that last 9 months, out of that, 8%-12% growth we are converting from this lead generation, sir. That itself is a major contribution. So this we want slowly increase it to 20%-25%.
For that, we are adopting a new tools, and that tools, what we are latest implementing is, we are creating a data bank for each outlet within their two or three kilometers operation. The data bank contains the how many business units are there, how many schools are there, how many government offices are there, how many societies are there, and this. And this entire data, we are making it available to the branches so that they can straightforward go and meet those people and convert them into that. Such type of usage we have started implementing it, and many such tools are there. Recently, you also might have seen that on the first January, we had a finals of Hackathon, what we conducted the last three months. And there was an overwhelming response from the globally.
There are 2,899 applications. Registrations have happened. More than 250 people have submitted their ideas. The ideas also, we have given three topics. One is using AI and machine learning in customer experience, default prediction, and fraud prevention. We got excellent response from the younger generation, IITians, many IITians have participated, and all these ideas are available for us. Now we are working more and more on that, and this, whatever we are, we already started enjoying the results. It doesn't mean that we stop here. We are continuing to move forward, and of course, we are also so very, very soon we are going to launch even self-help groups, end-to-end STP process in sync with our RBI innovation hub.
That is also product is completed, UAT is completed, we are ready to launch that. Several initiatives like that we are taking. Our API banking, we have strengthened. Though we started with 35 services, now we extended to almost 135 APIs, we have made it live. Like that, everything we are doing it, this continue, that innovations in the, the IT will continue, but at the same time, we don't want to just invest and leave it. We are very periodically, we created such a setup that return on investment on this IT is a core, focus point for us, and we are focusing on that, sir.
Sir, Canara Bank is always willing to learn, and that is going to be your future. Sir, how much are we likely to spend to enhance our human resource with this technology abilities which you are creating?
That's what, sir. Actually, business lead conversion, I already told that it is incremental growth, so far it is contributing around 10%. But we, we aim to improve it to around 20-25%.
No, no, no-
So that will supplement it to the staff.
Sir, my question was, you have created a technology, you have created a data center, you are empowering the branches. But technology can do certain things. How are you empowering the human resource who will do all the jobs? How are you-
That's what, sir. Again, let me, let me explain to you, sir. So our human resource is 84,000 of human resources is our strength. Technology is a supplement to their efforts. I don't think that the technology is a substitute for the human resources. For banking sector, it is a service, selling the services is mainly human beings, sir. We never undermine the efforts of our, talent of internal things. I can say that many of these technology initiatives is in-house. So we have created that pool, and they are doing that. Now, by using these initiatives, by all the 84,000, how it is possible? We have created even virtual classes by using the metaverse, and that has been imported to our training institutes.
There is every employee will be trained at least a minimum 1 or 2, 1 to 3 days in every new initiatives of this, technologically initiatives, sir. That is helping them, making them more useful. Even CBDC. CBDC, now we have given our entire, our entire 84,000 people have been onboarded on that CBDC. Our staff benefits are being created to CBDC through CBDC. So we are making them familiar with our initiatives so that they can easily use these initiatives and do better to this bank.
Sir, my last question, your outlook on international-
Thank you, sir. We'll take that as the last question. Thank you, sir. Due to time constraints, that would be our last question. Thank you, sir, for giving us the opportunity, giving us at Antique Stock Broking the opportunity to host this call. We'd like to hand over the call to you for your closing remarks. Thank you.
Thank you. Thank you very much. International business also, we are continuing to do that. We have three outlets. We got license from GIFT City for the fourth branch, which is going to be launched very soon. And we, with, with the opening of the GIFT City branch, I am sure that the, globally, whatever the corporate lending we can do, we can do from this here only with the limited regulations. And I'm sure that will help in our increasing our both bottom line as well as the top line, and we keep continuing to do this. And thank you very much. Our main focus is consistency. That is, I am sure that it is reflecting in our quarter-on-quarter results.
Sir, congratulations-
Thank you.
Best wishes for 2024.
Thank you, sir. Thank you.
Thank you.
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