Good afternoon, everyone. Thank you for joining in. On behalf of Antique Stock Broking, I welcome you all for the fourth quarter earnings call of Canara Bank. From the management side, we have Sri L. V. Prabhakar, MD & CEO, Sri Debashish Mukherjee, ED, and other EDs. Without further ado, I would hand over the call to MD, sir, for his opening remark, post which we can open the floor for Q&A. Over to you, sir.
Yeah. Thank you very much. I express my sincere thanks for all the investors who are participating in this interactive session. Let me brief the highlights of the performance of Canara Bank as on 31st March 2022. We have concentrated on credit growth. We projected that there will be growth of 7.5%, against which the actual growth is 9.77%. The credit growth is widespread. There is growth in retail, growth in agriculture-led activities and MSME. Apart from this, there's a growth in corporate also. Put together, in each and every sector, we ensure that the growth should be about 10% Y-o-Y growth. Regarding deposits, we concentrated on CASA. Savings bank has grown by 12.22% and CASA has grown by 11.5%. Retail term deposits, it has grown by 5%.
Bulk, we would like to control, and the growth was only 2%, which we expected. Regarding the asset quality, as we have forecasted, we continuously strive to reduce the Gross NPA and net NPA in absolute terms, as well as in terms of percentage. Gross NPA at the beginning of the year was about INR 60,000 crore. As on date, it has come down to INR 55,000 crore. In percentage terms, it was 8.93%. As on date, it has come down to 7.51%. Net NPA, in absolute terms, it was about INR 24,000 crore. Today, it has come down to INR 18,000 crore. In percentage terms, it was at 3.82%. Today, it is at 2.65%. Provision coverage ratio, two years ago, Canara Bank used to have about 69% PCR.
Today, we are at 84.17%. In credit cost also, we have controlled, and it is at 1.75% as on December 21st. As on March 31st, it has come down to 1.53%. Slippage ratio, quarter-wise, it has come down to 0.38%. Regarding the income, we have concentrated to increase the interest income and also other income, simultaneously focusing on non-interest income also. Y-o-Y, as on March, NII has grown by 25%, and because of which the operating profit stood at INR 6,202 crore, showing a Y-o-Y growth of about 18.8%. Net profit, it was INR 1,666 crore for this quarter, showing a growth of about 65%. CRAR, last quarter it was at 14.8%.
Now it is at 14.9% after excluding about 23 basis points, which is relating to the dividend payment amount. This time, Canara Bank is happy to inform that the board has recommended 65% of paid-up capital as dividend. That is INR 6.50 per share. Global business, we have crossed INR 18.27 trillion. This financial year, we are projecting that we'll be crossing about INR 20 trillion business. With these few words, now we would like to take questions from the investors. Thank you very much.
Thank you, sir. Participants, please note whosoever wants to ask a question, please raise your hand. We'll wait for a minute for the question queue to gather. Okay. Our first question is from the line of Mr. Dhaval. Sir, please unmute yourself and ask your question. Mr. Dhaval?
Yeah. Sir, am I audible?
Please.
Yes, you are.
Thanks. Sir, I had two questions. First is on you know, the sort of comment around Can Fin Homes. You made comment that there was some corporate governance issue in the company and you know, frauds were detected. So just wanted to understand you know, the quantum of the fraud and also, you know, I think management in their call mentioned about some 37 odd accounts from one branch where the title documents were fudged. So just you know, wanted your perspective and size of the fraud and what steps have we taken to address that. That's the first question. I'll come back to the second question.
Second question, please. Yeah, you can-
Yeah.
Ask your question also.
Second question was, sir, on the, you know, growth for next year. I just wanted to understand on credit growth, what is the outlook on corporate credit for next year? You know, what's the sort of pipeline around, you know, that. Also if you could sort of give some perspective on sectoral level, you know, where are you seeing corporate credit demand? That was the second question.
Yeah, thanks. Let me answer your second question first, then first question next. Regarding the credit growth, we are projecting about 8%. However, we are also targeting at least minimum 10% credit growth in the retail and RAM sector. Regarding the corporate, the growth which we are projecting is more than 8% since we have already achieved 8% growth in the corporate sector. We are very active in HAM projects, infrastructure projects, then steel, even to some extent in power. We are also active in health sector. The growth we are seeing not in one sector, in various sector spread over. Apart from corporate, as on date, our loan book consists of about 57% retail and 43% corporate.
Why I'm emphasizing this point, 57% RAM and 43% corporate is even if any one sector doesn't perform well, the other sectors will compensate so that at the end of the year we'll be in a comfortable position to exceed our projected credit growth of about 8%. Last year, that is last financial year, credit, corporate credit growth was at 8.27%. We feel that with the number of inquiries and also the demand which we are observing in CapEx, we will be comfortably achieving a growth rate of more than 8%. Now, coming to the Can Fin Homes. In CNBC, I did not say it is corporate governance. I said in the best interest of the corporate governance we have conducted the inspection. That is the word.
The origin is there was a whistleblower complaint which we have received from the NHB. It was discussed in the ACB and board. To find out the reality and also to plug the loopholes and to strengthen the company, an investigation was done wherein about 37 accounts were found to be fraud. Amount is less than INR 4 crore. Since some accounts have come, so the board has decided that why not we verify the other accounts for the weaknesses if any to be addressed immediately and to strengthen the company credit loan portfolio. Canara Bank, as a financial conglomerate, is committed to support all its subsidiaries, including Can Fin Homes, and also it wants to have highest standards of transparency and also highest standards of corporate governance. Thank you very much.
Thank you, sir. Our next question is from the line of Ms. Mahrukh. Ma'am, please unmute yourself and ask your question.
Hello, sir. Hi.
Hello, ma'am.
Hi. Sir, I have a few questions. Firstly, what is the total interest reversal during the quarter? I mean, and are the slippages high?
Ma'am, if you see the slippages, fresh slippages are about INR 3,600 crores.
Oh.
Our recovery, cash recovery is about INR 3,157 crore, including recovery in written off accounts, plus upgradation of INR 842 crore, which amounts to about INR 4,000 crore. Fresh slippages of INR 3,600 crore is less than the recovery of INR 4,000 crore. In this particular INR 3,600 crore, the composition is agriculture, it is about INR 600 crore, MSME it is about INR 800 crore, and retail is about INR 600 crore, and remaining amount is other sectors. Basically the slippages are from small accounts where we have found some weaknesses. Those things have been classified as NPA. Coming to a linked parameter, which is SMA-2 and SMA-1 , you can find out from the slides that outstanding of the loan accounts above INR 5 crore.
In those accounts, SMA-2 outstanding as on 31 March is about INR 2,300 crore, which is 0.27%. SMA-1 is 3,700, which is equal to 0.43%. Both the things put together, it comes to only 0.70%. Slippages are under control and it will be under control going forward. Thank you, ma'am.
Sir, I just wanted to know if there's any corporate slippage, but from the breakdown also, because a big corporate account had slipped from any bank. Did it slip for you in the previous quarter or what is the status in the retail sector?
No, ma'am. Corporate accounts are not slippery. I think you may be interested to know about the Future Retail, if I am right.
Yes. Yes, sir.
Yes. Yes. Let me tell you, ma'am. Today only we have received about INR 227 crore in that account, Future Retail. Our outstanding is hardly INR 1,200 crore, wherein we have provided, in spite of standard account, 60% as provisioning, so that in Q1 FY 2023 there will not be any significant requirement of making provision. Is it okay, madam?
Yes, sir.
Thank you, ma'am.
Sir, I just wanted to know that interest income, why has it declined quarter-over-quarter? Why has it fallen quarter-over-quarter?
Ma'am, if you see the interest income.
In that table, yeah.
Interest income, Y-o-Y, if you see, there is a growth of about 8.6%, but quarter-on-quarter there is a minus of 1%, because of two, three things. If you see my asset portfolio of rated accounts, triple A, double A and triple A portfolio, it has increased from 65%-7 7%. Last year being COVID year, we are very conscious of taking exposure in high-rated accounts with low risk. Naturally, when you go for high-rated accounts, the yields will be a bit less. However, this thing is confined to only 43% of the corporate, whereas in retail we are getting sufficient, what do you call, interest income. Going forward, we see a good traction as far as the interest income is concerned.
We have already increased our RLLR rate by 40 basis points, which will be effective from tomorrow. MCLR, in all the buckets, we have increased by 10 basis points, which will be effective from tomorrow.
Got it, sir. Sir, how will be your book linked to MCLR and to RLLR? What proportion of domestic-
Ma'am, RLLR, our book is to the extent of about 34%. MCLR is about 50%. About 84% of the book starts giving us higher rates.
Got it, sir. Sir, would you expect margins to improve from here on?
Ma'am, NIM, if you see, we have projected about 2.80%. Actually, we are at 2.82%, and we are projecting 2.90%. 2.90%.
Got it.
That will be minimum.
Got it, sir. Sir, my last question is just on the bond portfolio.
Please.
Bond portfolio, sir, what is the cutoff yield on the bond portfolio beyond which you start making mark-to-market losses?
Ma'am, for your information, the portfolio which our treasury holds in the bond, we'll not be getting a depreciation more than INR 200 crore-INR 250 crore. Not more than that.
Okay, sir. Thank you.
Thank you, ma'am.
Thank you, ma'am. Participants, please note, whosoever wants to ask a question, please do so by raising your hands. I would request you to please restrict your questions to two. Our next question is from the line of Mr. Nitin Agarwal. Please unmute yourself and go ahead.
Yeah, hi. Thanks for the opportunity. On this growth front, now we are guiding for a slower advances growth in FY 2023 than what we have reported in FY 2022. Why is that so? Because general impression is that FY 2023 systemic growth should be better than what we have seen in 2022. Your thoughts around this, sir.
Sir, if you see the guidance which we had given last year, credit growth, we said it will be about 7.5%, but in reality it is 9.77%. What we project is the minimum that we are supposed to achieve. As I said, in 57% of my portfolio, which is RAM, the growth will be more than 10%. Corporate also, as on date, we are at 8%, and we expect that this will also grow at a rate of about 10%. But however, as a minimum, guidance, we have said that our credit book will grow at 8%.
Sir, on the similar lines, if I look at the CASA guidance, that at 38% looks aggressive, especially in a rising rate environment. How, like, fair it is to achieve this number?
Yeah. Regarding the CASA percentage, if you see the CASA growth, it is 11.5% every quarter. If you see the savings bank growth, it is about 12%. Percentage of CASA, historically Canara Bank was having a lower percentage, and which used to be about 30% two to three years ago. Every year we are increasing by 2%, and now we have come to about 34.88%, and going forward we project at 38%. This is a percentage. Why? Means this year we want to grow more aggressively in retail term deposits, and wherever we get good rate, even we want to take up some bulk deposits also. Percentage-wise, growth of 2% itself will be significant. However, CASA Y-o-Y growth will be ensuring minimum 12%.
Okay. The other question is on the NCLT resolution related recoveries that you reported, which is on slide 35. If I just look at the average recovery per account, that number seems to be quite small, at around, say, INR 2 crore-INR 2.5 crore range. If you can indicate as to how the recovery rate overall is trending, what was the overall exposure in these accounts and how much has been the recovery? Is this similar recovery rate is what you expect from the upcoming resolutions in the coming quarters?
See, whenever we talk about NCLT accounts, in my opinion, I think we should not club each and every account and have an average. No. It should be taken as small accounts, medium accounts and large accounts. Historical reasons, small accounts you may have security, in larger accounts you may have less security. The percentage, if you really want to analyze, it should be bifurcated into three different categories and also secured and unsecured. More scientifically we'll be in a position to understand. With the past experience, what we see is at least there will be a realization of about 35%-40% as far as the NCLT accounts are concerned.
Okay. Sir, lastly, on the treasury front, you mentioned INR 250 crore out of MTM losses. Just to clarify, is this as per the bond yields where they are today? Also if you can share the duration of AFS.
I request my executive director to kindly respond to this question.
Yes. As our MD has said just now that based upon the portfolio which we have right now and the way in which we have arranged that portfolio, even in this rising rate scenario, the impact, negative impact, with regard to the depreciation, we expect would not exceed about INR 250 crore. That is what we feel our estimation on the treasury depreciation.
To add to what our Mukherjee sir has said, if you see the last year performance, in the beginning of the year everyone was of the opinion that this time the banks will not be able to make good profits by sale of investments. However, in Canara Bank, if you see, the quarter-on-quarter amount which the treasury has earned, as on March by sale of investments we have earned about INR 523 crore. Last quarter it was INR 320 crore. Before that it was INR 1,133 crore, and June it was about INR 647 crore. Put together it is about INR 2,593 crore, which is a decent amount. We continue to earn in this range. Thank you, sir.
Sure. Thank you so much, sir.
Thank you, sir. Our next question is from the line of Mr. Ankur Gupta. Sir, please unmute yourself and go ahead. Okay. Our next question is from the line of Mr. Sridhar Shivaram. Please unmute yourself and go ahead. Mr. Sridhar? Mr. Sridhar? Mr. Sridhar, please ask your question. Okay, I think there is some problem with his line. We'll move our next question to Mr. Deepak. Mr. Deepak, please unmute yourself.
Hello. Am I audible?
Yes, you are. Please, sir.
Okay. Sir, I just wanted to understand now in terms of credit cost. I think you kind of given an indication of 1.4% as compared to 1.53% we have done in FY 2022. 1.4% is what we are looking at in FY 2023. In the absolute level, INR 11,000 crore, is the credit cost that we are looking at in FY 2023?
Yeah. Because this time since, in SMA- 1 and SMA- 2.
Mm-hmm.
The loan accounts with outstanding more than INR 5 crore is very insignificant. That is, it is about 0.7%. We don't see any big accounts slipping going forward. Hence, whatever slippages will be there, it will be in the small accounts, which is natural and which can be properly handled. That is why we are projecting a slippage ratio of a challenging one.
Okay, understood. Yeah, that's a fair point. In terms of ROA, we are expecting a big jump, right? From 0.45%- 0.7%, right? With a minimum improvement in our credit cost. What will drive our ROA improvement?
See, we are projecting ROA will be at 0.70%.
Yeah. Yeah.
Again, let me tell, this will be the minimum benchmark for us. It is not the maximum one.
Mm-hmm.
In the last year we projected 0.40% and achieved 0.48%. This time what we are projecting, 0.70%, that will be our minimum benchmark for as far as ROA is concerned.
Okay.
We are confident of achieving that.
Okay. Currently, I think this year we are at about 0.48%, right? In-
0.4% annualized.
Yes. Yes.
Quarterized, if you see, it is better than this figure. What is occurring.
Okay. I understand.
Oh, yeah. That's it. Thank you.
Okay.
Thank you, sir. Thank you very much.
Okay. Thank you, sir. I would request all participants to please keep your questions to two. Next question is from the line of Mr. Rakesh Kumar. Please unmute yourself and go ahead. Mr. Rakesh? Sir, please ask your question. Okay, I think there is some problem with his line. We'll move to our next question from the line of Mr. Mani. Please unmute yourself. Mr. Mani?
Sir, good afternoon, sir.
Yeah, good afternoon.
Sir, thank you for the dividend of INR 6.5. I'm holding almost about 40,000 shares.
Thank you, sir.
It translates to almost about INR 1 crore. Here I would like to stress, sir, huge amounts are spent as CSR for donation to handicapped people and the needy by the bank. It's a great initiative. They also run a home for the destitutes. Bank has got about 75,000 retirees, of which maybe about 200 or 250 pensioners may be having wholly handicapped dependents. This detail is not available in the bank. The data is not available in the bank. Approximately about INR 72 crore is spent for the insurance, medical insurance for the serving employees, whereas these handicapped dependents are not covered under the medical insurance scheme for the retirees, sir.
Even if it is as a corporate social responsibility bank wants to cover them under this scheme of this IBA, that the bank may have to spend only about INR 20 lakhs-INR 25 lakhs on the whole. If your good selves can look into this, because nobody is having any idea how many retirees are having handicapped dependents. If your good self can help these parents. For your information, sir, many of the handicapped dependent parents of handicapped dependents have got only one prayer, that offspring should die before they die, because they don't want these people to be left in the lurch. Your good-heartedness will be appreciated by one and all, sir. Thank you very much, sir.
Sir, thank you, sir. Your suggestion is excellent. We really keep it in our mind. Thank you, sir.
Thank you very much.
Thank you, sir. Our next question is from the line of Mr. Sridhar Shivaram. Sir, please unmute yourself.
Yeah. Sorry, last time had some issues with the line. My question is on the tax rate. Last year we had almost 37% tax rate. Should we expect a normalization of tax rate for the current year? If so, what sort of rate should we expect?
Yeah. One minute. I request my CGM sir, who is handling the accounts. Please, Ramachandra.
Yeah. Good afternoon. I'm Ramachandra, CGM here. At present, we are paying the higher rate of interest of 35%. At the moment, we found that this rate is advantageous to the bank because of the merger accumulated loss we got through the merger. At the appropriate time, we have a plan of shifting to the new tax regime.
Should we assume 35% for the next year also? For the current year?
No. No. I have to take a decision at the appropriate time, sir. I cannot, commit now itself.
Okay. Sir, my second question is on the guidance that you've given of around INR 7,000 crore, INR 40 EPS you have given a guidance. If I work backwards, it looks like you are guiding for a total provisioning of close to INR 15,000 crore. If I assume that your operating profits will also grow at 10% from INR 23,000 crore to about, say, INR 25,000 crore, which looks slightly on the higher side. Can you give some guidance on the total provisioning number, the provisioning for NPA and the others, and is my working correct?
Sir, there are two points. One is your assumptions are based on the OP that is going to be there, which you are telling it will grow at 10%.
Yeah. I am taking a very conservative number.
Yeah. Yeah.
Based on what you have guided.
Yeah. Here, let me share one important information to you, sir. As for the IBA agreement, if the staff has to be paid 15 days PLI, which we are doing, which we did in the last year, and which we paid this year also, there should be a growth of minimum 15% in the OP Y-o-Y. I expect that every staff member wants to take 15 days PLI. Accordingly, everyone will strive to achieve a OP growth of about 15%. Regarding the provisioning, sir, as you have seen in the last two years, we do aggressive provisioning to make the balance sheet very strong and to keep the balance sheet ready for the future.
This is the reason why in the last 8-9 quarters, if you see, every quarter, there will be continuous growth in all the financial parameters without any downward trend. We strongly believe that going forward also, we have to make the balance sheet strong. For example.
We were hoping for a-
Let me-
We were hoping for a five-digit number of profit for the current year, because of the way the trajectory was going, and it looked like you have a very high provisioning number already. Looks like we may not get there.
Uh, sir-
Is it that you're underpromising?
Sir.
You will perform better.
No, I'll share some figures. From that, you can get the conclusion. Last year our net profit was about INR 2,550 crores. This year it is INR 5,678 crores. It is almost more than 100%, 120%. Regarding provisioning also, if you see, we are already at 84%, and we are projecting 85%. The third point is, for example, Future account is there. It is a standard as on date in our books. As on date means as on twenty-third of January. Even then, we have provided 60% to that account. Our philosophy is we want to be ready for tomorrow by making sufficient provisioning today.
That is the philosophy with which we are working, and it is giving excellent results, and because of which today the board is in a position to declare a dividend also after a long period. I think, going forward, this will give a good dividends because of this approach. Thank you, sir.
Sir, my last question on the dividend. Your dividend absolute amount is about 20% of the profit. Should we expect-
Right.
a continuation of that, going forward also?
Sir, two years ago when I addressed my investors, I said, we are working hard to take care of the investors, staff, and the stakeholders. We are of the opinion that we have to give maximum to the investors and the staff and the stakeholders. Our philosophy will go in that direction. Accordingly, I think we hope year-on-year the things should become better and better. That is our philosophy, sir. Thank you.
Thanks a lot, sir, and well done, sir. Thanks a lot. Bye.
Thank you.
Thank you, sir. Our next question is from the line of Mr. Anand Laddha. Sir, please unmute yourself and go ahead. Mr. Anand? Okay, our next question is from the line of Mr. Pranav. Please unmute yourself and go ahead. Pranav? Mr. Pranav? I'll take the next question from the line of Mr. Gaurav Kochar. Please unmute yourself and go ahead, sir.
Yeah, hi. Good evening. Am I audible?
Yeah.
Yeah.
Yes, you are, sir.
Good evening. You are audible, sir.
Yeah. Good evening, sir. Sir, my question is with regard to the slippage in this quarter. If I look at the gross slippage number, it was elevated. Last quarter, the net slippage number was very small, but even if I look at the net slippage number, this was high sequentially. You're saying that Future Group was standard. Any other corporate account that slipped in this quarter apart from Future Group?
Sir, if you see the fresh slippages, it is about INR 3,600 crores.
Right.
This INR 3,600 crore, sir, about INR 800 crore is from the MSME sector, about INR 600 crore is from the agriculture sector.
Right.
About same amount, INR 500 crore-INR 550 crore, is from the retail, which are all small accounts.
Mm-hmm.
Whenever we identify any weakness in an account, we would like to classify it as NPA so that it can be cured at the earliest, whatever sicknesses are there. That is the reason because of which even if you compare with the last March 2021, where the slippages were INR 14,000 crore because of various reasons, this time the slippages were only about INR 3,600 crore, out of which we are hopeful that in this current quarter, 25%-40% of this will be either recovered or will be upgraded.
Sure. Sir, upgrades and recoveries target for next year, total, recoveries?
Sir, first target, our target is always we target for recovery should be more than slippages.
Okay.
For example, fresh slippages this time, it was about INR 3,600.
Right.
My cash recovery is INR 3,157 crores and upgradation is INR 800 crores, which is equal to INR 4,000 crores. We are expecting that during the current quarter, minimum INR 15,000 crores-INR 16,000 crores of recovery will be there.
Right.
both in big accounts and small accounts.
Okay. Got it, sir. My next question is with regards to Can Fin Homes. You highlighted that you sent a team from the bank for detailed audit. Any findings from that audit or that is a part of the 37 fraud accounts that you disclosed?
That is the initial audit.
Okay.
We observed some irregularities. The important one is about 37 accounts were identified as fraud. Amount is less than INR 4 crore, which is already provided and reported to NHB.
Right.
Now the board has decided that with the same internal team and also with the statutory auditors, there can be further checking of the existing accounts so that if any irregularity is there.
Right.
It can be addressed immediately. It is an ongoing process.
Okay. Got it, sir.
Thank you, sir. Yeah, please. Please.
Yeah. Just last question, if I can squeeze in. On the Can Fin call, they did highlight it that, you know, Canara Bank has deputed three people in the risk function and audit function and one in the admin function. Apart from this, any other action that the bank will take with respect to Can Fin Homes?
See, Canara Bank will always take proactive steps depending upon the situation.
Right.
or as situation warranted. Canara Bank is committed to support Can Fin Homes and all its subsidiaries in terms of providing know-how, in terms of giving support or if required, in terms of capital also. We are as a sponsor, we are there to support all our subsidiaries.
Sure, sir. Thank you so much.
Thank you, sir.
Thank you, sir. Our next question is from the line of Mr. Pranav. Sir, please unmute yourself.
Hi. Thanks a lot. Can you hear me?
Yes, please.
Yeah. Sir, I just wanted to have a little bit clarity on the slippage guidance that you have given. Slippage guidance of 1.75%, don't you think it is little bit on the upper side as compared to, say, FY 2022 when it was 1.7%?
I can say it is not upside. Why we have given this 1.75% is we will not be crossing this. It can be less also. It may be. It may end up at 1.5% also, 1.3% also.
Right.
For the public, we want to say that this is our tolerance limit, to which extent it may go.
Right. That is a gross slippage, next slippage can anyhow be negative if your recovery and upgrades are above.
Yes. Yes. Yes, sir. You are right.
That is first question. Second question is, can you just spend some time on explaining the treasury income? Treasury income, as I understand, there will be some interest and then there will be some AFS MTM. Then this treasury income that comes in the other income is a sum of the two items. Now if you see, even in this quarter you have not reported negative. Is it safe to assume that this number in, on a net basis, will be in the same range of minimum INR 300 crores-INR 500 crores?
Yeah.
Will that?
One minute. Mr. Debashish Mukherjee, are you there? Yeah. Mr. Debashish Mukherjee, sir, please.
Like we said, just now, we do not expect any very drastic change in the depreciation levels in the treasury. Our AFS duration is around 2.3, which is a very healthy duration, we can say. With this, we are in a position to manage the risk in the treasury, which due to this, you know, higher rate regime, interest rate regime, which we are facing. It won't be as good as what it was in this last financial year, but it will not show much drastic, you know, lowering of the treasury income also. Like we said, we are totally aware of the depreciation levels which our treasury book will undergo, which roughly would be somewhere in the range of INR 200 crore-INR 250 crore.
Right. What is the other item in this income? Like, one is - INR 200 and then there will be some plus, right?
Can you please repeat?
Yeah. Yeah. I'm saying, even if that is -INR 200, the treasury income that comes in the other income will have some other components, right? It's just not AFS MTM.
No, no. It will have its other components as well, like it had this time also. You know, profit on exchange transactions and other things will also be there. They will also contribute like it had contributed. We are totally talking about sale of investments or, you know, the core treasury functions, what I was telling you about that. But there are other, you know, avenues of income which will help boost the treasury income, like we said.
Right. If I do just match by the guidance given by you, say 10% or 8%-9% growth in credit and 10 basis points increase in NIM, which will amount to somewhere around 13%-14% increase in NII. Obviously other income, factoring in what other income you are saying, and obviously taking operating expenses, your guidance of profit and EPS looks very, very conservative. I think it can be 30%-40% higher. Am I wrong in this calculation? Because 1.4% of NPA provisions would have been around INR 10,000 crores max. If I just plug in all the other data that you have guided, then this 14 EPS looks very conservative.
This is our minimum benchmark.
Okay.
Which will always be conservative. Going forward, as we declare the June results, we'll be revising the forecast also, sir. Guidance will be revising on upper side.
Perfect. The tax rate of 20%, about 30% will continue for how much time?
Sir, as long as it is beneficial to us, till some more quarters we'll continue with that. Once the carry forward losses are over, then naturally we may take a call to shift to the new tax regime.
Right. Any guidance on how many quarters will that continue?
Only going forward I will be in a position to say, sir. As of now, I think, it's difficult for me.
Perfect. Just to repeat last question from my side.
Please, sir. Please.
Yeah. Out of INR 1,000 crores future exposure, INR 200 crores payment we have received and INR 600 crores already we have provided. There is almost nothing to be provided hence forward. Is that right?
Sir, we have provided 60%.
Yeah.
60% in future. 40% is left over. Generally, our philosophy is to make a provision as far as possible. We may do in this quarter, remaining amount also.
Correct. You said also you have received INR 200 crore, right? INR 800 crore.
Today, after excluding INR 227 crores which I have received, now the balance is INR 1,200 crores roughly.
Okay. Got it, sir. Thank you.
Thank you, sir.
Thank you, sir. Our next question is from the line of Mr. Bhavik Shah. Please unmute yourself and go ahead. Bhavik Shah? Okay, next. Yeah.
Hello.
Yes, please. Go ahead.
Hi, sir. Thanks for the opportunity. Sir, I just wanted to know what would be your liquidity coverage ratio this quarter?
Sir, as on date, it is 125% LCR.
Okay. Sir,
Yeah, please. Next time.
No, sir. Go ahead, sir.
As on date, it has increased to 140%, sir. As on balance sheet date, we are about 125%.
Oh, okay. Sir, why has this drastic movement been? Because of deposits or, yeah, from 120%-140%?
Two things have come. RBI has given this latest on 19th April, some MSF relaxation has given for HQLA. That is also there.
Okay. Understood, sir. Sir, one more thing. Sir, I wanted to understand how has the slippages been from the restructured book. What would be your outstanding restructuring number?
Sir, restructuring book is about INR 14,000 crore as far as under the Resolution Framework 2 is concerned, and about INR 5,000 crore under Resolution Framework 1. Put together, it is about INR 19,000- INR 20,000 crore. We are observing about 4%-4.5% as slippages. In this restructured book, now the, in our Resolution Framework 1, the repayment is up to 95%, and in Resolution Framework 2, the repayment is about 85%.
Okay. Understood, sir. That's it from my side, sir. Thank you.
Sir, thank you.
Thank you, sir. Our next question is from the line of Mr. Abhijeet Sakhare. Please unmute yourself and go ahead.
Yeah, hi. Good evening, sir.
Good evening, sir.
First question is on the investment provision. There's INR 1,000 crore hit that you've taken. This relates to the security receipt book?
Exactly, correct, sir. Because it has crossed eight years, so we have made 100% provision.
Okay. There is INR 1,500 crore which is still pending there, so that would also get marked down consequently.
It will take some years. Not immediate, sir.
Okay.
It will take some years. Immediately, there may be around INR 300- INR 350 crores, which in all, if at all, required to make the provision in the full financial year.
Sir, on the G-Sec book, the impact that you're sharing, potential future impact, what are you looking at in terms of the cutoff yields when you're calculating that number?
You know, that is, our outlook is somewhere around 7.50%-7.60%. That is what we expect.
Second question is on the slippages, if we deduct all the retail agri SME slippages, we still have INR 1,600 crores of corporate slippages. Trying to understand if this is like really spread out across a lot of accounts or if there is any large account still sitting there.
Large accounts, at the most, it is about INR 150 or INR 120 crores. Not in four-digit figures.
Yes.
not in higher, what do you call, I can say three-digit figure. It is spread over one.
Sure. Sir, last question is a clarification on the pricing of home loans, for example. When we increase the RLLR rate by 40 basis points, how are we doing anything on the spreads as well? Is that being retained? Are we cutting it? How are we dealing with the spread on top of the RLLR tweaks that we are doing?
As far as RLLR is concerned, we have increased 40 basis points by maintaining the spread as it is.
There's a straight 40 basis point-
Yes.
impact on the
On a portfolio of about 34% of my loan book.
Okay. Got it. This is useful. Thanks a lot.
Thank you, sir.
Thank you, sir. Our next question is from the line of Mr. Dixit Doshi. Please unmute yourself and go ahead.
Yeah. Can you hear me?
Yes, please.
Yeah, I can hear you. Please go ahead.
Thanks for the opportunity. Most of the questions have been answered. Just one question. You know, looking at the growth that we are targeting for FY 2023, and also the recovery and upgradation we are targeting, is it fair to assume that in FY 2023 we will not require any fundraising?
Sir, as on date, with my present CRAR of 14.9%, I can comfortably achieve a credit growth of about 10%. However, our philosophy is to strengthen the balance sheet and strengthen the capital base as far as possible. Since now the Canara Bank is in a very strong footing, we can raise at a very competitive rate, AT1 bonds and Tier 2 bonds. Equity, we are not looking as of now. AT1 bonds and Tier 2 bonds to the extent of about INR 9,000 crore we may raise, and this we'll be taking to our board in the next board. Once the approval is there, then we'll be coming to the market.
Okay. Thanks. That's it from me.
Thank you, sir.
Thank you, sir. Our next question is from the line of Mr. Jai Mundra. Sir, please unmute yourself and go ahead.
Yeah. Hi, sir. Good evening. I have three set of questions.
Sir, good evening, sir. Please.
Good evening, sir. Sir, first on Can Fin. If you can suggest what is the course of action here, in the interim, will the current MD & CEO stay or there could be a potential change of management there? You know, and also it looks like the low amount of fraud is not that material considering their balance sheet size. You know, what is the thought process there?
I will break up this question into two, three parts. One, with regard to the stay of MD and CEO there at Can Fin Homes. You see, at the present moment we do not foresee any change. That is number one. Number two is, with regard to this whistleblower complaint, as we have been explaining you, this has been forwarded by NHB. We had to pay a lot of attention and seriousness on that, which led to discovery of certain fraud accounts amongst other irregularities, which we have already, you know, taken rectification action on them, like provision of the fraud accounts and et cetera, et cetera, on the irregularities.
Now, as our MD sir was telling the other participant, that is, since we have found out certain lacuna, certain irregularities, we wanted it to be more broad based. That is the idea with regard to what, as you said, that we have, you know, appointed the central statutory auditors of the company to themselves verify and see the books so that it is made more strong in the near future. That is what the basic idea with which we have worked in this area.
Understood, sir. Second question is, sir, on your corporate slippages once again. Out of INR 1,600 crores corporate slippages and your SMA-1 plus 2, right? That still remains more or less similar. What is the sanctity of this SMA-1 plus 2 number when you have INR 1,600 crores of corporate slippages and you still have, let's say, INR 1,200 crores pending from Future. How should one look at, you know, this INR 6,000 crores of SMA- 1 plus 2? It looks like it does not show the real riskiness in the book. How would you tie that up?
Sir, as far as the corporate is concerned, regarding this SMA- 2 and SMA- 1, which amounts to about 0.7%, this is above INR 5 crores. Regarding the slippages of INR 3,600 crores from which we said that excluding retail, MSME, agriculture, there is other small accounts called small businesses and others also. Excluding this, the corporate, there is no big account. Even if it is a big account, is about INR 110 crores or INR 120 crores. Put together in a full quarter, the slippages were about INR 3,600 crores, including everything. The SMA- 1 and SMA- 2, where we are projecting about INR 6,000 crores, there can be some slippages, but not significant slippages in the current quarter.
Right. Sir, what I was saying is that last quarter we also had the similar number, which looks very small, less than 1%.
No, sir. Last March, we had about INR 5,000 crores compared to this March, which is about 0.7% in SMA- 2 and about INR 10,000 crores in SMA- 2, which is about 1.47%. Put together it is INR 15,000 crores, constitutes about 2.17%.
No, no.
This is the figure for last year.
Yeah. I was comparing, sir. Slippages of INR 1,600 crore in corporate is clearly for this quarter, so maybe I was comparing versus last quarter. There is not too much change in this SMA- 1 plus 2, and we have-
Total INR 1,600 crore is not corporate, sir. In that again, there are small businesses and retail also to some extent where they are not corporates. Corporates, when we say INR 100 crore, INR 150 crore, such accounts are one or two only.
Okay. Understood. Third question is, sir, on capital and tax. One is we have accumulated losses of INR 18,000 crore plus, which we have set off. Despite having that, it looks like we are still paying accounting taxes. Whereas one other PSU banks, when they shifted to new tax regime or without shifting to new tax regime, when they had accumulated loss, they were still showing negative taxes.
Negative taxes.
Why are we not showing tax provisions right back when we have accumulated losses? Or, if you can explain that.
See, as already informed by our MD and CEO, as long as advantageous to the bank with a higher tax regime, we are continuing with the higher tax regime. I confirm that as on today, it is advantageous to us to have a higher rate of tax because of the reversal of the carry forward loss. When it is advantageous with the new tax, we are really going to shift it.
No, no. I am asking, sir, when we have accumulated losses of INR 18,000 crore, why are we still paying taxes?
Sir, see the accumulated loss is not a static. Every time it is reducing also. I can only tell it is advantageous as on today with the higher rate of interest. With the tax paying also it is advantageous. Totally, overall it is advantageous to the bank.
Sorry, how, sir? How paying taxes are advantageous?
You can come off the line, we can explain.
Sure, sir. Okay, lastly, on IFR, sir, investment fluctuation reserve. It looks like RBI had asked bank to provide at least 2% of IFR, and it looks like we did not. We have only done some 1.7% something, if I look at the last annual report.
It is fully provided, sir.
Now-
It is fully provided.
Okay.
It is fully provided.
Sure, sir. How much-
Sir, could you please come back in queue?
Sure.
Thank you, sir. Our next question is from the line of Miss Sneha. Please go ahead. Unmute yourself and go ahead. Miss Sneha? Please ask your question, ma'am.
Plans for selling off any of your subsidiaries. One is on the fundraising plan.
Ma'am, could you please be a little louder?
Just wanted to know any plans you are planning to sell any of your subsidiary? Second question is, any plans to raise the capital considering the growth which we are targeting?
Madam, to answer your first question, at present, we do not see any necessity for any, you know, lowering our stake in any of our subsidiaries for the present moment. That is number one. With regard to raising of capital, as our MD had very clearly stated, that regarding the growth which we are envisaging in credit, it is not necessary for us to raise capital on account of that. For strengthening the balance sheet further, we may come out with some, you know, plans for raising capital, which we will separately take up with our board of directors in the coming months and get their permission and then we will announce that.
Hello.
Thank you. Thank you, sir. Thank you.
Madam, could you get my answer, madam?
Yes. Sir, one more thing. During the fourth quarter, we have seen a highly substantial fee income. Can we expect the same trajectory to continue in the coming quarters on the fee income side?
Fee income. You see, our endeavor is always for, you know, maintaining the fee income. Of course, the contribution of treasury would be less, but at the same time, the fee income by way of commission and LC/BG commission and other, our bancassurance business, government business, service charges, et cetera, we would continue the same level of income so far as the fee-based income is concerned.
Okay. Got it, sir. Thank you.
Thank you, ma'am. This would be our last question for the day. I'll now pass on the mic to MD, sir, for his closing remarks. Sir.
Thank you very much for all the investors for giving us an opportunity to clarify if any doubts are there, and also to project our future guidance. Today really we are happy as our board has kind enough to declare the dividend for which we have worked hard in the last two years to take care about our investors, about our staff and about our stakeholders. We expect the same type of support and cooperation from you all people. Thank you very much.
Thank you, sir. On behalf of Antique Stock Broking , I thank the Canara Bank management for giving us the opportunity to host them. Thank you everyone for joining in. Goodbye and have a good weekend. Bye.