Good evening, everyone. We welcome you to the Q3 FY25 earnings web call of Canara Bank. Thank you for giving us this opportunity to be with us. I am Mr. Raju, MD, sir. We have with us Mr. Ashok Chandra, Executive Director, Mr. Hardeep.
No, no, no, no, no. Ashok Chandra is not there.
No, Mr. Ashok Chandra is not there. He has gone already to PNB as MD.
Sorry, sir. Mr. Hardeep Singh Ahluwalia, Executive Director, and Mr. Bhavendra Kumar, Executive Director, along with other senior management, came out here. Without any further delay, I hand over the call to MD, sir, post which we'll open the floor for questions and answers. Over to you, sir.
Good afternoon to all of you, sir. Another consistent performance figures I would like to share with you for the Q3, the December quarter performance. Our global business has grown at 9.3%, stood at INR 24.19 lakh crore. Our global deposits grown at 8.44%, stood at INR 13.69 lakh crore. Our global advances have grown at 10.45% as against the and stood at INR 10.49 lakh crores. Our operating profit again regained, and it is reflected more than 15.15% year-on-year growth, stood at INR 7,837 crores. Our net profit grown at 12.25% year-on-year and stood at INR 4,104 crores. Our PCR has reached an all-time high of 91.26% with a year-on-year improvement of 225 basis points. Our gross NPA has come down to 3.34%. Year-on-year decline is 105 basis points.
Our net NPA has reached to the all-time low in the history of the Canara Bank to a 0.89%, with a year-on-year decline of 43 basis points. When we have grown the advances more than 10%, what we have given the guidance double-digit at 10.45%, it was led by the RAM credit at 12.32%, and our corporate has grown at 8.04%. This RAM credit has led by, again, retail credit at 35.46%, mainly on the housing loan grown at 12.26% and vehicle loan grown at 17.26%. Our earnings per share is stood at 17.59. This is against a ₹2 face value. Our fee-based income shown a steady growth with a year-on-year 23.31% and stood at 2,185 crores. Our slippage ratio, first time it has come down below 1%.
We are able to maintain that below 1%, and it is a year-on-year reduction is 28 basis points, which stood at 0.96%. Our credit cost, again, all-time low in the history of the Canara Bank to reach to a 0.89% at 8 basis points. See, at the initial stages when we commenced our financial year while announcing the last March, last financial year results, we have given a guidance in the 13 parameters to the investors. The same 13 out of 13 for March, whatever we have given the guidance, out of the 13, 9 parameters already we surpassed or we have achieved whatever the guidance we have given it to achieve by the end of the March. We achieved well within that three months earlier only. Within nine months itself, we could achieve that nine parameters.
These nine parameters are advances growth, then the gross NPA, net NPA, PCR, slippage ratio, credit cost, return on equity, earnings per share, return on average assets. These are all comfortably we have surpassed that March, whatever the given the guidance. In four parameters, business growth and the deposit growth and CASA NIM. I want to share it with you that though the growth is steady, but still here we are facing a constraint that the market liquidity is still having a problem. We can garner the term deposits. It's not a big issue for that. It's not a concern for the bank, but only thing at what rate we have to raise that. Since in the market the rate of interest war is going on, it has become a costly affair.
That's why last quarter, when we have an 8% of excess SLR, instead of garnering the high cost term deposits, we depended on a window available with the RBI by pledging our excess SLR and raised around INR 40,000-45,000 crore. And that we could raise it around only 6.5%. That is helping us in reflecting a better performance in the bottom line. That's the reason actually we have shown a growth of 8.4% in the deposit that has indirectly impacted our guidance of 10% business growth to 9.3%. But we want to continue because again we have kept in mind that the LCR guidelines, what are the regulatory guidelines which is going to come effective from 1st April onwards, that may impact our LCR to 12-13 basis points.
At this moment, our LCR is 123% as against the regulatory requirement of 100% and the within the bank requirement of 105%. We are at 123%. But if you impact that as on date, that guidelines are implemented as on today itself, our LCR would have been fallen from 123 to 110 or 111%. Just to bring it back to 120%, in the December 1st week of the December quarter, we introduced a two long-term tenure term deposits and offered a higher rate of interest, that is two to three years and three to five years buckets. We offered at a 7.3% and 7.4% for general public. That has attracted quite a handsome amount. We almost garnered 8,800 crores so far in the last one month. We will continue to do that so that will take care of our shortfall of LCR.
Whatever the guidelines we are going to impact our LCR, that 10 basis points, again we want to regain by canvassing the deposits under these two buckets. That has cost, that has impacted our cost on deposits to a little bit. That has also impacted our NIM to some extent. So these are all the few glimpses of the performance I've shared with you. Now open for all of you, sir. You can ask any clarifications. We are there to answer you.
Thank you, MD, sir. We will wait for a couple of minutes for the questions to be arranged. If you wish to ask a question, please raise your hands. We have our first question from the line of Ms. Mahrukh Adajania. Please go ahead, ma'am.
Yeah, good evening, sir.
Good evening, madam.
Yeah, hi. So just a couple of questions. Firstly, that just in terms of deposit growth, how do you plan to boost your CASA? Because it's already down to 30%, right? I know there's a lot of competition. Traditionally, also, your CASA was very competitive given that your geographical presence kind of matched that low CASA. But now, at these levels, how do you boost CASA? And what is the tolerable level of LDR? As of now, the domestic LDR is already 78%. So can you take it up to 80%-81%? What is your comfort level of LDR? That's my first question, and I have two others.
Okay, madam. First question, first let me answer about that CASA, what we are doing it. We have recognized our shortfall of the CASA. That way, the last two years, we have come out with so many new products targeting for the various sections of the people. But all those products have been deeply penetrated, and it has attracted almost 23 lakh new customers in those new products. It has contributed to us almost 17,200 crores incremental CASA deposits, savings deposits alone. But what the unfortunate part is at this moment, when we have introduced at that time itself, the market liquidity has become a major issue, and the market has gone beyond the competitions, beyond the expectations. And at the same time, simultaneously, industry started offering very high rate of interest.
You are aware that now, presently, in all public and private sector banks, the payment platforms have been stabilized. Every individual can shift his surplus funds anytime to either the term deposits or to the mutual funds, or whenever he wants, he can redeem it and bring it back to his savings bank account. Under such matured payment systems, the customers nowadays, the tendency became that they are not retaining beyond whatever the basic requirement of the CASA amount in the savings bank. Remaining entire surplus, they are shifting to the term deposits or even for the other income revenue sources. That is a major concern. But our trust will continue in the CASA because recently, also just one month back, we have introduced in the current month only, we introduced a Canara Crest, that is to reconnect with our existing high net worth individuals.
This is also an innovative product, Canara Crest and Canara Crest Plus. This is targeting for our existing customers who are maintaining a well-averaged balance, daily averaged balance, good handsome averaged balance. We are making them as a customer of the bank instead of a customer of a branch. We are making them all 10,000 branches as a home branch for them. Anywhere if they visit, they get the same treatment in all the 10,000 branches. We made the branch manager as a relationship manager for such high net worth individuals. We are meeting them. We are extending this facility, and the initial response is very, very high.
Whatever the steps we are taking in augmenting the fresh deposits, this initiative of retaining the existing customer and their balances will help in growing a little bit in the coming two months or three months. But definitely, it's a challenge to grow in that. That's why our innovation of products targeting the sections will continue here afterwards also. And the second one is what the main is you asked about.
LDR.
CD ratio, CD ratio. CD ratio, madam. We are already at 76.5%. We may reach at we are comfortable at 78% because the 18% is SLR, 4% is CRR. If you together, it's 22%. If you remove these two things, the 78% is comfortable for us. That is our comfort level. Till that time, we will continue to grow in that. The 78% will be for us, psychologically, is a limit we can absorb it.
Okay, sir. And my other question.
That's a global CD ratio.
Got it, sir. Got it. Okay, sir. Sir, and my other question is, is there any runoff in interest income because other interest seems to have gone down this quarter? And likewise, in your fee-based income, where you have three components, commission, service charge, and miscellaneous, you have three. So the miscellaneous is a very big amount. It's bigger than the commission, exchange, and brokerage. And this quarter, it has fallen QOQ. So can you break it down into components or explain why the miscellaneous fell so much? And likewise, if there's any runoff in interest earned, interest income. And also in the provisions, there is an NPA provision, sorry, an investment provision, NPA investment provision, right, of INR 4 billion. What is that for? Non-performing investment. Yeah.
The first question.
First question is runoff in interest income, tax refund or interest.
That's, let me answer you, madam. First of all, the one of the interest income. Actually, the interest income, if you look at that Q1, QR, or year-on-year basis, interest on loans and advances is a considerable improvement there because our average advances are growing steadily. But the only thing, last year and this year, we used to get a benefit of excess liquidity, whatever available in our system, we used to lend it effectively in the overnight market or call money market. That benefit we are taking it in that is actually other interest income. But this time, since we are using our excess liquidity in increasing the credit growth, we are not lending more in that overnight investments. There we have seen some reduction in that other interest income.
The one-time interest, last quarter we got some 320 crores benefit in the NPA account. One NPA account, when we are resolving it, we got a recovery towards the interest on NPA is 320 crores. That 320 one-time is not available this time. Even with these two conditions, still we could recoup because of our improvement in the interest on loans and advances. That's why if you see that sequentially, only 200 crores shortfall is there in the interest income, but it is a bottom line. It's a base. Here afterwards, we strongly believe that quarter on quarter, there will be a steady growth in NII. Then second, it comes for that fee income. Fee income has grown at 23.31%. Madam, this fee income, it is one is commission, exchange, brokerage, whatever it is there. It's a steady growth only. It is there.
It's not that too much growth, whatever it is there, but we are focused on non-fund-based business mostly. That earlier, it was stagnant, but because now centralized, we have centralized that non-fund-based business entire thing. That has initial stages in stabilization. It took some time, but now it has started giving the results. Again, it is also we also started cash collection centers, cash management and collection centers. That is also giving some good income. That has helped in giving that some 100 crore we got in that fee-based income pay. Earlier, last year, this vertical was not there, but this vertical is created second half of the last year. That has contributed good income. Regarding the miscellaneous income, it is a miscellaneous income is only debit card charges, and that you have to see that miscellaneous income you cannot see from sequentially quarter on quarter.
It has to be looked at to that quarter on year-on-year wise because many of the incomes in four quarters may some incomes fall in one-time measure of either September quarter or December quarter or March quarter. Let us say that CGT MSE fee collection, that will fall in September quarter. That's why September quarter may that it looks that more it is there and there is a fall in that. When you have to compare, it cannot be compared in the sequentially. You have to compare only year-on-year basis. If you see the year-on-year basis, 570 crore became a 747 crores with a 31% growth. There I feel that it is in line with the as expected only. Then the actually again treasury income also we got some improvement in the treasury income.
That is because, as per the latest regulated guidelines, every bank can sell their 5% of held to maturity HTM securities. First two quarters, we are not sold any securities because we want to keep it because we have sufficient incomes. Since the market is, we are getting some benefit, we immediately taken some call part of that 5%. We sold in this quarter, and the remaining part we kept it for the next quarter, the current quarter. That benefit also we got some around INR 300 crore. That has shown that some increase in the treasury income.
Now regarding NPA, madam, when we are resolution with the true resolution, when we send that when we transfer our account from banks to NARCL, that will be we are getting a 15% only upfront cash payment. The remaining 85% we get SRs. That SRS will be accounted in the investments. But only thing, see, even though it is a central government guaranteed accounts, we cannot reverse that provisioning. So it is nothing but increasing the provisioning in NPA, but to that extent decreasing the provision in the NPA. If you look at that overall, the provision is almost it is same as last quarter. Except that there is no fresh investment is slipped to NPA.
Okay, sir.
Have I answered all your questions?
Yes. Sir, only on that miscellaneous income.
Sorry, there are other participants waiting in the queue. If you could please join the queue.
Sure.
We have a next question from the line of Chanaranjan. So please go ahead.
Hello. Am I audible?
Yes, sir.
Yes, sir. Audible.
Hi, sir. Congrats on the quarter and thanks for taking my question. So firstly, you are one of the largest players in agri gold loans. And right now, RBI has been talking about some changes in that segment in terms of they have to be collateral free. They have increased the limit from 1.6 lakhs to 2 lakhs. Just any thoughts on how this product evolves? Because I presume everything is collateralized. And if RBI wants it to be collateral free for PSL benefit, how will this business evolve?
Sir, our internal audit by the RBI is concluded, and I have not seen any such comment from that RBI regarding our gold loan in the agriculture. So I don't see any problem at this moment from any regulatory comments on that.
Sir, so this full INR 1.5 lakh crore book comes under PSL, gets a PSL benefit?
No, sir. No, no, no, no, no. INR 38,000 crores is retail portfolio. The remaining amount is under agriculture.
So that remaining gets PSL 1.1 lakh crores?
Yes, sir. Yes, sir.
Okay, so there's no issue on that front with RBI?
No, sir. Because the current year audit, the RBI exit meeting also is over. We have not seen any comment that related to that particular area. That's why we cannot comment on that.
Okay. And just in general, on the retail portfolio, RBI has been concerned about certain practices. You can't revolve without paying the full thing. They are concerned about bullet loans in gold loans. Any changes to the underwriting we are doing? And also the 75% LTV, is it only a disbursement or throughout the term of the loan?
Sir, that LTV is throughout the loan. There is no question of at the time of disbursement because the expectation is whenever the rate of interest is charged, as and when charged, it has to be serviced. Regarding the retail loans, we don't have any bullet payment type of products at all. It is all equated monthly installments only. And wherever it is there, if it is a bullet payment, the interest as and when serviced, the charge has to be serviced by the borrowers. Without that, there is no such product is available in Canara Bank. Regarding the regulatory concerns, it is only unsecured loans. That unsecured loans is not so active in our bank because we have only against salaries and pension, it is 15,500 crores as on date. So that is very small amount compared to our total 2,500 crores, 2,600 crores retail product.
It's hardly not even 6% or 7%. And in that, NPA is also less than 1%. We don't give any clean loans other than the salaried class and pensioners who draw their salary or pension through our bank. We don't give any pre-approved loans. We don't give non-salaried class clean loans and all. So that concern is not there. Again, another concern by the regulator is MFI exposure. Our MFI exposure, we reduced even from one year back, it was around above 700 crores. Now it has come down to 300 crores. And we have kept unless the maximum cap is only 40 crores for MFI. And we are not so aggressive on the lending to the MFI.
Okay, sir. This was very useful. So secondly, to the previous question, you mentioned 320 crore interest benefit. So can you just repeat? I think last year [Foreign language] 320 crore.
Let me say that. Last quarter, our interest on NPA recovery is INR 780 crores. That's INR 780 crore interest on NPA accounts for that quarter. But generally, on an average, we get every quarter, it's INR 400-INR 450 crores. But last quarter, because one account resolution payment we got INR 320 crores towards the interest, we have taken that benefit in the interest income. But otherwise, the average income, average interest on NPA every quarter we receive on INR 450-INR 500 crore. This time also we got around INR 530 crores.
That comes in other interest income line item, right?
Yes, sir.
Okay, sir.
Other interest income, yes, sir. Other interest income, it is in the.
Advances pay.
Advances pay. But other interest income is whatever your overnight lending. You do it whatever the excess liquidity it is there. Whatever the excess liquidity you have, you will do that in the overnight. You deploy in the overnight or short-term investments. That income has come down a little bit.
Understood. Sir, just last year, it may be earlier, but what is your deposit? Okay, okay. Sure, sure, sure. Thank you so much, sir, and wish you all the very best.
Thank you very much. Mr. Jay Mundra. So please go ahead.
Hello. Yeah, hi. Hello, sir. Good evening.
Good evening, Jay sir.
Sir, I have a few questions, sir. Thanks for the opportunity. One is, sir, apart from this interest reversal, the interest on NPA that was lower by 300 crores, was there any other reason that why the loan yields would have declined in this quarter? Any other product where you are seeing maybe there is a pressure on yield?
Sir, if you look at that, our yield, sir, it is quarter on quarter. If you see that earlier, the September quarter, our yield is 8.77. Now it is 8.79. There is a two basis point increase in the yield. So literally, no product we are compromising in the rate of interest, and we are not reducing any rate of interest. Even let me share it with you that one year back, our corporate portfolio of 4 lakh crore used to give at 7.1-7.20. That's the average yield. But now we are successfully by reemerging, de-risking the exposures and all. Now we are almost touching 8.5% in the corporate yield. So yield-wise, we don't have any concern. We already are in the highest level. But the only our concern is only cost of deposit.
Okay. Understood. Secondly, sir, if you can provide the breakup of slippages for this quarter and outstanding standard restructured book?
Okay. Theek hai, Sir. Total actually the slippages are 800 crore agriculture. 500 crore is retail. Near to the 1,000 crore is MSME. This is 2,300 crore, Sir. No corporate account is slipped to NPA. Now the outstanding restructuring RF1, RF2, and MSME restructuring. Total now as on date, standard restructuring is outstanding at 8,800 crores, 8,600 crores. And already restructured accounts are 4,500 crores slipped to NPA. Total it is 13,000 crores are outstanding in our books by restructuring, Sir.
Right. And lastly, sir, I think you partly answered on gold loan. So if I remember correctly, last quarter our retail gold was 28,000 crore, which has increased to 30,000 crore, right? So that product is still growing in a decent way. Is that the right understanding? Is the number comparable with 30,000 to 28,000 crore?
Yes, sir. Actually, it is growing decently because in metropolitan cities with stringent LTV ratio, we created a product available to them instead of giving earlier which to give for agriculture purposes with documentary evidence. Now that we have discontinued, we have created without any documentary evidence. If anybody wants to avail a secured personal loan, they can avail that secured personal loan. So that product has attracted the attention of the many metropolitan borrowers. That is giving a continuous almost 15% growth, sir.
Any changes that you have to make to the product in terms of, let us say, disclosure of end use or maybe rollover? I mean, do the customer rollover? They have to necessarily pay the entire outstanding?
No, no, no, no, no, sir. We are 100% complying with the RBI guidelines. No rollovers in these accounts.
Sure, sir. I will come back in a minute.
Theek hai, sir.
We have a next question from the line of Mr. Ashok Ajmera. Mr. Ashok Ajmera, please unmute yourself.
I'm here.
Okay, sir. Go ahead, please.
Give me some time because it takes some time technologically. Good evening, sir.
Good evening, sir.
Good set of numbers as regards the profitability concerns, sir. Operating profit is good, and in spite of the difficult times, once again coming in the banking, you have performed well on the profitability front because you manage it well. Now, sir, my only concern, which is a general concern nowadays in the entire banking sector, is the growth in the business. You answered in your initial remark only, and especially the credit growth.
Now, if you look at the current nine months, I think both on deposit front, of course, we are almost half, and if you take out the, I mean, if you calculate the total FY25 and what is left now in the remaining two and a half, three months, then on both the fronts, how do you plan to meet the given targets, sir? Because then there will be a lot of pressure during this quarter, both on the deposit mobilization side also and the credit side also, and you already consumed a major part of your excess SLR also.
No, sir. Actually, let me say that even today, our excess SLR position is still there because partly we are even onward lending to the overnight deployment window because we are getting excess SLR of 6.5%. If the market is paying 20 to 30 basis points extra, we are lending there. That benefit we are taking. So if my credit growth is picking up, what we have given the guidance is 10%, we are growing at 10.45%. I'm sure that the 10 and a half percent we can definitely easily achieve. So whatever the given target under the advances growth, 10.45% may not be a big issue for us. To meet that requirement, I don't think that because we have enough cushion in the RBI window, we don't have any problem in meeting that requirement.
But at the same time, I don't want to cross my CD ratio beyond 78%. That's why we are putting entire our energy again on the liabilities for this entire quarter. We are already given a calls to them. And wherever we are addressing the people, we are expressing our concerns and we are giving a special thrust on that campaigning mode on the liability side. It's not that the only cost we are focusing.
We are even interested in the retail term deposits. So retail term deposits, actually, September quarter, there was a muted growth was there. But the December quarter, we grown at least INR 5,000 crores. And now, as on date, we have grown at least INR 15,000 crores absolute numbers in the retail term deposits. We aim to grow in the retail term deposits as well as the CASA, sir. So we will continue to do that.
I don't think it will impact my credit growth because our given targeted growth is only 10%. We already achieved 10.5%, and business growth also 10%, it is achievable because 8.4% deposit growth, if you can focus on that, if you cross the 9%, we will achieve the business growth also, sir.
Okay, sir. Point well taken, sir. Sir, my second question is on recovery side. So both in the normal recoveries and also the recovery from the return of accounts. So what do you think now this quarter going to be? I mean, is it because your major thrust, as you said, will be on the deposit side full quarter, on the recovery front, how do we see this quarter in total FY25, both from the normal recovery and the return of account recovery?
And having said that, after that, on the SRs, like you said, that 85% of the SRs and only 15% in the cash recovery, and especially in case of NARCL, even if it is government guaranteed, we don't take it as an income. So in this quarter, how many such cases have taken place and how much amount of recovery and SRs which we have got, cash recovery and SR?
Sir, first let me say that about the recovery of the recovery steps, what we have taken. Of course, NCLT is one aspect, but the SARFAESI is another aspect. Major thrust is OTS and DRT also we are pursuing it. See, when you focus on DRT, SARFAESI, NCLT, ultimately, people will come forward and try to settle the accounts under OTS. So our recovery is more through OTS is more compared to all other things. Even if you see that the existing recoveries plus upgradation total together in the current quarter, the December quarter, we could achieve around 3,600. If you say the cash recovery alone, it is INR 3,100 crores. Out of INR 3,100 crores, we got the benefit of NCLT is INR 653 crores. The remaining all we got it through other modes of recovery.
The same tempo, if you have seen that we have shown to the earlier also, that in September also we were, our recoveries are more than the slippages. Whatever our focus, we are shifting to the liabilities is not from the recovery side to the liabilities. Recovery sections are separate. Recovery teams are separate. We don't want to mix those teams into that liability side. But the marketing teams, whatever it is there for business growth, there we want to focus, divert them into a liability focus. But the retail, the recovery and the slippages teams, exclusively earmarked for these two parameters, will continue to work on that. And the March quarter also, we expect that the same type of performance, whatever we have shown on the December quarter, the slippages, we could reduce it to below 2,400 crores. And recovery should be more than 3,000 crores.
That will continue. We are expecting even INR 2,000 crores in the technical write-off of accounts. The remaining is in the normal NPA accounts, the cash recovery, sir. And regarding NARCL shifting, the current quarter, we are expecting we may get some INR 500-600 crores benefit. They identified some accounts, but all consortium banks have to come forward and everybody has to give the clearance. Then only it happens. But we are also, wherever we identified, we are negotiating with the NARCL. In two accounts, we got a positive response. We are hopeful of that two accounts. If we do that two accounts, we may get a benefit of INR 500-600 crores, sir.
So this INR 500-600 crores, the outstanding, I mean, or the recovery?
No, sir. It is not the outstanding. It is a recovery what we are expecting. But out of that, again, cash recovery will be only 15%, sir. The remaining entire thing will be in the form of SRs.
Okay, sir. Sir, last point is on.
Sir, we have a lot of other participants.
Okay, all right. All right.
Thank you, sir. Thank you.
Thank you and all the best.
Thank you, sir. Question from the line of Mr. Jugal.
Hi, Jugal Ji. Thank you, sir. Thanks for the opportunity. My first question is regarding the bank's density for advances, and I just wanted to know how it is trending and the RWA density of our international advances portfolio.
Sir, they actually, their total global CD ratio is around 76.5%. We see that because CRR is four% and the SLR requirement as on date is 18%, total together 22%. We don't want to cross 78% in normal conditions. Though we have support in the form of own funds and even refinance funds and even infrastructure bonds and all those things, but still in a normal course, we don't want to cross our CD ratio beyond 78%. With that, the CD ratio, we are at 76.5%. At present, our growth also projected is only at 10.5% to 11%. We will be well within that 78% for the March end also. The global only, I shared with you. Domestic may be a little bit one or two% here and there may be happened. That is only for overseas.
Sure, sir. And what proportion of our total advances are externally rated?
Pardon?
What proportion of externally rated? Actually, we have.
See, external rating is mandatory in our bank as per our policy. It is 25 crore and above. So in all those things, 80% of our exposures are A and above.
Sure. And sir, if you could just guide on the impacts of proposed RBI guidelines on LCR?
Sir, the proposed RBI guidelines of LCR is going to come, expected to come effective from 1st April onwards. As on date, our LCR is 123%. And we have assessed that if we implement those things as on today, it may impact our LCR from around 11-12 basis points. So our LCR may come down to 110-111. But to take care of those things, again, we introduced in the last quarter for raising the deposits at longer tenures. That is a 2-3 years and 3-5 years buckets we introduced. And we have offered a higher rate of interest at 7.3%-7.4%. We already garnered more than 8,000 crores in this. We want to continue to garner in those two buckets at least for next two months so that again we can restore it back my LCR to around 115%-120%.
Sure, sir. Sir, could you help us with the total exposure in HAM projects and also ethanol projects and other biofuel-based projects also?
Yes, sir. Our exposure to that HAM projects is there around INR 25,000-26,000 crores, and everything is standard. We are almost financial; we are a part of financial closers of 70 such projects, but there we have some internal policy that generally we take it up A and above rated companies only, but now again, we are actually considering monetization of those HAM projects which are started taking the receiving the annuities. That is also is in the market. That also we are actually participating in that, and ethanol also, whatever the actually it is there, it's more than INR 2,000 crores. It is there. Compressed biogas also we are actually considering that.
Sure. Sir, if you could possibly help us with the total exposure to renewable sectors like solar and wind energy also?
The exact figures, if it is required, that our CRO will share it with you.
Sure.
With regard to renewable solar and energy together, our exposure is around 6,500 crores. That is actually outstanding what he is telling about. But the sanctions are there around 15,000. These are all project funding. It gradually, depending on the progress of the sanction, the progress of the projects only, it will be disbursed. As on date, outstandings are 6-7,000 crores are there. Plus 2,000 crores ethanol is there. So total 9,000 crores is there. But the sanctions are there. Total sanctions, if you consider that exposures are more than 15,000 crores.
Yeah, makes sense. Sir, if you could help us with the exposure to Kerala and Telangana government and specifically the state PSUs, if you could help us out with the same.
It's specifically disclosing outside. It may not be correct, but we have state-wise risk rating is there. State-wise exposure limits are there. These are all the limits will be fixed by the boards and board subcommittees. We are well within that sub-limits.
Sure, sir. Sir, my last question is on the potential impact of new RBI guidelines on operational risk and interest rate risk in banking book?
For CRO, we'll explain to you, sir.
See, the new guidelines on IRRBB are to be, I mean, date is yet to be announced, but new guidelines has come. RBI is yet to announce it. And as per the guidelines, if the impact of interest rate change is beyond 15% of my Tier 1 capital, then to that extent, I have to provide additional capital under Pillar 2. So as of now, with the rough estimate, it is below 15%. So we need not provide any additional capital as far as Pillar 2 is concerned.
Yeah, it's below that, below 15%. So there is no impact. As of now, there is no adverse impact once the new IRRBB guidelines is implemented.
Thank you. Sure.
Thank you, sir. Thanks a lot.
Thank you, sir. We have a next question from the line of Mr. Suraj Das.
Yeah, hi sir. Thanks for the opportunity. Two questions. The first one is in terms of subsidiary monetization, I mean, what is your plan? And the second one, I think in terms of the subsidiary business overlap, what has been your response? And in case the current guidelines has to come in the same second form, what would be your action plan?
Sir, actually the first subsidiary disinvestment is already we have proposed disinvestment in two subsidiaries. That is one Canara Robeco Mutual Funds and Canara HSBC Insurance Company. These two cases may already all regulatory required permissions we have obtained. Now we have communicated to that respective boards to take it forward for that coming out of that public issue. That respective boards have created sub-board committees and for close monitoring of this progress. They are all doing their job, and now at this moment, I think bankers have been appointed.
So it is on the as expected lines, and we are expecting that both the companies may come for the IPOs in the next financial year. The second one is if the RBI guidelines as for RBI guidelines, a common activity between the parent company and the subsidiary is only for us Can Fin Homes. But there are no timelines to be stipulated by the regulator. We are watching that market. If at all we feel that we get enough pricing, we expect that our pricing valuation of that company should be in the four digit. Whenever we expect that the share price crosses the four digit, we may think of coming out of that.
Okay, sure, sir.
Thank you, sir. We have a next question from the line of Mr. Rakesh Kumar.
Hi sir, can you hear me, sir?
Yes, Rakesh ji.
Yeah, thanks, sir. Thanks for the opportunity, sir. So just I was a little confused with the numbers that you mentioned in some of the questions that you have changed the asset composition in favor of loans and reduced the cash balances number. And that is pretty evident in the number as well. But I am not able to see that the yield on fund has gone up. So that has not happened. Even though there is an increase in the yield on advances. So with the asset composition, that should have happened.
See, let me see that, sir. Actually, this exercise we have started from last December to June quarter. When we have done this rejigging of that low yielding advances, we have taken it back. We started doing that high yield investments. 8.6%-8.79%, 19 basis points increase is there in that yield on advances. The 19 basis points is not a small amount. That has happened only because of these things. Otherwise, our MCLR, our RLR, there is no change for the last two years. Even then, how the yield has increased? The increase in the yield is only because of that, sir.
I was bringing to the slide information that we have. Anyway, I understood your point. Second thing, sir, last quarter we had the LCR of 130%. Now we have, you mentioned 123%. So.
Rakesh. Just one minute, Rakesh ji. Our CFO wants to share something to you.
Your question is when yield on advances have gone up to that extent, how yields of funds have not gone up, isn't it? That is your question, and with the change in asset composition in favor of.
My question is that we are rejigging that composition. I answered correctly only. Now tell me, sir, LCR related LCR, no?
Yes, sir. What I was saying, sir, that we have switched, shifted some of the.
See, the LCR earlier 130%-123%, why it has come down? That is your question, sir.
No, no. Generally, LCR will.
No, no, sir.
Last quarter, we announced that 130.
Yeah. So that has happened. What I'm thinking is that do we plan to further shift cash balances to advances considering that LCR guideline, as you are mentioning, might come? And we have LCR at around 123%. So do we have room for that to do it further?
Sir, as per regulatory requirement, one has to maintain 100%. Within that, our bank, our board has kept an internal ceiling of 105%. As against requirement of 105%, already we are at 123%. So even if the RBI new guidelines implemented, that will impact only 11-12 basis points, which may come down to 110-111. But we don't want to play our business at such a smaller gap. That's why we have already taken initiatives to garner the more deposits in the longer tenure buckets. That is 2-3 years and 3-5 years, which we are offering the higher rate of interest. We already started garnering the deposits. We garnered more than INR 8,000 crores in the last one month.
Last question, sir, is there any classification issue in the commission exchange brokerage income line?
No, sir. There is no such miscellaneous income. You are aware that last year, RBI guidelines have come that penal interest should not be charged in the interest side. It has to be booked in that other charges. So that's accounting standards have been changed compared to last year to this year. So that's instead to that extent, interest income has come down and to that extent, the miscellaneous receipts are increased. They accept that remaining things are only because of the business growth. Nothing else. That comes approximately 150 crores or 160 crores.
Okay. Thank you. Thank you so much, sir.
Thank you, sir.
Thank you, sir. We have a next question from the line of Ms. Mahrukh. Mahrukh? You can unmute yourself now. We have a next question from the line of Mr. Chokshi.
Hello. Congratulations. Yeah, Mahrukh, go ahead.
Thank you, Chokshi sir.
Sir, congratulations to Team Canara for a very stable and positive result. Sir, you just highlighted that you are open to monetizing Can Fin Homes. Now, if you are looking for a strategic premium, because you are saying that you are looking for a thousand rupee price, market condition which is in a little correction or a consolidation mode, whether it's a housing finance sector or your financial market. Are we open to a strategic buyer?
No, sir. Actually, because the RBI has given guidelines on the subsidiaries, that a common attribute should not be there. But there are no for existing organization, there are no timelines for closing down those things. So since it is open for the individual banks to take a call on that, for us, we know the internal strength of that company. We have 29.9% shareholding in that company. We feel that we have initiated something with the help of that board and that current top management.
Some initiatives we have done in cleaning the top level as well as in their functioning. That will start yielding the results in one or two years. We want to wait for that one or two years when the results are coming out. The real value will come out. When the real value comes out, then we may think about that, whether it has to be strategic sale or whatever it may be.
Sir, but if somebody is working with a positive approach that you have done the cleansing, the value is already there at INR 1,000 or INR 1,200 or INR 1,100, whatever may be the fair value. And because you are offering 30%, which enables them to make an open offer too, so you can increase the shares from the market and the market will tender the shares. In such scenario, will you participate or will you wait for one or two years only?
No, sir. Actually, as an individual, these decisions cannot be taken at this level. But generally, these options will be discussed in our strategy meet generally happens once in a year at a board level. And this year also, it will be scheduled either in March or in April. During that board meeting, it will be discussed thoroughly threadbare. Then, as per the board directions, we will proceed and we will share it with you, sir.
Thank you for answering that question. Sir, next is the non-interest income. There has been very good performance by the treasury as was concerned and returns on accounts are concerned. How do you see that panning out in the current quarter?
Sir, the treasury may actually, whatever the benefit we got it as part of that 5% sale of HTM securities. That benefit we have taken because all other banks have taken earlier. We have not taken; we kept it pending. Now this December quarter also, we have not taken entire 5%; we have not sold it. Part of that only we sold it. The remaining balance, we can sell it in this quarter. That benefit always will be there that we will take the benefit out of whatever the benefit is there. The second recovery and technical written-off accounts will continue. We are expecting this quarter also will be there around 2000 to 2100.
What is the number outstanding on technical written-off accounts?
We have around INR 68,000 crores, sir.
Okay. Sir, if the yield on G-Sec is in the region of 6.5 to 6.7, the profit can match of the previous quarters or?
We will wait and watch, sir. Let us see that what will happen.
Do you anticipate to monetize your subsidiaries which you are already looking towards Canara Robeco and in this quarter or you think it will go into the next quarter?
No, sir. Not in this quarter, sir. That will be in the next financial year.
Sir, my last question.
Already, the merchant bankers have been appointed. Now it is in their hands. Once they say that we are ready, then we will think about it.
Okay. Sir, I know you have answered the majority of the participants' question on CASA. If we move well on CASA, I think we will outsmart the majority of the comparative banks. So what acceleration program other than what you have garnered in deposits, new schemes can be done from the geography where we are present? Because it's a difficult geography where CASA is concerned because people generally don't keep idle balances because they are smarter humans. What can we do differently that will help us to grow better?
Sir, nowadays, we are every year, we want to open some 250-300 new branches. These new branches, we are planning to open where the CASA potential is there, especially where our presence is a little comparatively lower. And that's why compared to the South India, we are opening more in the north and eastern side of that branches. And last year, we opened 211 branches. This year, already we opened 180 branches and we are targeted for 250 branches. This will continue for two, three years. And these thousand branches, if we want to open, definitely create a mark in that. That the strategy anyhow, it is continuing that, sir.
Thank you, sir. Thank you for answering all my questions and best wishes to Canara Bank team to come to.
Thank you, sir. Thank you. Thank you so much.
Thank you, sir. We have a next question from the line of Mr. Arvind.
Hi sir. Thank you so much for the opportunity.
Hi, Arvind.
Hello, sir. You mentioned about maintaining CD ratio below 78%. If the deposit environment continues to be constrained, will our focus be we continue to remain on CD ratio, maintaining CD ratio below 78%, or would we be flexible in that aspect? That is my first question, and the second question is on expenses, sir. This year, we have been able to manage expenses much below, in a much more controlled manner. Can we expect expenses to be in line or closer to income growth next year, sir? These are my first.
First, let me say that liabilities. Liabilities for us also, earlier also I shared against that. It is not that CASA, we are finding it difficult to garner the more CASA, but liabilities, we are not finding difficult to garner it. Only thing, you have to shed higher rate of interest, which we are cost conscious. That's why whatever it is required, we are garnering that liabilities. When we are decided that our CD ratio is 78%, thereafter, our incremental deposit and advances, we will ensure that we will match these two things by, if at all, if necessary, we may have to increase the deposit rate. That's all. Otherwise, it is not difficult for us to garner the deposit. Only thing, we want to be cost conscious. We don't want to shed the higher rate of interest.
That's why when you have surplus cushion in your system, we want to take maximum benefit out of it. Once that is, if it is coming to the exhausted, then we may go ahead with that offering a higher rate of interest and garner the deposit. But at this moment, I don't see any such issue. The second one is expenses. I don't see any further increase in the expenses suddenly. But annually, suppose 6%-7% annual growth in the expenses is likely to happen. But that's only to that extent I am expecting that. Otherwise, we will continue that cost to income ratio around 47%-48%.
Sure. Just one more question from my side. Sir, like fees especially in the system level, the unsecured loans, personal loans, credit cards, and these are the segments where multiple companies have faced issues because of the higher growth. And people say over-leveraging with the particular budget of borrowers that led to issues that we can see in different companies. I have a similar question for MSME. The MSME in the system, as well as what the bank has grown at a commensurate rate in the past few years. Do you see any signs of over-leveraging or any issues there which could be popping up there?
No, sir. I don't see MSME any such leverage. Last two years back, we have revisited underwriting standards of all our MSME products. And we have centralized the processing of those accounts. We created, in each regional office, 177 regional offices, maybe, created hubs for processing the MSME loans. That has started giving the results. That's why slippages are under control. That's why gradually our NPA under MSME is coming down. I don't see any that too much stress on that except one or two small government-sponsored schemes or anywhere the stress is there. But that is well within our risk appetite only. I don't see anything on that.
Just one last thing.
We don't lend too much. We don't lend too aggressively anywhere. We are not active in portfolio buyout of any portfolio. Our total portfolio buyout outstanding is only for the entire bank, all including retail, MSME, everything together is only 1,600 crores. Our exposure to MFI is only 300 crores. So our even co-lending is also less than 1,000 crores. We are not too aggressive on that lending. Instead of that, we are actively making involve our branches to generate the loans. This year, we are expecting that we will touch the 10%. That's a double digit growth in the MSME. Last year, we were at 7.5%. This year, we are confident that we may touch 10%.
Sure, sir. Thank you for the elaborate explanation. Just one last thing, if I can squeeze in. With respect to recoveries and return of accounts, can we expect similar rate for next two years also?
Yes. This current quarter also, I already reiterated earlier. In the last quarter, we got around INR 2,000 crores. This quarter also, we are expecting that the INR 2,000 crores will be recovered.
Sure, sir. Sure. Thank you.
We have a last question from the line of Mr. Ashley.
Hi, team. Good evening. Sir, a couple of questions from my side. Firstly, I'm sorry if this is a repeat question because I got disconnected in between. Firstly, if I look at the SMA2 book, you had called out two accounts, two state government accounts in the last quarter in the SMA2 book. One was the Andhra-based PSU in the steel sector, and the other one was a state government account. What is the update on those accounts as of now?
Now, as on December 31st, these two are appearing in the SMA2. But as on date, these two have come out of even SMA. These are all now not even in the SMA0.
Even the steel account?
Yes, sir. Both Steel Authority and Telangana, whatever it is there.
Okay. Got it. Sir, and secondly, the last participant was also checking about the outlook on recoveries for the next two years. Is there some sense that you have in terms of trend?
See, it's a two-year period is too long period to predict. But I can tell that the present Canara Bank said, I can tell that I cannot comment on the industry-wise because we are conscious, we are a little conservative in high-risk portfolios. Next one year and one and a half year, whatever it is there, I'm sure that our slippages will be less than our recovery and upgradation.
Sir, and just lastly, if I look at the trend on other interest income that has been trending downward, you expect the same?
We have reached to the bottom, sir. Further down, we don't expect in this.
Okay. Okay, sir. Just one last question, if I can squeeze in. The other OPEX seems to be a bit volatile in the last few quarters. What is the cause for this?
No, sir. Actually, you may be remembering that last continuously three years, we are investing heavily on the IT. So when we are investing, though it is a CapEx, next year onwards, it will convert into an OpEx and all service charges and all you have to pay it. So that's the only thing. Except that nothing is there, sir. We are also opening new branches. You can accept it last year onwards. Previous year, we were not opening. Last year, we opened 211 branches. This year also, we are opening 250 branches. That also will add to our OpEx to some extent. When you want to grow in your CASA, you have to bear with that to a possible extent.
Thank you for answering my questions.
Thank you, sir.
Thank you, sir. We will take that as the last question. Thank you, sir. We take that as the last question. Thank you, sir, for your closing remarks.
Thank you. Thank you, one and all. We will continue to perform consistently. That's what actually we always share even at the beginning of the year and even today, after three completed quarters, we have proved that we are consistent in our performance in all the key parameters. Thank you, sir. Thank you, one and all.
Thank you, everyone. That concludes the call.