Good evening, everyone.
Good evening.
Welcome to Canara Bank Q4 FY26 earnings conference call. Antique Stock Broking. From the management side, we have with us Mr. K. Satyanarayana Raju, MD and CEO; Hardeep Singh Ahluwalia, Executive Director; Bhavendra Kumar, Executive Director; and S. K. Majumdar, Executive Director. With this, I hand over the call to the MD, sir, for his opening remarks. Thank you and over to you.
Good evening, all the investors who have attended this, sir, analysts and all. I am here to present the one more quarter results. That is June 2025. Our global business has grown at 11% and year-on-year growth of 11% and stood at all-time high of INR 25.63 lakh crore. Our deposits have grown at 10%. That is INR 14.67 lakh crore. Global advances have grown 12.42%, near to the 12.5%, stood at INR 10.96 lakh crore. Entire the top, whatever the top line, what we have promised in the May month, we have given the guidance for this financial year. That is advances will grow at 10%-11% and deposits grow at 9%-10%, global business at 10%. We have surpassed all those expectations, whatever the guidance we have given. Our growth is beyond that expectation. Especially the credit growth is above 12%. In the June quarter, first year on year.
This has led to that our operating profit also has grown year-on-year at 12.32%, stood at INR 8,554 crore, all-time high in the history of Canara Bank. This has helped us in maintaining our net profit at INR 4,752 crore with a year-on-year growth rate of 21.69%. Our PCR improved 395 basis points, almost 400 basis points, and stood at 93.17%. Our CET1, our core equity tier one capital, has crossed 12% and stood at 12.29%. Year-on-year, there is an improvement of 24 basis points. Our return on asset has, against the guidance of 1.05% for this financial year, in the first quarter itself, we could show that 1.14% with year-on-year improvement of 9 basis points. Our gross NPA has come down to 2.69% with a decline year-on-year of 145 basis points.
Our net NPA also has further come down and stood at 0.63% with an annual decline of year-on-year, that is 61 basis points. This business growth was led by the RAM credit, which has grown near to 15% in the year-on-year June quarter. Just here, I want to recall you that when we have traveled, that started journey three years back. Our RAM sector was 54% and corporate sector contribution was 46%, which we have given a guidance to you in the next three years period. We want to reach that our RAM credit at 58% and the corporate credit at 42%, which I am happy to share that by the end of the June quarter, our RAM sector has reached 58% of our asset book. The reason behind this is our RAM credit is growing almost near to 15% as against our corporate book of growth of 10%.
This RAM growth is 15% led by our retail credit growth, which has grown at 34% year-on-year, stood at INR 2.35 lakh crore. This also further aggravated, that is helped by the housing loan sector, which is growing at almost near to 14% and stood at INR 1.09 lakh crore. Our vehicle loan is growing at 22.09% and stood at INR 0.21 lakh crore. Our earning per share is at INR 21.01 paisa as against each INR 2 share with an annual increase of 21.66%. This centered though that there is a little stress on our NIMs and the NII, but our operating profit is led by our fee-based income and the treasury income and the recoveries and the return of accounts. These three have helped our balance sheet, which is our core strength for the last several quarters. This quarter also, we could take benefit out of it.
Our fee-based income has increased 16.39% year-on-year and stood at INR 2,223 crore. Our slippage ratio has further improved with a decrease of annual year-on-year 52 basis points and stood at 0.80%. These are all the few highlights of the June quarter performance I shared with you. Of course, by this time, you might have already gone through our investor presentation. Now you are all open for taking any clarifications or queries or the questions. We are ready to take up any of your clarifications, sir. Along with me, my Executive Directors are there and my CFO and entire top brass is with you. Now you are all open for asking for any clarifications, sir.
Thank you. We will start with the question and answer session. Participants, those who have any question, please raise your hand. We will take the first question from the line of Maruk. Maruk, you have been unmuted. Please go ahead with your question.
Hello, sir. Can you hear me?
Yes, madam.
Yes, hello. Good afternoon, sir. Sir, I had a couple of questions. That in the fourth quarter, your NIM did not decline. Like for everyone else, it declined 9-10 basis points. For you, it did not. That was in the fourth quarter. In the first quarter, of course, there is a decline of 17 basis points. Right? How do we look at the second, third quarters? Do you think that some of the margin decline has been upfronted? Because a lot of banks, not only PSUs but private, are guiding to a sharper decline in the second quarter compared to the first quarter. In terms of the quantum of decline, any guidance there would be useful, right? Because it is already a sharp decline in the first quarter. Will the second, third quarters be lower in terms of quantum of decline?
I mean, that clarity would really help us in forming a view. The next question is on PSLC, sir. Obviously, some banks have stopped booking PSLC. You have still earned PSLC income. Does it stop for us next year or even next year it continues? How do we view PSLC income? How come some banks are saying that they cannot do it after the RBI circular and then we are still having those opportunities?
Let me clarify to you, madam. March quarter NIM was we were maintained at 2.73%. The reason behind that is we could control through our cost of deposit, whereas all other banks' cost of deposit was very high in the last quarter. We could maintain properly in the cost of deposit because I already shared with you that we have an internal call from staff members to garner the deposit. We got some INR 16,700 crore contributed by the staff by canvassing individuals. That has helped us in controlling the expenditure. The reduction in the yield on advances has started from March. A little bit, it has not reflected because it is affected only 25 basis points in February. Our RLLR related book is 45%. That has not impacted much on our yield on advances in the March quarter.
When that 25 basis points in February, then again 25 basis points in April, then again 50 basis points from June, these total 100 basis points we are passed on to that entire RLLR linked book of 45% of our total assets. Total 100 basis points we have passed on to them. That is a reason for that decrease in the yield on advances for the current quarter. It's almost 36 basis points has come down. Whereas current quarter deposit rate, up to June, we have not changed our deposit rate because we are interested to garner more deposits. We should not face any problem for growth in the current year credit growth. We maintained the same rate of interest up to June 8.
On June 8, once the repo rate 50 basis points reduction has happened, we also have reduced 50-60 basis points on the term deposits in various buckets. That benefit you will see only in this quarter onwards, that reduction. Whatever the 100 basis points we have impacted, of course out of that 50 basis points, the impact is already reflected in the current NIM. Another 50 basis points reduction in the RLLR is impacted only one month. The remaining two months will impact in this current quarter. Overall, what I want to say is that the reduction in the deposit rate benefit also will start earning from this month onwards in this current quarter. That will be compensated whatever the reduction it may happen in the first two months of that 50 basis points.
Overall, I feel that our NIM may not go below 2.5%, but we will be able to maintain that around the 2.5% for this current quarter. We see that slowly that if no further rate cuts are there, subject to that, we may see slowly that the NIM may gradually improve in the third and fourth quarter. The current quarter, we do not see that September quarter, again, we do not see that much steep what we have seen in the first quarter, that 17 basis points reduction, 16 basis points reduction may not be there. That much reduction may not be there in the second quarter. That is regarding the NIM, madam. The second one is regarding the PSLC. You should have that as against 40% of our actually originally our priority sector lending was around 56%-57%.
Though some part of that reclassification has happened in the last year itself, that could be compensated with a higher rate of demand because there is a higher demand in the market. Earlier, we used to get at 1.6%-1.7%, whereas this quarter, we could sell that whatever the excess we have at almost near to the 3%. That has compensated our, though volumes have come down a little bit. Maybe it is 30%-40% volumes might have come down, but that has been compensated by the demand in the market and we got the higher yields on this PSLC. Clearly, I am communicating to you, even now after selling that much, after booking INR 1,200 crore in the PSLC income, still as against requirement of 40% of priority sector, we are at 45.63%. As against agriculture credit of 18%, we are at 23.25%.
As against small, SMF, that is small and marginal farmers target of 10%, we are at 16.57%. There is a demand in the market, even these three parameters, we have excess on that. We also may take advantage in the current quarter, whatever the excess is available with us. What I want to communicate to you is that it is not PSLC income is stopped for this bank. It will continue not only this year, the next year, or the next year also.
Sir, thank you so much. That is very helpful.
Thank you. We will take the next question from Jai Mahindra. Please go ahead with your question.
Good afternoon, sir. Sir, question on margins. Sir, question on margins again. In the, I mean, 2.55 this quarter, and let's say in Q2, it reduces to 2.5. Then, sir, there is a slide on guidance which says 2.70-2.80. Is that exit margin or you think you can manage to do 2.75, 2.80 for the full year FY2026?
No, at this moment, because in the market conditions, still we are hearing from various corners that there may be another one or two rate cuts. If that one or two rate cuts are there, always every rate cut, the banks have to absorb for at least minimum six months that burden, six to nine months period that burden. Because that amount to that extent, the borrowers immediately that benefit will be given. The depositors, you cannot pass it on immediately on that. An existing depositor, you cannot pass it on. That can be reduced only in the fresh deposits. That is why always the gap between the loan reduction and the deposit interest reduction is a six to nine months period. If there are further rate cuts are there, even getting it, whatever we are given the guidance, that will be a difficult task for us.
If there are no rate cuts, we will try to improve our NIMs in the third and fourth quarters.
Sir, is the guidance, that is, the guidance slide which is there in the presentation deck, is that, I mean, is that relevant or on the NIM part or is it not very relevant?
That's what actually at that initial stages was time pay, then we have come across when we are given this guidance, we have come across only two rate cuts of 25 basis points each. By that time, we are given this rate cuts, the guidance keeping in mind of that two rate cuts. Thereafter, one more rate cut has come straight forward, 50 basis points. Now, again, you are hearing from the market that two more rate cuts at 2.25 may be there. If you take all those things, it may be difficult to maintain that 2.75-2.80 guidance for this current financial year, I feel personally.
Okay, sir. And, sir, we have a decent amount of wholesale deposit, right? You would have seen the cost of that deposit, at least maybe 30%-35%, 25%-30% of the wholesale deposit, the rates would have eased there. But still, the cost of deposit has not seen any downtake. Why is that so?
That's what actually I'm telling you, sir, that the cost of deposit, whatever it is up to March, there is no reduction. Whatever we have taken, the deposits for a period of three to six months or nine months or one year, that can be repriced only when it comes for that expiry date, due date. You can't reach with it. You can take a fresh deposit, whatever it is required, which is falling due for that April to June month. Out of our total INR 3,25,000 crore or INR 3 lakh, whatever it is, INR 3,90,000 crore of big deposits, the bulk deposit portfolio, hardly the deposits will come for renewal of INR 60,000-INR 80,000 crore. To that extent, we have repriced. That will not impact suddenly, immediately on that.
It will impact gradually whenever you are repricing that, we are replacing that existing deposits with new deposits, then it will happen. That's actually the cost of deposits. We have seen that March to June, it is maintained at 5.74%. The term deposits, we have not reduced our rate of interest till June 8. We maintained that whatever the earlier March we offered, the same rates we continued because we need deposits for growth because our expected credit growth is around 12%. To meet that requirement, we have to garner the deposits. That's why we have not altered or reduced the retail term deposits rate of interest up to June 8. Once June 7, RBI has reduced 50 basis points, then on retail term deposits also, we have reduced 50-60 basis points. That impact you will see in the second to third quarter.
The interest reduction, the cost of funds reduction, you will see from the second quarter onwards.
Okay. Last question, sir. In the notes to account, we have mentioned INR 1,883 crore of one-off item for the Consolidated Canara Bank. It looks like it pertains to RRBs, but the amount looks very high.
Sir, APGB. Actually, that is APGB, sir. Andhra Pragati Grameena Bank, that was one of the best bank among 42 private sector RRBs. That was the highest profit earning RRB, which was under our control up to that April 30th. On latest guidelines given by the DFS and the NABARD, that bank went to the Union Bank of India. That transfer of that bank from one bank to another bank, it has happened as per their guidelines. It is only on the investment, whatever you made that investment on that book value only, investment face value only, it has happened. They have not considered that latest values. To that extent, whatever that value, it has gone to that Union Bank of India. That is why it is a book entry what we have made to do that. That is why it is exceptional entry.
It is reflecting it. It is pertaining to Andhra Pragati Grameena Bank.
Thank you. We will take the next question from the line of Piran Engineer.
Audible?
Yes, sir.
Yes, sir. Can you?
Yeah, yeah. Thanks for taking my question. Congratulations to the entire team of Canara Bank on strong results. Sir.
Thank you.
Firstly, sir, firstly, just wanted to understand on repo rate cut, what happened in April? When did we pass it on? Immediately the next day or we pass it on after three months?
No, no, sir. Our ALM date is 12th every month. So whenever that rate cut happens, whether it happens on 5th or 6th or 7th or 8th, if it is before 12th, 12th, it will be passed on to that because ALCO committee meets on every month 12th and it will be passed on from 12th effect. See, all the three rate cuts, whatever it has happened on the first week of that respective months, it has passed on to that borrowers on the 12th day itself on the next same month.
Okay, okay. Understood, sir. Okay, that is.
Hardly, it is a gap of three to five days.
Understood, understood. Okay, this is very clear, sir. Also on savings deposits, I think, sir, we cut by 25 basis points in May and then again 20 basis points in July. Am I correct?
Yes, sir. Actually, it is 20+ 20, sir. It is not 25 and 20. It is a 20+ 20. The reason is actually initially we have cut to 20 basis points. By that time, actually, we were the highest paid interest on among all the banks. Then to bring at par with all other banks, everybody is paying at 2.5%. We also have made it our rate of interest at par with all other banks and made it 2.5%. That's why twice we could reduce that.
Okay, but sir, can we see one more rate cut out here because the private sector banks are also at the same rate? Typically, government banks give it lower, so just checking.
No, sir. At this moment, no, at this moment, there is no such proposal on hand.
Thank you. The next question is from the line of Bhavik Shah. Bhavik, go ahead.
Hi, sir. Thanks for the opportunity. Sir, I just want to understand. We are at the target for 0.6% at NPA. And still, I mean, our credit cost guidance is at 90 basis points. No scope for revision again, sir?
No, actually, always in that is our regular practice that we give guidance conservatively, but we will excel in our performance. We are continuing to do that. We need not change the guidance, but definitely we will excel whatever it is there in the net NPA or gross NPA figures what we have given for the March. The present tendency, it looks that even for the July quarter slippages also, we have seen that. And recoveries, we have seen that. We are sure that the targets guidance what we have given for the March 2026, we may likely to cross by September. If not September, December 100%. I think that September itself may happen.
Understood, sir. Sir, is it fair to assume that our PCR improvement is broadly done? Now incrementally, we will just kind of provide for whatever the NPA is?
See, partly we will go for that. PCR. Partly, it will be on the declaring in the profits. If the fresh slippages are coming down, naturally, our demand for higher provision not required. The provision is gradually will come down. That may reflect in our net profits.
Understood, sir. Sir, our NBFC book was down 3% quarter on quarter. Is it pricing competition or have we chosen not to participate?
You are aware that generally we are very conscious on the pricing. We do not compromise on the pricing. Wherever some threats come for prepayment and all, we generally accept it without compromising our pricing. This quarter also, we have taken back one such big exposure, some INR 8,500. We do not want to compromise our pricing. Still, we are able to maintain that. That has not impacted our credit growth, if you see that.
Yeah, sir, now on incremental basis, I think our cost of funds would have normalized, right? This quarter, like the second quarter, you would have seen good growth in NBFC. Or no, that is not the case?
No, it may happen. Chances are there wherever, but we do not want to lend at a throwaway price because we always keep our cost of funds in mind. Because when compared to all other banks, our cost is low. So our cost of funds will be a little higher than the peer banks. While advancing, while giving to that, whether it is an NBFC or anybody, we have to keep in mind our cost of funds. That is why we will be a little cautious while lending. We will not run behind that organizations just for the sake of top line.
Thank you. We'll take the next question from the line of Ashok Ajmera.
Hello. Good evening, sir.
Good evening, sir. How are you, sir?
I'm fine. Congratulations, sir. In spite of a very, very difficult quarter for many of the banks who have declared results so far, you have at least, you are positive on the operating profit, if not on the net profit. Even on the business growth side also, there is a growth rather than the growth in the credit also. Compliments for that. Just a couple of questions and some observations. I will start with that. You said just now that your cost of fund is higher because of the lower CASA. Sir, on the CASA only, of course, we have a perennial problem, which cannot be corrected overnight. In this quarter, I think we have probably, for the first time, gone below 30%, maybe in the last four, five, six quarters. What exactly are we doing on the CASA front?
When you say that your target guidance is 32%, how will the CASA improvement take place? What is different than what it was in this quarter?
First of all, let me say that, sir, every March we get institutional deposits because we have three or four branches located well within that popular, some central PSUs campuses. In those branches, we get current deposits during March every year, almost INR 20,000-25,000 crore. They will utilize it in the April month and May month and all those things. That is why generally in the first two, three quarters, it looks that the CASA growth is a little sluggish or negative. That will be compensated when it comes for that next March. Again, the funds will come. Meantime, we will steadily grow that. Even if you remove that, quarter on quarter may be negative, if you look at that year on year, the growth is 9.85% in the current account.
One thing let me highlight to you, whatever the initiatives we have taken during the last two years, coming out with the new products and attractive features, our savings bank individual deposits are consistently growing. It is growing more than 6%. The only thing is, within the savings also, institutional deposit is there. That fluctuation continues because of central government policy. Nowadays, the government deposits are not maintained at the bank's level. That is some dip we are seeing in the institutional deposits. Individual deposits, there is literally no dip. Every month on month, we have targets and we are achieving those targets. That is actually a positive side for us. Why the first time it has come below 30% is, in the earlier days where the total business used to grow at 3%, 4%, and 5%, our CASA also used to grow at 4%-5%.
Nowadays, last two years, if you can observe, our growth is almost in every year, every quarter, we are in the double-digit growth. When your business is growing, your credit opportunity is growing at more than 12%. To meet that requirement, the market may, 12% growth at this juncture in the CASA will be very difficult, whatever the steps you take. Absolute numbers, there is a growth. There is a growth of 6%, but that is not sufficient to meet the requirement of 12%. We are dependent on retail term deposits. That is growing much better than this, other CASA deposits. We are able to meet that credit demand of 74% above 12%. Because of that difference in that percentage, it is absolute numbers, though there is a growth, but it looks that the deposit percentage, CASA percentage, has come down to 29%.
We are sure that again, the next quarters and all will be there. This only first quarter, you will see the current account may show much negativity because of that institutional deposit withdrawing in April. Again, quarter on quarter, there will be a steady growth. I am sure that we will be above 30% even at the end of the financial year. We will try to reach the percentage we have given at 32%. Again, why I am telling you this hope we have is gradually the term deposit interest rates are coming down. Whenever the interest rates on term deposits are coming down, if another further one or two rate cuts are there, our term deposit rates may go below 6%.
When the rate of interest is going below 6% or near to that 5%, generally people again tend to retain in the savings bank deposit only instead of converting them into term deposits. There is every chance that in the coming quarters, our CASA may go up a little bit. That is what actually I am telling you.
No, sir, point well taken, sir. Sir, my second point was on this. SMA 2 numbers. Because last time, you know, a major amount was one SMA 1.
SMA 1. Sir, now I will tell you that.
Actually, we have two accounts, sir. One account is a real estate account from Bangalore. That is mostly continuing for the last six quarters in the SMA 2. The exposure is around INR 2,000 crore. Then one state government guaranteed irrigation project exposure of INR 3,000 crore, which is moving from SMA 0, 1, 2. Again, it is going back to SMA 0. For the last six quarters, if you see, it is moving from one quarter to quarter and to one SMA, either 0 or 1 or 2. We are very much sure that these two accounts will never slip to NPA. However, as a precautionary measure, we have provided INR 1,200 crore against these two exposures as a safety measure, as an additional provisioning for that.
All right.
It means these two exposures, INR 5,000 crore, our SMA 2 is only INR 1,800 crore, sir.
Yeah, yeah. That is very comfortable. So basically, there is no chance of these accounts slipping to NPA.
100% there is no chance of slipping to NPA, sir. It is not even 99%, I am telling you, 100%. After observing the six quarters, I am telling you this.
No, no, it's perfectly all right, sir. Sir, on the treasury front, I mean, I think our major part of the profitability, even in this quarter also, has been the treasury income booked in the other income, which has gone up to INR 1,993 crore against INR 995 crore. With further two rate cuts, expected rate cuts, can we get some color on total overall treasury operations as well as the kind of profitability which will come in the other income rather than going to the AFS results? How much AFS results have we already built up because of the change in the RBI steps?
I'll ask Majumdar to give that answer to you, sir, Executive Director.
Sir, as you know, the first quarter was a special quarter as far as treasury income goes, where that OMO support was there. Out of that, we gained a substantial income of around INR 500 crore, which may not be there this quarter. With the rate cut, there is some that from. That AFS category, we are expected to get that support should continue. To answer your question straight, like the INR 1,000 crore additional which you saw this time, that is in the first quarter, that will be a bit, that will be substantially lower, which we are already thinking of avenues to bridge. This I can tell you. That will be compensated even with even a slight decrease in that.
We have already earlier, I shared with somebody when they asked that we have excess priority sector cushion with us. There is a huge demand in the market, which the entire thing we have not sold in the first quarter. We are keeping it for the second quarter also. That portion we will encash in the second quarter, that excess, whatever the priority is there.
You are talking about PSLC.
PSLC commission.
Yes, sir. Yeah, yeah. That may compensate INR 1,000 crore. If INR 5,600 crore down here, that can be compensated by that. Sir, one point on the recovery side, sir, what is the status of the—anything happening? I mean, in this quarter, nothing much has happened. In the coming quarters, is there any chance of some good recovery coming from somewhere, either by selling some assets to the NARCL or from the NCLT, some matured cases? Can you give some color on the recovery side, sir?
Actually, NARCL, we identified eight more new accounts, which is under different stages. That will continue to follow it up with them, sir. That is around INR 4,000 crore. Actually, our board has approved some OTS agreements for almost four big proposals that is worth INR 1,200 crore. Out of that, majority we are expecting that the repayment will come in this quarter. This quarter definitely will be much better than the first quarter in the recoveries.
Thank you. We'll take the next question from the line of Mona Ketan.
Hello.
Hello.
Am I audible?
Yes, madam. Tell me, madam.
Good evening. Two questions. Firstly, when I look at your MCLR rate, one-year MCLR rate, that has come down by almost 30%.
MCLR.
Right.
ठीक है.
Yeah. That's come down by almost.
Our MCLR book is around 45%, madam. Our MCLR has come down from 9.10 to 8.75 recently. 45 basis points already we reduced that 40 basis points.
Right. So the question is, in terms of the reported yields, does that already factor in the yields? I mean, to what extent? Or is it yet to be reflected in the actual yield on advances?
No, madam. Partly, it is already reflected. Partly may continue because this depends on our deposit rate. It's not that it is linked to the repo rate or anything. If our cost of funds are coming down because we reduced on June 9th, 50-60 basis points, our MCLR also has come down from 9.15 to 8.75. If there are further rate cuts as seen, naturally we also have to reduce our deposit rates. If we reduce deposit rate, automatically next month, while calculating the MCLR, it will impact that MCLR and further reduction may happen. That all depends on the market conditions, madam.
Yeah, sure. No, my question was more referring to the interest income. Does the 30 basis points come with a lag in terms of the impact on yield on advances?
Naturally, madam. It will come in the lag only, any reduction because one-year MCLR resetting may happen in the every year. So whichever of the accounts are due for that completing that one year, only those accounts it attracts. It will not attract all MCLR linked portfolio immediately.
Okay. So it will take roughly a year to sort of start reflecting in the yield.
Totally.
Whenever you reduce that MCLR, whether you reduce or increase, complete transformation, it takes one year, madam.
Got it. Got it. Secondly, we have made this other provisions of INR 449 crore. Does that pertain to the provisions we have made towards some of these large accounts that you mentioned in an earlier question?
Yes, madam.
Okay. So what is the standard provisions that we may be holding against general and everything together, some of these accounts?
No, actually, whatever the standard provisioning, it is required 0.42 and all those things. So beyond that. Actually, that is required only INR 3,000 crore. But beyond that, INR 1,200 crore is extra what we have provided.
Got it. Thank you so much.
Thank you. We'll take the next question from the line of Nitin Nagarwal. The line has been unmuted. Please go ahead.
Hello. Yeah, am I audible?
Yes, you are audible.
Yeah. Thanks, sir. Congratulations on good results. I have two questions.
Thank you, sir.
Sir, firstly, on the OPEX, like if I see like going by the trend, first quarter is always a slight decline in operating expenses on a sequential basis. Probably as the incentives and the other variable costs, they do not recur and you see a Q on Q decline, which we have not seen this time. How should one look at the OPEX run rate for the year?
Generally, OPEX, when you are investing every year INR 10 billion on the technology, every year you see a little bit 7%-8% growth, it will be there in the operating expenses. Since we efficiently manage our operations, especially we do not pay too much money on DSA-sourced business. That is only 16% in our new business, whereas all other banks are paying very heavily. There we are able to maintain this very effectively at the same level.
If you see, even for year on year, the growth is only 3% reflected. Quarter on quarter, there is a marginal negativity there. We are sure that we will maintain only on the same level of operating expenses with maybe a 6%-8% growth. If you see our cost to income ratio, last month, March, it was around 47.55%. Now it has come down to 46.77%. Right, right, sir. Sir, second on the margin, while you talked about that downside from here is not much and 2.5% can be the bottom. Can you also give some color as to how can the recovery be in the following quarters over the second half as the bulk deposit portfolio reprices and the rest of the deposit costs also come up with the recovery?
In general, in our bulk deposits of total INR 4 trillion, 25% will be on three months, 25% will be on six months, the remaining 50% may be in one year. That is actually generally we follow the formula. First 25% already we might have repriced by this time. The second 25% will be repriced in this quarter when we are going for that. To that, 50% of that bulk deposits can be repriced in this before the end of September that year. To that extent, benefit we will get it earlier. We are rising the average, the cost used to be 7.6, 7.7. Now it is coming down because the fresh deposits, whatever we are taking, we are taking only at 6%-6.10. That is the rate we are taking it. There will be a drastic reduction on that.
Still, the 50% of the bulk deposits, that is approximately INR 2 trillion, is one-year period. You have to wait for that repricing of those deposits for some more time.
Okay, sir. Sir, lastly on the growth, while we continue to guide a very stable growth, but has there been any discussions with the government and some push on the growth front that you are seeing, which and will the PSU banks therefore can deliver a better growth over the year?
No, always the government is keen on showing a higher growth both in MSME and the agriculture. The same thing we are also giving a thrust on those matters. Core agriculture already last two years consistently is growing at a double-digit growth.
This year by the June end, if you have seen that we are almost 11% growth is there in MSME, we want to grow much bigger in the MSME sector especially. Though the expectation is beyond 20% growth, we are also trying for as much as possible to grow in this MSME and agriculture sector. We are hopeful of doing that. We have taken several initiatives on that. We have come out with some new systems. These two loans have been digitized completely so that we can address the TAT. We can do that faster. Disbursements and all. We are hopeful that we will do that much better growth in these two sectors. Overall, whatever the growth guidance we are given, 10%-11%, and I am telling you minimum 12%, we can grow easily overall credit.
Within that credit, corporate may grow at 10% and our RAM sector is already growing at 15% and which may continue at 15%.
Got it, sir. Thank you so much.
Thank you.
Thank you, sir.
Next question from Ms. Suri. Please go ahead with your question.
It has been given to understand that two of your subsidiaries are going for IPO and you are diluting your stake, including sacrifice of majority stake. If Canara Bank alone is diluting, then how will you protect the loss of controlling premium for sacrificing your majority stake?
No, madam. Even now, after diluting that, whatever the proposed dilution is, still we will be the leading, major owner of those two subsidiaries. So we continue our hold on that.
Okay. Thank you, sir. Thank you for clarifying.
Thank you, madam.
Thank you. We'll take the next question from the line of Anand. Anand, please go ahead with your question.
Am I audible?
Yes.
Yes. Thank you. Sorry, sir. So basically, sir, my question was on the project financing provision, which will actually kick in from 1 October. Have we made some provisions regarding that in this quarter and provisions are higher? Is it fair to understand or like, you will have to actually make those provisions in third quarter?
Sir, in the guidelines, they are given that all the projects which are coming to the financial closure and implementing in the stages up to September 30th, these guidelines are not applicable at all. Any project finance which is financial closure is happening only after October 1, 2025. Only those projects that need that additional provisioning. Remaining all projects which are in the various stages will continue with the existing provisioning. There is no demand that there is not required that we have to provide additional provisioning during this quarter.
Okay. You do not expect that to be made even in the future, right?
Not required. Not required.
Not required at all.
Okay, sure. Yeah. Sir, basically, second is the ECL implementation. Do you think that that will come in this year? If yes, are we showing up a PCR specifically for that as well?
Actually, we are prepared with that, but we don't know when it comes. It's only RBI regulator has to come out with that dates and all. We are well prepared for that. We don't foresee any pressure on that ECL because of ECL.
In the past, you had done some working around it.
Even if they, see, they may be expecting that it has to be implemented in five years. Even if the entire thing has been implemented, absorbed that entire provisioning in the first year itself, it may impact. Not even we will not, and we will be much above the 14% of our CRAR.
Okay. That's a working that you have already done and you feel that you are comfortable on that?
Yes, yes. We are very, very comfortable on that.
Great. That's very comforting. Thank you.
Thank you. We'll take the next question from the line of Prithesh Bham. Please go ahead with your question.
Yes, you are audible. Please go ahead.
Yes, sir.
Hi. Good afternoon, sir. Just a few questions.
Good afternoon, sir.
One is on NII side. Any interest on IT refund this quarter?
No, that's a small amount. It is there in the INR 300-400 crore range. That is, every quarter we will have that much, a little bit. The majority of interest is on overnight lending.
Okay, okay. Second question was on in terms of PSLC, you clarified some of the parts, but just wanted to check that some. There was a guideline that the gold loans may not qualify for the PSL, and you mentioned direct agri is at about 14%. Is it beyond the gold loans, basically the direct agri?
See, actually, the gold loans, it is not portfolio there. That is not the actually RBI clarification. Initial stages where there was a draft guidelines expecting that below 2 lakh without collar, कोई भी agriculture loans should not be sanctioned with collateral. So the collar, whatever the loans, gold loans up to 2 lakhs you are sanctioned and classified as an agriculture was thought of that reclassifying that as a non-agriculture. Anyhow, in the first quarter, we have kept out of that bucket that whatever the exposure is there, we are not sold for that and we are kept out of that priority sector. Whatever the left out only, we sold it in the market because we have ample question as against the requirement of 40%, our actual priority is around 57%. Last year we sold almost INR 85,000 crore.
This time we have sold it around INR 40,000 crore in the market. Only thing last time we got lower commission, but this time because of heavy demand in the market, we got a higher commission, we could garner INR 1,200 crore. Now the RBI has classified that there is no bar in classifying such voluntarily if somebody has given that gold as a pledge as a collateral also, agriculture can be classified. There is that latest guidelines have come from RBI. That also may, I don't think that any issue is there now here afterwards.
Got it, sir. Last question was on recovery of NPA from return of account. What kind of a run rate you can see, sir? Because last year you look at second half was quite strong. Could we see some?
Sir, this time this quarter will be much better than the June quarter, sir. Already, last quarter itself we have sanctioned some four or five big proposals and OTS, and we have given time for that 90-120 days. Most of them are falling in due for the payment in this quarter. We expect that much more better recovery will come in this quarter. Your recovery under return of accounts will be much better than the June quarter and the September quarter.
Got it, sir. Sorry, if I squeeze in one more, you are selling your stake in Canara HSBC OBC.
Yes, sir.
You have tied up recently with LIC as well. Do you, will you be tying up with more insurers or will you be exclusive still with Canara HSBC?
That depends on the demand and supply. That is now Canara because we want to give more opportunities to our customers. We have onboarded LIC in addition to our own subsidiary, Canara HSBC. We will see that if the demand is there, then we will think about it. That is a board level decision, sir. At this moment, we are not thinking of onboarding any other.
Thank you, sir. Thank you so much.
Thank you. We'll take the next question from the line of Susan Chokshi.
Congratulations team Canara for excellent results.
Namaste, sir. Thank you, sir. Thank you, Chokshi sir.
Thank you, sir. Sir, you mentioned that you are expecting or there is a murmur that there will be two rate cuts in the current financial. Are you sensing this more towards the later half of the year or you are sensing quarter now and quarter later?
Sir, I have not told that I am expecting two rate cuts, sir. Chokshi, sir, I am hearing from various market. People know that feelers are coming when you go through that media and all. They are expecting that two more rate cuts. One rate cut definitely it may happen, but whether it happen in August or October, we are yet to see, sir.
Sir, in case there are two rate cuts, where do you see 10 year G-Sec?
That is only our treasury can tell. You tell. It should be around six.
It should be around six.
That is, see, sir, let us not speculate on market conditions. This is that way we speculate.
I'm just visualizing Canara numbers if I have to write any report. If it is at six, that would miss the Muslims are flying.
Sir, if that rate cut, if it happens, it will give us, it will have a temporary hit in the NIM and the NII. I am sure, sir, we will make it up. We have other avenues which will make it up. We are aware that that is a possibility. I do not think, sir, with now, as sir said, two IPOs, two divestments are also coming in. There are some cushion for us in case of extreme adversity.
Sir, my next question to management is your RAM and retail specifically are growing well. In view of rate cut, the geography where Canara Bank is strong is likely to do well because of GCC, manufacturing, agriculture, various aspects. Do you think the numbers what we are seeing are sustainable quarter on quarter or maybe see a little higher growth on that?
Actually, the first quarter generally you see a little slow growth in the credit. That is a general investigation, sir. What we are growing at is 14.9% RAM sector. I am sure that we may be able to continue that range. That 14 point means that means around 15% growth in the retail sector, RAM sector.
What would be the blended yield on RAM sector?
Pardon?
The yield on RAM advances would be what?
That's what, sir. Actually, the last time when it comes for that blended RAM sector, it was around 9.23-9.3% was there. Now it will come down a little bit to 8.7-8%. That is the average yield, sir.
When do you expect the monetization of both the divestment in the second half, or do you expect it in the current quarter?
The one will be in this quarter, sir. If subject to SEBI permission, the one will be in the next quarter.
Sir, any view on your Canfin Homes, which is going stable, but there are mixed reports. I don't know who's quoting whom. Are we looking for divestment or are we looking for growth for a right value?
No, we are looking at further growth, sir. I earlier also several times shared that my minimum expectation is INR 1,000. So we are confident of reflecting that INR 1,000 price of that in the market. Now it is around INR 800. So still we are confident that we can move towards that. At this moment, we are not thinking of any stake sale in that Canfin Homes, sir.
Sir, you mentioned that you will be spending INR 1,000 on technology. That's a regular run rate. Canara is ahead of the curve on doing a lot of technology initiatives to roll out a lot of products. Is anything new which is in pipeline which would make something unique again to start at Canara?
Yes, sir. We are working on now cyber security measure, comprehensive cyber security platform we are creating it. Recently we have also launched a loan against mutual fund end-to-end digital transformation. Everything will be, even raising the loan, even closing the loan, even pledging. Everything can be done through online portal only. Major contribution will be on digital lending platform, sir. We have launched a comprehensive digital lending platform by the end of this March 2026. Entire our RAM portfolio we want to convert into a digital platform. Already, 70%-75% of products we have created there and we have started working on that. Somewhere on the UAT stages, somewhere already actually for new loans, all new loans we are onboarding it. We want to even existing loans also for renewals and all, we want to convert them into digital lending.
That will change the face of the credit side portfolio, sir, in the quality as well as in the TAT and all those things. There will be a sea change in that so that we can easily compete with the private peers in the credit side also. Of course, cyber security, I told you, we are almost to INR 70 crore we are invested on that. That platform will come for operations in another one month time. Again, we are also investing almost more than INR 100 crore in the credit card platform. That entire credit card platform is being refaced and we are working on that. That purchase order also almost at the verge of issuing the purchase order. That also will change that our actually we want to grow big in the credit card also within the bank.
For that, we want a bigger platform that has been onboarded. Now once that is implemented, we will go aggressively on canvassing that credit card also for that. The third one is we want to strengthen our Canara Bank Securities Limited. That is actually where we are dealing so far. We are not able to serve to our own existing customers who deal in the equities and mutual funds. That's why we want to invest our capital something on that our own subsidiary. We want to strengthen that subsidiary, Canara Bank Securities Limited. Already we have posted a general manager there. That will be mutual benefit for our CASA also so that our customers also can deal directly in the trading of equity and the mutual funds, sir.
To strengthen all the digital initiatives and new products, what measures are we doing for human resource so that end-to-end satisfaction with the TAT technology, all that is achieved?
Recently, we recruited exclusively 120 people only for IT, sir. The advertisement has been given through IBPS only. We recruited 120 specialist agriculture IT guys at a scale one officer level. They have all been reported. They have all been deployed in various key areas where earlier we used to depend on outsourcing or the resources taken from the people. Now, again, recently one month back, we concluded the interviews for 60 specialists at a little higher cadre. That is at a project leadership cadre. Those people also may come and report after two months because the lock-in period, three months notice period is there for all those guys. These 60 people have been recruited on contract basis in three months with the market demand packages. Once they have given, each one will be given one-on-one projects. We will monitor the project progress on that.
Once they report, I think our implementation of project will further speed up in those matters. Since we have a lot more on our AI-related initiatives on our card, these 60 people will help us in implementing it and taking advantage out of that.
Sir, congratulations to team Canara on all aspirations and for the years to come.
Thank you. Thank you so much, Chokshi sir.
Thank you. There is one question in the chat. What is the breakup of the slippages into retail SME in Canara Bank?
It's INR 650 crore is agriculture, INR 400 crore is retail, INR 1,000 crore is MSME.
The total outstanding restructure book as on first quarter?
See, the restructure that RF1, RF2, and all those things, now it has come down drastically. Now it is outstanding is only around. Total it is INR 11,000 crore. INR 7,000 crore is in standard asset, INR 4,000 crore is in NPA.
Thank you. That was the last question for the day. I hand it over to the management for your closing remarks. Thank you.
Thank you. Thank you so much for all the analysts, sir, for attending this conference call. Thank you, sir.
Thank you. That concludes the news call for Canara Bank.