Good evening, everyone. On behalf of Antique Stock Broking, I welcome you all to the Canara Bank Q1 FY 2027 earnings conference call. I would like to thank the Canara Bank management team for giving us the opportunity to hold the call. With us today, Brajesh Kumar Singh, MD and CEO, Hardeep Singh Ahluwalia, Executive Director, Bhavendra Kumar, Executive Director, S.K. Majumdar, Executive Director, and Sunil Kumar Chugh, Executive Director. With this, I now hand over the call to the MD for his opening remarks. Post which, we will have a Q&A session. Thank you, and over to you, sir.
Good evening, moderator, and at the same time, all my respected analysts. We have just declared our quarterly results today. Numbers, according to me, are good and so has market also taken. Let me put forth some of the performance highlight first, then we will go for question and answer. Global business has grown by 14.37% YOY at INR 29.05 lakh crore. At the same time, global deposit has also grown by 11.63% YOY at INR 16.11685 crore. Global advances grew at a handsome rate of 17.97% YOY at INR 12,93,381 crore. Net interest income has also grown 13.39% YOY, and it has first time, there is a distinction, it has crossed the INR 10,000 crore mark at INR 10,215 crore. Net profit also grew by 2.19% YOY at INR 4,856 crore. We are very well capitalized. Our CET1 is at 12.91%.
There is a gain of 62 basis points YOY. Our total CRAR is at 17.17%, 65 basis points gain on YOY basis. We have increased our provision coverage ratio at around 95%, at 94.76% to be precisely, which is 159 basis points more YOY basis. Gross NPAs come down 112 basis points YOY, and it is now at 1.57% only. Net NPA has also decreased at 0.36%, which is 27 basis points less YOY basis. If we talk about RAM credit, retail, agriculture, and MSME, it has also grown 21.20% YOY basis, and as of 30th June, it is INR 7,64,675 crore. Retail credit out of this thing, RAM, has grown at 35.88% YOY and placed at INR 3,19,893 crore. Housing loan within the retail credit space has grown very good at 17.85% YOY and placed at INR 1,29,036 crore.
Vehicle loan has grown little higher, 26.34% YOY, and placed at INR 27,315 crore. 15.12% of YOY growth we have registered under MSME, and it is at INR 1,68,815 crore. 2.19% growth we have given YOY basis on earning per share that is placed at 21.47%. YOY credit cost has also reduced by 23 basis points, and now it is at 0.49% only. Slippage ratio is contained at 0.60%, and which is improved by 20 basis points YOY. Whatever the performance we have given, we have bettered everywhere on count of guidance, whatever we have given. See, business growth, we gave guidance of 10%-11%, which is now at 14.37%. Advances growth, we said will grow by 10%-12%, we have grown by 17.97%. Deposit growth, we said-
This meeting is being recorded and summarized
It is at 11.63%. CASA, we said that it will be between 30%-32%. That guidance was for March 27. We are 29.70% as of now. NIMs, we said we will be protecting it between 2.50%-2.60%. We have kept that at 2.52%. We are able to protect our NIM. Gross NPA, we said 1.50% March 27 annual full year guidance. Against that, we have already reached 1.57%. 112 basis points we have already reduced. Net NPA, we said 0.40% for annual target, which we have surpassed as of now only at 0.36%. PCR also, the provision coverage ratio, we said 93.50%. We have this thing raised it to 94.76%. We have bettered it at there. Slippage ratio, I said 0.80%, we said that our slippage, we will be containing at 0.80%. We have contained at 0.60%.
Trade cost, we envisaged at 0.75%. Which is improved at 0.51% only. Return on equity, 16.50% we said, now it is bettered at 18.07%. Earnings per share also, we said 20, now it is 21.47. Return on average asset, we said it will be hovering between 1.01%-1.05%. We are towards the higher side of it. That is what is at 1.04%. You would see everywhere, whatever the guidance we have given, we have kept those guidance, we have bettered those guidance. Again, our performance should be seen in perspective of the total ecosystem, how our peers have fared and how we have fared. That is all from my side. I hope it is liked by you people also. We are open for any further clarification in this regard. Thank you.
Thank you, sir. We'll start the question and answer session. Participants, those who have any questions, please raise your hand. We'll take the first question from the line of Ashok Ajmera.
Please go ahead.
Hello. Good evening, sir.
Ashok, sir. Namaskar.
Namaskar, sir. Namaskar. Compliments to you, sir.
Indian Bank. Yes, sir
The entire team of Canara Bank. Very good results. You rightly said that we will appreciate your results. Yes, we are definitely appreciating, sir, because on most of these parameters, you have excelled better than the targets given. The bank is now in the range of INR 20 lakh crore business bank, soon touching INR 30 lakh crores, and very sound asset quality also. Your PCR also has increased to 94.7676%. Yes, progress on all the fronts. Having said this, some observations and some clarifications. Number one is this, sir, on the SMA side, our SMA 0 has gone up, whatever numbers are given, from INR 862 crore- INR 3,315 crore. There is a migration from SMA 1 to SMA 2. SMA 1 is reduced, but SMA 2 has also gone up from INR 1,394 crore- INR 3,482 crores.
Is it the normalized things, or can it be seen in view of this present geopolitical situation or some stress building up in some of the MSME or retail accounts that the SMA 2 numbers have gone up from INR 1,394 crore- INR 3,482 crores, and even SMA 0 also has started. Some color on that. Based on that and connecting to that only, for this ECLGS 5.0, what is the assessment made by us for the total eligible accounts, how much amount has been sanctioned and disbursed from that? This is my first take, sir, first question, on which I want your take, sir.
Okay, sir. I'll answer one by one. First question where you said that our SMA 2 has increased, but at the same time, see, SMA 1 has decreased. What has happened, there are three, four big accounts, which are with every bank as a consortium finance. These accounts are government-guaranteed account. They keep on oscillating between SMA 0, 1, and 2. I cannot take the name of the accounts, but they are high-value account. It will never degrade considering it is government guaranteed. For quite some time, it is oscillating between 0, 1, and 2. One account only has shifted from 1 to 2, but as of now we speak, it has come down to SMA 0. Due to one account, this account has gone from SMA 1 to SMA 2, but now it is corrected. It stands corrected.
Same thing has happened in one account, which was out of those three accounts only. It was out of SMA zero. Again, it has, due to some problem, on the last day, it has come in SMA zero, but now it is out of SMA zero also. There is nothing to worry. It is only due to two accounts. One account entered into SMA zero. As of now we talk, it is out of it also. One account got shifted from one to two, but it keeps on oscillating from one account to another account. Nothing to worry, sir. It is well controlled, and if total SMA, if you'll see, it is only less than 3%. It is some of the industry best number.
Yes.
We do not see any stress in our large corporate book. A little stress will be always there in MSME and agriculture, but that is also contained less than 3%. The second question, we have identified around INR 90,000 crore worth of rupees of account, which are either to be eligible for Emergency Credit Line 5.0. Out of that, we see a positive of around INR 18,000 crore rupees of advances based on their eligibility. Out of that also, we have already sanctioned INR 11,000 crore plus amount, and out of that also, INR 10,000 crore is already disbursed. We see INR 5,000-INR 6,000, considering everybody is not taking it also. Whosoever is taking, we are lending. It is done through Jan Samarth portal, and there is hardly any pendency on Jan Samarth portal also. This is a dynamic situation. People keep on applying.
Where we have this thing provided all those eligible accounts list to all our down the line, to our branches, our regions, and circles. They are also following with them, explaining the benefits of taking Emergency Credit Line. That is how we are placed, INR 10,000 crore plus disbursed, INR 11,000 crore plus sanctioned. Total domain is INR 18,000 crore. We see INR 5,000-INR 6,000 crore more there. This has helped in our good growth in our advances also, sir.
Yes, sir. 4.51% in this quarter, and some of this might spill over in the next quarter. The advanced credit growth is going to be robust even in the coming quarters also because of this, sir.
Thank you, sir.
Something on the income side, sir. On the income, the treasury income has contributed substantially in this quarter, even in many of the other banks also. Beyond INR 1,000 crore is a treasury, this thing. Another one is the PSLC commission also. In other income, if you see, it is INR 1,947 crore as against INR 393 crore in the last quarter. Whenever I compare, generally, I compare with the last quarters only because it's a dynamic thing, and considering with the four quarter earlier may not be realistic sometimes. This kind of trend in the other income, which has contributed substantially to this higher profit. Whether it is going to continue or it's a one time, like PSLC might accrue in the coming quarters also and some of the other incomes also.
Along with that, on the provisioning side also, there is other provision of INR 680 crore in this quarter as compared to INR 319 crore of the minus provisioning or deprovisioning in the last quarter. Both of these have relevance with the profit and loss account profitability of the bank. If you can give some color on that, sir.
I'll start with first treasury income, sir. Treasury income is not there what it was there in the same time in the June quarter 2025, sir.
That time yields were soft and so we could earn through treasury operations by sale of investments. At the same time, RBI had their OMO operations also, so we could earn through arbitrages also. Last time during the same quarter, the earning was INR 1,617 crore.
Which is not available this quarter considering there is no arbitrage available also. Yields have also hardened, you have seen, so there is no fun in going and selling our investment. We could only earn INR 654 crore by way of sale of investment. There is a not gain, but dent of INR 1,000 crore. At the same time, rightly you said PSLC, we will go to PSLC. PSLC has got some peculiarity, which happens mostly in the first quarter.
Little bit it spill over second quarter, but that is not available across all the quarters. Yes, we have earned very handsomely on count of sale on distinct priority sector lendings, PSLC certificates. That is very good. Last year also we could earn in the first quarter INR 1,684 crore, but this time it has bettered at INR 1,947 crore. You rightly said last quarter, in March quarter, hardly any PSLC happened, sir. Two, INR 300 crore here and there, somebody is lagging behind that. That was the answer of your second question. Regarding that provisioning, sir, yes, we have done good provision in this quarter. Last quarter, if you rightly said you compare it quarter-to-quarter. Last time total provision in March 2026 quarter was INR 2,252 crore. This time our provision is around INR 3,780 crore. That is more than INR 1,500 crore more we have provided.
That is all basically on two counts. First is on income tax, this thing, sub provision we have made. Another for employ. In others, you see, last time it was INR 869 crore less provision was. That was the negative.
Yes.
Which is 489+ this time. INR 300 crore we have provided, sir, for PLI for staff.
Okay.
Performance linked incentive. That is INR 300 crore. It's not here. Okay.
Yes, sir. My last question in this round, sir. Hello?
Yeah. Yes.
Did you get it? The figure.
No, it's okay, sir. We have provided more this time. Yes.
You have provided. Sir, how are we prepared on the ECL front, sir? What is the total assessment? Now the numbers are clear now, and how are we moving about providing whatever amount is required to be provided? How prepared we are on that side?
Somehow we got the idea about stage one, stage two, and stage three. There we see around INR 10,000 crore extra provisioning we will be needing. At the same time, our provision coverage ratio is touching 95%. We do not have exact idea about M2M what happens on 01/04/2027, what is the market that time. Nobody has got that idea, sir. That is a dynamic situation. Whatever is known in the known way, this thing, known knowledge, that is INR 10,000 some plus crore. Even if we consider INR 2,000 crore there, mark to market, it is 12-
INR 12,000 crore extra provision we will be requiring. Considering the kind of profit we are making, last year INR 19,000 crore plus, INR 19,000 plus crore profit we have made. This year also in the first quarter itself, INR 4,856 crore net profit we have made. Even we analyze, we will be again making around, everything goes correct, around INR 19,000 crore of profit. High profit and our capital adequacy, you would have seen it is at 17.17%. Even if tier 1 we have talked about it, 15%. If you see-
Yes sir
Tier 1, 12.91%. We are very comfortably placed against the regulatory requirement of 11.50%. The total dent on capital adequacy ratio, even if we provide it in one year only.
Yeah.
We have got the dispensation of five years. Still we are providing in one year, there will be 1.2%-1.25% of debt. We guess, and we are trying to provide it in two years. Not in five years, maximum in two years. Till there will be not substantial impact. Even if we are not raising any capital, we will be very peacefully selling through new norms of ECL.
Technological preparedness and other things through knowledge partner, it is all in place. We have PD, LGD and EAD, all we have got all those modalities in place and by October we'll be having that dry run. I guess we will be on technological aspect also and on capital aspect we'll be very comfortable in going through the ECL process.
Thank you. We will take the next question from the line of Jai Mundra. Please go ahead.
Hello. Yeah, hi. Good afternoon, sir.
Hello.
Thanks for the opportunity. I wanted to check, sir, on the strategy part. You have come from Indian Bank, which has very clear balance on growth and profitability. They have the highest NIM within almost all PSU banks. Canara Bank has actually one of the lowest NIM because of the lower CASA and maybe higher share of bulk deposit. I wanted to understand, sir, how do you look at NIM and CASA balance at Canara Bank over the next one year? Do you want to focus more on NIM, or you think that 2.55% kind of a NIM is a decent outcome and you would focus more on the growth? You have an opportunity now to fix the liability, or you think this is reasonably good for Canara Bank?
Rightly you said, I've got experience of Indian Bank also, which is one of the most efficient bank, I would say. At the same time, I'm having experience of 28 years at Bank of Baroda also, which is on both side, maybe growth side or the balance sheet side. At the same time, Canara Bank is also a big bank. Now we are in excess of INR 29 lakh crore of business. Yes, but my first focus and preference will be on efficiency parameters only. Growth is also important, but at the same time, I would like to be giving more emphasis on efficiency parameters. Rightly you said, our NIM is towards the lowest side. I come from a bank where NIM is always all-time high. That time it was 3.3%, to now it is hovering around 3.50% also.
Yes, we have started working on those parameters. Yes, our dependency on bulk deposit is more considering our CASA percentage is less than 30%, around 29.70%. That we have started working and very heartening to note also, you would have seen in our presentation also, that our individual saving individual, not institutional I'm talking, it has increased by 12.48%. There is a very good traction in retail term deposit also, that is at 9.10%. That is a good growth considering the tight market at present. We are focusing by way of good quality products, by good way of placing, by good way of pricing, and we are working on delivery channels also. We want to have good traction in SV individual and retail term deposits. We have come up with very nice products also.
Our endeavor is to slowly and steadily replace those low-cost bulk deposit through not necessarily 100% by CASA, but through retail deposits. This good dispense and we have given guidance that will be going to get around $2.5 billion of FCNR, ECB and OFCE taken together. Which will also help us in reducing and replacing those bulk deposit, considering this is coming at 6.50% only. There is dispense of CRR and SLR also. There will be further saving of 20 basis points- 25 basis points there also. It will be costing less than what we are as of now holding in bulk deposits.
That way there will be. Again, whatever the growth we are getting in deposit, we are deploying it very gainfully, considering very tight and quality underwriting, and keeping our credit cost, you have seen, at very controlled way. Both side we are working on yield on advances also and cost of deposit also. You have seen that we have grown our CD ratio also from 75%-80%. Yield on fund in our investment is 6.90%, whereas yield on investment is around 8%, yield on advances is 8%. Again, we will get 110 basis point traction there. That will help us in here. We will be certainly protecting our NIM and we will be further growing on it. That 100 basis points dispense and given last year in repo rate, by repo rate cut.
That has also been fully materialized and it is plateau now. Cost of deposit also kind of stabilized, and we are getting further growth towards low cost deposit and replacing well. We will protect and we will even take it further. I am sure, I am hopeful.
No, sir. Actually, the question is, right now there is a balance. Most banks cannot target above industry growth and still deliver, let us say, higher NIM. Even for Canara Bank, we have grown loans at 18%-19%. NII is 12%-13%. Currently, the growth is not NIM accretive. If this situation remains, would you be growing at 18%-19%, which is higher than industry, or you would be focusing more on, let's say, growing in line with your SA growth, which is 12%-13%, and thereby protecting NIM, or you would be lean towards higher growth and higher NII versus NIM? That is the question, sir.
Okay. No. This year, there was a special growth under emergency line of credit also. Around INR 11,000 crore we have sanctioned there also. It has happened towards, I think, placed across the quarter. It has not happened in the first quarter. That is why you see that effect will come next. It will start coming from this quarter. Considering there, we are getting 1% more also. Whatever the incremental advances we are doing, considering good credit underwriting also. We are doing it gainfully, I said, in a guarded way, but we are doing it at good rate. Better than our average yield also at some times we are doing. It will further improve. No, first thing is efficiency, then only growth. We will be striking a balance. We cannot be stagnant also considering every bank has got different characteristics.
This is a high- Business outstanding bank. At the same time, NIM also if we approach. See, consider at 2.50%, we are making INR 19,000 crore of profit. Even if we are this thing, moderating towards in our favor a little bit also, that will give us good distinct traction on net profit also, sir.
Right. Sir, just on this point. Sir, what would be your blended cost of bulk deposit? A rough guess will also help.
Okay. This month. This is month-over-month. Every month, we are having a gap of, in our favor, around 29 basis points- 30 basis points. Whatever the bulk deposits going outflow and whatever the inflow is there, that way we are correcting it. 20 basis points, 30 basis points here and there. Last month it was at 6.58%. It is improving every way.
Sir, when we have a yield at 8% and bulk deposit is anywhere between 6.5%, clearly, as long as, you can gain NIM if you shed bulk and maybe grow a little bit softer on the overall deposit side, right? Because your incremental margin on that bulk deposit is around 1.5%, which is lower than the blended. I wanted to check, sir, would you be keen on having a higher growth, thereby higher NII, or would you be more focusing towards taking this NIM of 2.5% towards maybe 3%? Do you have a choice, right?
No, sir. It's what I say. We have to strike a balance. Overnight, we cannot raise it from 2.5%- 3%. What we are doing, incrementally. You take example, we have said that we will raise FCNRB deposit to around, say, $2 billion. That means INR 20,000 crore will be coming. This we are betting at 6.50%. Again, there is a benefit of that negative carry of CRR and SLR. That dispensation is also there. It will be costing us around 6.20%. Again, there is a traction of 30 basis points. It will all help us, sir. We are mindful of both the things. We are mindful of growth also, and we are mindful of this thing, leverages also therein.
Thank you, Jai. We'll take the next question from the line of Maru. Maru, your line has been unmuted. Please go ahead.
Congratulations, sir.
Thank you, Maru.
Yeah. Sir, I had a few questions. Firstly, on the FCNR deposit mobilization, how much do you think you can mobilize? That is my first question. Of course, Jai discussed a lot on margins. I just wanted to know the near-term outlook on margins, right? Because you said that every month the incremental deposit cost kind of comes down. What will be your margin outlook for the next two to three quarters?
Okay. Should I?
Yes.
First question first. FCNRB, you have said, we have given guidance of $2.3 billion-$2.5 billion. Against that guidance, we said this month, in the month of July, we will raise $750 million. Against that, already we have raised $775 million, and within these four or five days left in this month, our endeavor will be to cross $1 billion. That is our guidance on FCNRB and how much we have received. You have asked about this near-term guidance on NIM. We have given guidance of 2.50%-2.60%. We will try to better it, but even if we are maintaining at 2.60%, like I said, you have to see in the total backdrop of the ecosystem. Everybody has lost on count of this thing, NIM.
Still, we have protected our NIM and we have all the aspirations and we have all the, I guess, ability to raise it further, even more than 2.60%, but guidance remains at 2.60%, 2.5%-2.60%, considering the very tough and many headwinds in the ecosystem.
Thank you. We will take the next question from the line of Ashlesh. Please go ahead.
Hi, sir. Good afternoon. Sir, first question.
Hi, Ashlesh.
My question is about this comment which you made, that incremental lending is happening at a higher price. Can you just elaborate a bit more on this part? How are you able to do this?
Could you please come back? I could not hear you properly.
Sir, you made a statement that incremental lending that you are doing is happening at a higher price. Correct me if I heard you wrong. Can you just elaborate a bit more on this part?
Your voice is breaking.
Voice is breaking, Ashlesh, I could not get you.
The price, what you want to know?
Sir, hope this is better. You made a statement that you are seeing the incremental price of lending going up.
Yes.
Can you just elaborate on how you are able to do that?
See, we were having some sub-seven lending also. That, whenever it is coming to reset, we are resetting in our favor. Sometime we do not mind taking prepayment also. Incrementally wherever we are doing, and market is also little better now. Wherever we are doing, since we are not fighting for the growth only, we are getting good terms there also. You would have seen, again, in our total advances mix, our RAM percentage has gone by 1%, from 58%- 59% has gone. You know there are many benefits of having this thing growing RAM, considering the better leverage also, they are diversified, risk also, less credit cost also, and at times, private sector reckoning also. That way we are trying to improve. On every proposal, we are very mindful and we are appraising it from this thing, efficiency angle also.
Understood, Sir. Sir, just one follow-up there. When you say market is getting better, which segments are you referring to here? Is it only corporate or are you seeing that trend across retail and MSME segments also?
Corporate, I would say. Otherwise, these are all targeted lending, retail and agriculture and MSME. These are all more or less on the similar lines. In corporate, we are getting good traction. We are asking and we are getting also good rates.
Sir, on the second question.
Our rate. Yeah. Yes.
Understood. Sir, within that corporate, I see that the better-rated corporate has grown much faster than the lower-rated corporate. You expect that trend to continue here on?
Yes, also. In our total book now, 86% of our book is A+ rated. That has grown, actually, from last time also.
Do you think continue?
We are getting quick traction at the better-rated corporate also. Yeah, 86% is.
Thank you. We will take the next question from the line of Parth Gutka. Please go ahead. Parth, please go ahead with your question.
Hi, sir. Thanks a lot for the opportunity. Sir, in the interest income line item, is there any one-off for the quarter? What was the interest on IT refund for this quarter?
Okay. There is not one-off there, whereas we are this thing, adversely placed on this time. Last time we had good interest on IT refund also. That is not available this time.
Okay
It is not that much what it was last time. There is not much one-off things. These are all, this thing, organic only.
Okay. My second question is, what was the interest on recovery from write-off account in the interest income line item for this quarter?
Okay. Interest on IT refund this time was INR 247 crore only, which was quite more in the last quarter same time. Recovery interest towards NPA and write-off is only INR 258 crore. That is also less than, it was INR 382 crore last time. This is INR 258 crore this time only. Last year, interest on IT refund was INR 619 crore. This time it is INR 247 crore only. That way, like I said, there is no one-off distinct case in any of the interest component.
Okay, sir. Fair enough. My second question is, the PSLC income has picked up in Q1 from INR 1,600 crore or INR 1,700 crore odd. What is the target for the full year here? Around INR 2,000 crore?
Sir, there is absolutely no target for full year as such. Whatever PSLC sale happens, that happens in the first quarter or little part of the second quarter. You'll see hardly, this last quarter, March 2026, if you talk about, there were only INR 393 crore of income. Whatever happens, it happens in the first quarter, mostly in the first quarter and little part in the second quarter only.
Okay.
I guess, actually, that we have already gained, but there will be some traction, INR 200 crore, INR 300 crore here and there, but not as much as what we could book in the first quarter itself.
Okay.
Second quarter, something will be there. Yes.
Okay, sir. Fair. Sir, my last question is, despite the proportion of RAM segment going up, our yields have declined in this quarter. Any particular reason for the same?
See, if we are considering it quarter-over-quarter, last financial year, 100 basis point rate cut was there in repo rate. That was spread across the year.
That way, we have lost 100 basis points and our 53% of portfolio is repo rate link. That way, we have lost there instead of gaining, but still we could hold on that, you see.
Okay. Should we assume that yields have largely stabilized, and it should not decline from this levels?
I guess yes, yields have largely stabilized, depending upon MPC we do not know. As of now, last time also, there was no change in MPC also. There will be always benefits of stability.
Sure. Sure, sir. Thanks a lot for the opportunity.
Thanks. Thank you, Parth.
Thank you. We have a next question from the line of Sushil Choksey. Please go ahead.
Congratulations to Team Canara and Brajesh for excellent performance. Having known the bank-
Sushil, [Non-English Content]
Namaskar, sir.
Namaskar. Hope you remember me from Indian Bank time.
Not only Indian, I remember you from Bank of Baroda.
That's great.
Sir, knowing you from Bank of Baroda and Indian Bank, and knowing Canara Bank's excellent performance from inception when it got listed-
Thank you, sir.
Sir, what is that you would like to see in Canara Bank in your tenure that you are able to implement and make a dramatic change in outlook of Canara Bank despite great success they have achieved? Second thing I would like to know on digital spend, all your subsidiaries, gold loan, and credit pipeline, disbursed and undisbursed.
Okay, sir. Credit pipeline. My aspirations will be on efficiency line, sir, considering this bank is doing very good as long as top line is concerned. But again, yes, we are a little challenged on the efficiency parameters, and that has got anything to do with only one parameter. That is, our CASA percentage is towards lower side as long as our peers are concerned, to the likes of Central Bank of India, Bank of Maharashtra. Even my this thing, previous bank, it was around 38%, 39%. That is one of my aspirations, to correct it. I mean, I can't correct it overnight, but that would be my endeavor. If you ask me my wishlist, that is my first wishlist. Second, I would like to further work upon our HR.
As long as I am concerned, I feel that the only differential between one bank to another bank, good or not so good bank, is that HR. I would like to work more on our own personals. I would like them to not only talk about deposit and advances. Rather, they should talk about ROE, NIM, and whatever the efficiency parameters, they are all talking about that. Whenever doing anything, they are always mindful to that. Ethics also, I would like to work upon, considering many benefits of being ethical. That is two of wishlist. There are many wishlist, but if you talk about prioritizing those wishlist, these are my first two wishlist. Digital spend. Yes, we are doing quite a good digital spend. This time also, more than INR 3,000 crore we have earmarked for digital spend.
It is around 8% of our total. Total IT cost, if we say, it is 8%, but out of that digital only more than INR 3,000 crore we have earmarked. Out of that also, substantial portion will go towards AI. I want to do AI in a very consolidated way, not in piecemeal way. Very calibrated way. I think we are better placed than any of the banks, considering our headquarter is at Bengaluru. We will be getting better traction in AI and all. Our employees are also very tech-savvy, I must say. That is how we are placed on digital. We have got many digital journey. Those are good also. On adoption part, we have to do a lot of things. Digital journeys are there, but adoption level for all the journeys are not that high.
Gold loan book is, I will not say bread and butter, but I guess we are market leaders in gold loan. Already INR 2.49 lakh crore was the gold loan outstanding as of 30th June. It has further increased, I would say. That is a growing business, and it gives us good leverage. It is very well collateralized by near cash collaterals. Credit cost is hardly there. There is no capital provision also. It is giving good traction. It's a stable business in southern part of the country, but whereas it is growing other part of the country also. But in southern part, it's a stable business. People collateralized gold for all their banking needs, and it is very fast also they get. It answers your third question. The fourth, you said credit line.
Around 92 accounts, take it 100 accounts, and around INR 50,000 crore is our secret pipeline, I will say. It's a dynamic situation, sir.
Sir.
Sanctioned, but if want bifurcated, also I can tell 45 accounts we have got sanctioned but yet to be disbursed, around INR 18,000 crore. Proposals in hand, good proposals which are sanctionable and disburstable, around 47 accounts worth INR 32,000 crore. Together it is around INR 50,000 crore.
Sir, your view on all the subsidiaries which are listed and unlisted?
Two of the subsidiaries, we have got a good number of subsidiaries. Two of them got listed last year. You have seen that Canara HSBC Life and then Canara Robeco, and both of them are doing good. Their results also got published, and there is two, three days, I think, when there was a upper 10% circuit also. These two subsidiaries are doing good, and we are getting threefold benefit out of them. Considering we have their distribution franchisee also. They are using our 10,131 branches. We are getting agency commission also. At the same time, valuation of these companies with the good business is growing, there also we are gaining. Our share market, we are also invested there. There is a third benefit also, that appreciation of our stock prices. Same way, Robeco is also doing good.
Their share has also appreciated. We got around five subsidiaries we have got. Around five associates we have got. All of them are giving good traction. This year, we could book at least more than INR 320 crore of a profit which has come to us as parents. We are seeing good traction there, and they are very professionally managed. Though we are keeping arm's length distance. They have got their own board. They are governed by their board. We are keeping arm's length distance, but we are supporting them by way of allowing them to use our distribution franchise.
Congratulations and good luck for the year, sir.
Thank you, sir.
Thank you. We'll take the next question from the line of Nitin Aggarwal. Please go ahead.
Hi, sir. Congratulations on good quarter.
Thank you, Nitin.
Sir, couple of questions. One is like, this quarter we have seen a sharp decline in cost of deposits. How do you see the further repricing over the coming quarters, almost 27 odd basis point decline? Is it fair to say that margin expansion from here that you're indicating will be driven more by reduction in deposit cost versus lending yields?
Both sides we are trying, sir. One side will not help considering we are placed towards the lower circuit. We are trying to have synergy on both sides. Yield on advances also we want to grow. Credit-Deposit Ratio we have also grown so that the dependency on investment reduces considering that 6.90% only we are earning by way of yield on investments. 110 basis points will come from there. That's why our NII also increased. We are targeting both sides of it, sir. Rightly you said, 27 basis points it has come down, but at the same time, yield on advances had come down by 29 basis points. Whatever the gain we have got here, that was this thing, subsidized that way.
We cannot rely on one side of it, but whereas we have to get traction from both sides, little here, a little there also, which will augment us on our earning.
Right, sir. Sir, with lending yields more or less repriced with the repo transmission done, how do you see the repricing on the deposit side in the coming quarters?
Repricing is also, I think it will plateau, it has all done. Whatever reduction happens in repo, that is immediately transferred overnight to deposit side, but it is never, It gets transferred, but it gets transferred with lag. At the same time, full amount is also not, full percentage also not transferred. Somehow, there is always fight for, depending upon the respective ALM of the banks, they have got aspiration of growth also. That bulk deposit, there is always a fight. Sometime rate goes depending upon their own ALMs. People are giving good rates also, so that it is not fully transferred. It never happens also. This last one or two year, that is little on adverse side of it.
Right, sir. Sir, on the corporate side, how do you see the pricing trend now? Has there been some improvement in the pricing environment on corporate lending?
There is some improvement, I must say. We are getting little INR 0.10, INR 0.20 here and there, we are getting. If we are bargaining, we are getting.
Okay. I see like the RAM mix for us has been same, say for last two, three quarters. How do you see that? Other banks, some of them have a much higher mix on RAM. How much is the difference between, say, aggregate RAM yield, blended yield on RAM, as well as versus the corporate?
I see. Okay. Yes, in our advances mix, RAM has grown by 1% YOY. It has from last 58%- 59% this time. Yield on RAM is little more than yield on corporates. Considering corporates, we have got sub-seven, some of the portfolio at sub-seven also, that is not the case with the retail. Again, in MSME, a little more leverage is there. Agriculture, we get subsidy also there. In retail also, especially unsecured retail, that is not more, there good leverages we get. If we blended we go, it is more than what we get in the corporate. Again, in corporate side, there is less operational cost. It is a trade-off, still most of the banks, they prefer retail, this RAM.
Right. Sir, difference, fair to say, can be, let's say around 50 odd basis point or can it be more also?
Around 50, but exact number if you want, I'll provide you. Yeah.
Okay.
Around 50. Yes.
Okay. Thank you so much.
Thank you, sir.
Thank you. We will take the next question from the line of Anand Dama. Please go ahead. Anand, please go ahead with your question. As there is no response, we will move to the next question. Next follow-up question from the ask list . Please go ahead.
Hi, sir. Sir, I have a few follow-ups very quickly. On the ECL estimate which you gave of 1.2% of RWA, that translates to about INR 13,000 crore- INR 14,000 crore of provision. Have you already created any floating provisions against this requirement so far? That is one. Second question is if you can share the segmental slippages. Third question, your fee income has been quite sluggish this time. It is up only 5%. What is the reason for that? Last one on the deposit focus which you mentioned, do you have any targets in mind about the CASA ratio or the share of bulk deposits by, let's say, March 2027 or March 2028? Those were the four follow-ups.
Okay. ECL you said 1.20%, that translates into INR 12,000 crore- INR 13,000 crore. That is what the amount we also perceive. No floating. Floating is already there where whatever the distinct provision we do on standard advances, that is always there. It takes care of SMA 0 and again, this NPA is always 100% provided. In between one and two, SMA 1 and SMA 2, there is a challenge. There comes this amount, this INR 12,000 crore- INR 13,000 crore. That is there. Our provision coverage ratio is 95% again. It will take care. The incremental in one and two, that is around INR 10,000 crore- INR 12,000 crore. INR 10,000 crore we are envisaging, but we do not know what will be the market rate and M2M, whatever that we have to provide on our investment book.
That is one challenge which we do not know. Even if by law of average, it comes 2,000-
Yes.
We are having very good CRAR that also you can consider a floating margin. 17.17% we have got against the regulatory requirement of 11.50%. CET1 also is 12.91%.
You can get any guidance in terms of NPA provision which you have?
No. We have not having some hidden provision here and there. PCR is there, and this provision on standard advances, which is not part of PCR also. That is there. CET1 is 12.91%. That is very handsomely placed even by dent of 1.25%. Regulatory requirement is 8% only. We are very comfortably placed there I guess. Even if we are not raising any capital, we have absolutely no provision in absorbing it in one year also, but we plan to absorb in two years time, against five years time allowed by Reserve Bank of India. Segmental slippages also, I will provide you segmental slippage. Yes, we have got. Slippage. Okay. Total slippage has happened of INR 1,781 crore. That's all. Out of which INR 727 crore has happened in agriculture. MSME, INR 697 crore has happened.
In retail, INR 326 crore, and in gold, some here and there to INR 20 crore-INR 30 crore. Altogether, the major slippages are there in agriculture and in MSME. That two are not significant considering our 12 point some odd lakhs of crores of our business. That slippage ratio is only 0.15% in this quarter. Annualized is 0.60%, but actual for this quarter is only 0.15%. That is, I guess, somewhat industry best.
Understood, sir.
Yes.
The other questions on-
Fee income
Fee income and your target for the next.
Fee income, I'll explain. Non-interest income, fee-based income, if we talk about, YOY if we consider, YOY we have grown at 5.35%. YTD we have come down actually from INR 2,513 crore, if we talk absolute amount, to INR 2,342, less than INR 200 crore. That is on count of two. There are some incomes which are booked in the last quarter. Considering many commission on government, many service charges, you're getting me, no? Those things are only specifically booked in the last quarter. YOY we have grown by 5.35%, but YTD we have gone down less than, say, INR 200 crore. There is no systemic problem also, but there are some specific commissions, there are some specific charges we book in the last quarter. That's why it is little less there. Then we, deposit forecast, you say.
We have given guidance, in deposit to grow to 9%-10%, lower double digit. We have grown close to 12%, 11 point some odd percentage. The most heartening thing to know there is, that the most of the growth have come from individual accounts, either it is SP individual or it is retail term deposit. Which only testaments our registering good services, good products, and good placement also. That is what we would like to harp upon. We have got good number of branches, good franchisee, 10,131 branches spread across all the places. Again, we have aspirations to open 250 new branches this year. Out of which 34 we have already opened. Going further, our distribution franchisee will also increase. We have got some synergy from our subsidiaries also.
Suppose somebody is taking one of some of their mutual fund products, then they need to have one savings account with us. That way also we are getting synergized also. We would like to grow 11%-12% there also.
Thank you. There is a question in the chat box. What is the total gold loan portfolio in agri and non-agri, and what is the LTV over there?
What is?
What is the total portfolio in the gold loan, agriculture and non-agriculture? What is the LTV?
What is the
LTV.
LTV. Okay.
LTV.
See, agriculture gold loan, total gold loan is INR 2.59 lakh crore, out of which agriculture gold is INR 1.51 lakh crore. Rest is under retail gold loan, that is INR 107 lakh crore. LTV, around 60. 65, I would say. Between 60-65. Yes.
Thank you.
We were very well, held ourselves there also due to any fluctuations of gold prices.
Thank you. We'll take the next question from the line of Anand Dama. Please go ahead. Hello, Anand, please go ahead with your question. As there is no response, we'll take the last question from the line of Param Subramanian. Please go ahead.
Yeah. Hi, sir. Thanks for the question.
Hello, Param.
Sir, first question, what is your LCR for the quarter?
LCR is around 150. 115.
115.
Soft target we have kept at threshold at 1.10. 110, against that we are at 115. Average is still more 119. That is I'm talking about terminal LCR, but average LCR during the quarter is around 119.
Okay. 119 is the average.
Yes.
Okay, sir.
Average. Yes.
Yeah. Perfect, sir. Sir, on ECL, what is the run rate impact on credit cost? You mentioned the one-time impact, but once you transition to ECL, how much will your credit cost increase by on a run rate basis?
I guess it will not have much effect. You have seen we have controlled our credit cost like anything. It is only at 0.51%, around 4.49%, say 0.50% against our guidance of 8.0%. In total provision requirement is incremental basis till around INR 10,000 crore on a book of INR 12.83 lakh crore. You can understand, there will be some increase, but not substantial.
Sir-
As of now, I cannot predict very precisely, but it will be in the range of, say, 10 basis points or not even 10 basis points, sir.
Yeah, sir.
Four, five basis points. Yes.
Okay. Got it, sir. Do you think, sir-
That is an assumption only, sir. That is an assumption only. Yes.
Okay, sir. Got it. Sir, if it is, say, 10 basis points, do you think you will be able to increase your, say, lending rates to offset the impact? Or such a-
I guess no, sir. For 10 basis points, why it would be.
Okay.
When, again, it will be an industry thing, sir. It will be not restricted to Canara Bank. Interest rates are always market driven. As of now, as per my own understanding, none of the bank is going to load that. There are some issues on floor rates and all, but we'll see how things evolves, you see.
Sir, reason I ask is, sir, the 1% ROA comes under some sort of pressure if we start seeing higher credit cost. Yeah, it'll be difficult to achieve that if we have a higher credit cost. Is that something you will not try to defend?
See, ROA in excess of 1% is okay. I guess it is better. Even if we are protecting at 1.0, 1.02, we'll be happy.
Okay, sir. Okay. Sir, last question, sir. On your agri book, since you have such a substantial agri book, any issues or stress you are seeing because of the, say, monsoon that we are looking at or are you worried on anything over there? Yeah.
Like I replied in earlier questions also, yes, if there is a less rain or due to that, what happens, those districts gets declared as distressed districts by SLBC and District Level Technical Committee. Many kind of dispensation comes. Even if we are going to get any, some stress, that will be in our KCC portfolio only. Again, that dispensation will come from SLBC and government and RBI, it will be very easy to sail through that. Again, as country grows, there is less. The rain-fed areas are dwindling down very fast, you see. There are other ways out also for irrigation also. Fasal Bima will be also there. Dispensation by way of declaration of distressed districts will be also there. I guess there will be not much effect.
KCC portfolio also not very huge at our bank, you see.
Okay, sir.
I guess that will be manageable. Yes.
Yeah. Thank you so much, sir. Congrats once again on the quarter.
Thank you.
Thank you.
Thank you for your question.
We take that as the last question. I hand over the call to the MD, sir, for his closing remarks.
Thank you all my respected analysts. We have tried and worked hard, and we have kept in mind, we were always mindful of our efficiency parameters. Going further also, our endeavor will be to mark more upon efficiency parameters, inch towards implementation of ECL work, more on the digitization, more on the decongestion of branches so that our branch is getting time for developmental aspects, and take help of financial inclusion also at the same time. Grow deposit at low cost, and then gainfully deploy that. That is what some aspirations are there. We look forward for your support also and your guidance also therein. Thank you all for taking out time and going through our balance sheet, giving so much insights, which will certainly help us. Thank you all.
Thank you, sir. That concludes Canara Bank Q1 FY 2027 earnings call.
Thank you.