Good evening, everyone. Thank you for joining Canara Bank's Q2 FY 2027 earnings conference call. Today we have with us the senior management team of Canara Bank, represented by Brajesh Kumar Singh, MD and CEO, sir, Shri Hardeep Singh Ahluwalia, ED, Shri Bhavendra Kumar, ED, and Shri S. K. Majumdar, sir, ED. With this, I hand over the call to the MD, sir, for his opening remarks, post which we will have a Q&A session. Thank you, and over to you, sir.
Thank you. Thank you there. I just welcome all our esteemed analysts to this analyst meet after having published our September quarterly results. I am very happy to inform some of the salient features, though we have already provided the full balance sheet and profit and loss statement posted. We have this quarter crossed a very important milestone of INR 30 lakh crore of business, and our total global business stands at INR 30 lakh 72,000 crore at 15.88% YoY growth. Global deposit also grew by 13.13% YoY, and it is as of now at INR 16 lakh 97,000 crore. Global advances grew very robustly at 19.46% YoY, INR 13.75 lakh crore. The most heartening to note is our core business, the income from core business, that is net interest income, grew by 20.39%, and it is at ever highest YoY also and ever highest outstanding gross amount at INR 11,000+ crore.
Net profit also grew very handsomely, and it is also ever highest profit of any quarter at INR 5,175 crore and YoY 8.40%. CRAR is very well placed at 17.19% due to plowback also, and at the same time, our density of our risk-weighted asset has also improved like anything. PCR coverage is also, we have increased it by 175 basis point YoY basis, and now it stands very robustly at 95.34%. Gross NPA, our total asset quality has improved like anything. Our guidance for the full- year at 31st March 2027 was for gross NPA 1.50%. Now, we have already improved it at 1.33%. Net NPA also, we said that it will be around 0.40%. It has further improved and it is as of now only at 0.30%. If we go granularly in the advances side, the advances growth was broad-based.
I mean, every RAM and large corporate, everybody has equally contributed to discuss RAM grew by 21.303%. Within RAM, retail credit at 31.61%. Even in retail, if we talk about housing loan, it has also grown 17.35%. All these numbers are YoY. Vehicle loan grew by 25.50%. If we talk about MSME also, that is a very good growth at 15.49%. In earning per share also 5%, the growth is 5.5%, and we are at INR 22.06. There is an improvement of 21 basis points on YoY basis in credit cost, and it is very handsomely placed at 0.47%. Then slippage ratio has been contained like anything, and the annualized slippage ratio is only 0.58%, and there is improvement of 18 basis points.
And let me just conclude by just giving you how we have fared against our guidances, which we gave in the start of the year. So we said we will grow total business by 10%-11%. Against that, we have grown 15.88%. Advances, we said 11%-12%, we have grown 19.46%. Deposit growth, we said 9%-10%, now we have growth at 13.13%. CASA, we have said that it will be in between the range of 30%-32%, which is as of now we are at 29%. In that, we have protected at 29% in spite of the fact that we could garner $5.8 billion of FCNR deposit, which in rupee terms is close to INR 55,000 crore, which is all under term deposit. Had it not been there, we would have been also achieved or surpassed this guidance also.
Despite of so much term deposit, that too in a very short span of time, we have still maintained it 29%. NIM, we said it will range between 2.5%-2.60%. We are at 2.53% on annual basis, and on quarterly it is 2.55%, even better. Gross NPA, like I already discussed, net NPA also I discussed, PCR also discussed. Slippage ratio guidance was 0.80%, now it is only at 0.58%. Credit cost also I have said that we have improved and against the guidance of 0.75%, it is only 0.47%. Return on equity, we said 16.5%, it is 2% more, around 18.49% to be precise. Earning per share also, we said INR 20, and it is at 22.06%. Return on assets, we said between 1.01%-1.05%, we are at 1.04%. So you see, barring one, CASA, that too I have explained how can it vary.
We have surpassed by good margins on all the guidances. Now I shall be open to your analysis, your questions, your any further clarification from our side and any guidance from your side, please.
Thank you, sir. We will start 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 Maru. Please go ahead with your question.
Yeah. Hello, sir. Good evening. Congratulations.
Good evening, Maru. Yeah.
Yeah. Congratulations, sir.
Thank you.
I just had a couple of questions. What would be your incremental yield on corporate loans currently, and what would it be last quarter? As in, what was the incremental yield on corporate loans in the second quarter, and what was it in the first quarter? Likewise, on gold loans, your yields.
Okay. That I will provide you. Or yeah, we have got it. Yes. Let me see.
The corporate yield is 7.72%.
On gold, it is increased to 9.10%. It has improved.
Okay, and-
from 8.96% to 9.10%.
Corporate has improved?
From 7.68%, it has improved to 7.72%.
Okay, sir. Got it. And sir, what is your take on margins from here on? Do you see margins improve from here on, too?
Yeah, I guess we will be able to sustain this NIM at 2.55%, considering there is a rate hike also of 0.25 basis point. We are at 25 basis points, and our repo rate link book is 53%. Again, MCLR will be also repriced, but at the same time, it will further depend upon how deposits and advances are getting repriced. But as of now we speak, 53% of book is already repriced. Then there is a festive. This season, there will be lot of festivity also. So there will be a lot of underwriting under retail lending and growth propelled through widespread consumption. So we see there is good margin also. In retail, our margin is 8.65%, our earning. So that way, it will improve. 50% already repriced. Yeah.
Got it, sir. Sir, again on gold loans-
Yeah
Competition keeps increasing. I know Canara Bank has done well. It is one of the leaders there. But competition keeps increasing. So do you see pressure on yields going ahead? Your yield has actually improved QoQ, but do you see pressure on yield going ahead, given that competition keeps rising? Even large NBFCs are now getting into it in a big way.
We work under a very competitive environment. We are used to taking on competition. Yes. But one thing I would like to say, gold loan, we are doing for years altogether, and we are very much skilled in doing gold loans. All our people are very smart. We have got a very good setup of appraisers, gold safes, and the whole ecosystem we have got very well placed. We are market leaders also. As of now also, we are not pricing very aggressively, like this NBFC and all. We are always below NBFC, and they can't be below us considering they borrow from us only and then they further go on lending. They are not a deposit-taking NBFCs. Yes, competition is there, but we know this business, how to do this business. We will be further bettering.
It will be not dipping, I guess.
Okay, sir. Perfect. Thank you so much.
Yeah. Thank you, Maru.
Thank you. We will take the next question from the line of Jai Mundra. Please go ahead.
Sir, good evening, and congratulations on a-
Good evening, Jai.
very steady quarter. Good evening, sir.
Thank you.
Sir, a few questions, sir. First is the bulk deposit. While we have raised huge FCNR(B), but it looks like that the bulk deposit has not moved either ways. I was under the impression that the bank may be tempted to reduce bulk deposit or may replace bulk by FCNR. What is your thought process? Can bulk deposit be decreased, and the entire FCNR will be in retail TD only, right? Is that understanding correct?
Yeah. Let me request Mr. Ahluwalia to answer. Yeah.
See, sir, last quarter, we have increased the bulk and CD by INR 12,000 crore. From INR 4,25,000, the bulk has gone to INR 4.37 lakh. This quarter, we have consciously not taken and maintained at the June level from INR 4.37 lakh to INR 4.38 lakh. During this process, we have decreased the cost of deposit by 1%, because the FCNR deposits were at 1% less than the bulk prevailing market price.
Right. Okay.
It is a cost. We have grown by 19% in advances also. We have grown 13% in deposits. There is a gap also. It was funded there also. The part of it was utilized there.
For credit growth.
Fully.
With robust credit growth, it was utilized.
No, it has replaced. What you understood was correct. It replaced bulk deposit.
Yes.
It fully replaced the bulk deposit. Otherwise, had FCNR not been there, bulk deposit would have been more by INR 30,000 crore-INR 35,000 crore. I mean, bulk CD put together.
Yes.
Right. Okay. In the process, you have saved 100 basis point cost on bulk, right?
Yes. Wherever we have replaced it, we have saved 100%. Consider it was at 6.5%, and that was at 7.5%. Further, we have saved on cost of CRAR and SLR also, which is also 22 point- 23 point. Consider these were not supposed to be charged CRAR, SLR also. Again, there is that earning also. Yeah.
Right. Sir, I am not able to understand your NIM trajectory because 50% of the book will move up by 25 basis point immediately, or it has already moved. Bulk deposit, even if the rate seems still softer or stable type, right? Mathematically, the NIM should go up only. What is the offset here?
See, I will answer. This quarter, that effect of that FCNR(B) leverage will also come, wherein we do not have a spread of 2.55%. The spread in the $3.2 billion in leverage is only 40 basis points- 50 basis points. That will be compensated with this. Little more, it will compensated more. That impact will also come from this quarter.
Okay. Sure.
Yeah.
And sir, in interest income on advances, was there any one-off? I mean, the calculated yield and even the reported yields are up by 3 basis points-4 basis point, on the loan yield. Is there anything which helped us in improving the loan yields?
No. It is only since our average advances has continuously increased and it never dipped. So due to average advances on the increasing side, and very calibrated underwriting also we have done. We have not done any sub-7% loans. Rather, we have settled some of the sub-7% loans and at the same time, we have settled some of the high cost deployed, like Mr. Ahluwalia told. So that's why this increased earning is there. It is merely on the count of average outstanding advances going one side northward only.
Right. Understood. And sir, your total gold loan in rupees crore and how much of that is agri gold and retail gold, sir, if you have that number.
Okay. So INR 2 lakh 82,000 crore is the total gold loan, out of which agriculture is INR 1 lakh 74,000 crore and INR 1,08,000 is the other non-agricultural.
INR 1,08,000.
INR 1 lakh 8,000 crore. So altogether, INR 2 lakh 82,000 crore.
Right. Last question, sir, from my side is, sir, AFS reserves. If you can quantify what was the AFS reserve at the end of Q1 and at the end of Q2. Yeah.
Number I will also give, but in percentage terms, I would like to say, 80% of our investment book is HTM, 20% is other than HTM, AFS and FVTPL. Out of that also, 15% book is 15 point some odd percentage is AFS reserve. AFS. Even if HTM is not supposed to be, if you are asking about that dent of mark- to- market. HTM is not supposed to be hit by MTM, but AFS is also not hitting our P&L. That will directly go to AFS reserve. Only FVTPL, which is less than 4%, around 4%, their impact of mark- to- market is coming. That also I can quantify. Last-
Jai wanted to know that what is the increased loss. AFS, the loss for the quarter is around INR 1,300 crore for the quarter in AFS.
Okay, but that is adjusted in AFS reserve, right? Nothing to do with P&L.
Exactly. It is adjusted in AFS.
Yes.
Right. Sorry, sir, you were mentioning about the sensitivity of FVTPL.
Yeah, FVTPL last quarter our earning was from INR 55 crore.
This year loss INR 55 crore.
This year loss was INR 55 crore. Last quarter earning was around INR 500 crore.
INR 555 crore.
INR 555 crore. Altogether, loss is, say, INR 600 crore.
Right. Sure, sir.
That is there.
Sorry, sir, last.
That is.
Lastly, sir, if you can, I think I heard you on TV saying about this drought situation is not very problematic as of now. But are you seeing anything that can reduce your recovery efforts even in those affected district? How can that pan out? I mean, if you can
Not much. Three states have been declared drought-affected. Part of Karnataka, then Maharashtra. These two states are only affected, that two part. There will not be much effect on the recovery because restructuring is happening through SLBC. Total exposure to drought-prone area is not less than around INR 10,000 crore to INR 13,000 crore.
INR 13,900 crore.
That will not affect much. INR 13,900 some odd amount. Again, some dispensation also will come from SLBC side. That has already come. We'll sell through that, I guess.
Right. So, sir, these amount, let's say INR 13,000-14,000 crore, that will be restructured, right? Or can be restructured.
Absolutely.
Yes.
Restructured, somewhere, [Hakani].
Deferred
Moratorium, deferment is there, moratorium is there. Some restructuring, some additional support also it comes. It is decided by state by state by State Level Bankers’ Committee.
State Level Bankers’ Committee has already helped.
Like last to last quarter, emergency line of credit was there, so that helped. Some kind of dispensation every time comes. This will be also not an exception.
Right. No, sir, my worry is by the time dispensation come, can these account become NPA or they will be straight away restructured?
No. Like I have said, [Hakani], there is no stress in my book going further also. Even if you take SMA 0 into consideration, total stress is only 2.42%. Slippages also last quarter were only 0.15%. That way we do not see or perceive any stress in our book.
Right. This 2.4% is all ticket size, right? Including below INR 5 crore.
Every ticket. Yes. If you talk about more than INR 5 crore, then it is less than 1%, 0.30% only.
Right.
Yeah.
Okay, sir. Great, and thank you-
Thank you.
and all the very best.
Thank you, Jai.
Thank you. We will take the next question from the line of Sushil Choksey. Please go ahead.
Sir, congratulations to Team Canara on excellent performance.
Thank you, Choksey Sahab.
First question to you, sir. Your key ratio table, page number. I have heard whatever you have replied to Maru and Jai Mundra.
Yeah.
I have a specific question. As you are saying, there is no stress, margins have bottomed out, your efforts on saving costs are looking good, irrespective of FCNR deposit taking up your toll. Would you like to revise your guidance for the year on any parameters starting from ROA, ROE, cost to income, CD or any of the parameters?
Like I said, sir, these were all decided before my joining the bank, and we are just respecting that. I said I will work hard, team will work hard, we will better it. You have seen everywhere we have already bettered it, and we will sustain it. I said instead of going revising my own guidances, let me better it. We are bettering it only. We are not restricting ourself anywhere, we are not sticking to guidances. You see, against advances growth 11%-12%, we are booking 19%. We are just concentrating ourself to let this growth story be a very sustainable one.
Sir-
We have no plan to evaluate, sir. Yeah.
Sir, as of October 14th, what is the visibility on RAM business being festive quarter and Karnataka has a big festive, pretty specifically around Dussehra. Second thing, how is your gold loan business looking? How is your corporate pipeline looking and overall business mix? How do you see visibility for Canara for the quarter and for the year? Specifically, looking at the businesses which are emerging in state of Karnataka and Tamil Nadu, where we have a good concentrate, manufacturing business are expanding. Be it auto, be it defense, many other such businesses are emerging out of these two states. How is the new business segment emerging for you where the credit is likely to go well?
First question, sir. We are seeing very robust demand for retail lending products. Our housing loan in excess of 17%- 18% is growing. Total retail, 21%, vehicle loan, 25%. It is a very good demand also, that too without this festive season. We have also today started getting those numbers. We are already in the festive mode. Yes, our presence is very good in the state of Karnataka and Tamil Nadu, Kerala, and Andhra Pradesh, Telangana also. What benefit we get due to this presence, and since we are born here only, that we are very well-recognized. That branding and the issue is not there, and we are kind of first choice bank here. That benefit we are already getting.
This quarter, due to this festivity and other, like Governor Sahab also you would have seen, in spite of him raising repo rate by 25 basis points, he revised the growth projections for the country from 6.7% to 7.1%, 40 basis points. That way, country is also very resilient and robust, and we do not see any stress in our books also. We see that this quarter, going further, will be a good quarter. Again, regarding pipeline of large corporate book or mid corporate book you ask. Altogether, already sanctioned but not disbursed, and we have got good hot leads in hand. That is around INR 47,000 crore. Let's say around, in and out, INR 50,000 crore. In June also, similar kind of pipeline was there.
I guess there is a sustained demand also from the market, most particularly from power sector, green sector, power evacuation, battery storage, data centers. Many, sir. From infrastructure also. There is a good pipeline, I can say. That INR 50,000 crore is in my hand only.
Sir-
RAM is also doing good, sir.
Sir, my next question is, how is outlook for recovery from written off accounts? Second thing is on your subsidy, and third is treasury, you will have a painful time.
Yeah.
How are we weathering the storm where treasury is concerned? If you can highlight more on your subsidies and the written off accounts.
Okay, sir. I will start with the recovery part. Recovery, though, there is no challenge as such. In percentage basis, we are recovering very handsome. Every quarter, we are recovering more than what we are slipping. This quarter was also not an exception. That is one. But yes, at the same time, let me accept that very pool of that written off accounts is dwindling down. All those gross advances also, you have seen, it is only 1.33%. In the total absolute terms also, it is around INR 18,000 crore only. Part of it is already resolved and recovered also, and which is some of the outstandings are in our book only due to CIRP or PPIRP processes. That pool is dwindling down, and we are not slipping also very heavily in the new slippages, only 0.15% quarter. That pool is this.
So in absolute term, recovery will be not as much as what we are recovering as of now. But yes, one or two quarters, there is absolutely no issue. But going further, that very pool is dwindling down. One thing. But there will be another benefits, if we are not slipping, then what we will recover. That is one thing. Then the next question you asked, sir, regarding-
Subsidiaries.
Subsidiaries.
Insurance and-
Treasury and subsidiaries.
Yeah. Subsidiaries, last time, two of our subsidiaries, we listed them. They are all good, profit earning, and their shares, stock is also doing good. Canara HSBC Life and Canara Robeco, that is a mutual asset company. This quarter also, we intend to sell it out one of our subsidiary called Canbank Factors. That deal is already done. So total investment was only INR 14 crore, but we'll get 4x-
INR 18 crore
4x we will get at least. Our share will get 4x. That is on count of subsidiary. All, we have got 14 subsidiary associates and joint ventures. Everywhere we are doing good. All our subsidiaries are doing good and giving synergy to us and augmenting our balance sheet side also. Then we come to treasury operations. Yes, there is pain in that side only due to hardening of yield. At the same time, there were no much OMO operations so that we had any arbitrage. Last year, very handsome income was there from treasury side. This year, instead of income, there is a loss. But that everybody is exposed to that. We do not have much say into that. But yes, with our own prudence, we are trying to minimize losses. But whatever is mandated, like mark- to- market, you have to book, you have to book.
That is what we have booked and said, "We will be not little bit less affected considering 80% of book is HTM. 20%, maybe 15% is AFS, that will go to AFS reserve directly. 5% that vulnerability is there. For one quarter, it was affected by INR 600 crore. That is due to 44 basis points hardening of yield in one quarter. It is further hardening, but that is a dynamic situation, we do not know. If we know, we can speculate, but there is no speculation. Whatever is there, we are coping with that.
Sir, this is a-
But that is being compensated by robust NII growth.
Yes, yes. I agree with you on all the parameters. Sir, my last question, I know I won't get answer, but still I'm asking you. Looks government has expedited result season for PSU banks this time. This is led by some speculation or reality, we don't know, that there's a Diwali gift of some merger, and Canara Bank stands out to pick one or two banks in the merger fold. Do you have any comment on it?
No, no, sir. It was all our decision to give a result as early as possible. It has got nothing to do with the government. It is all solely our decision, top management decision, and heavily supported by all my vertical heads and our statutory, central statutory auditors only. Why we wanted to publish our result as early as possible, considering every quarter, we are publishing these results by 22nd, 22, 24, and sometime by 28th of the month. In a way, what happens, we lose one month, then we are left with only two months in the quarter. Even if you are not that much bogged down with the process of auditing and publishing your results, still your mind is occupied with the results and all. So that way, we have just tried to make ourself free.
Now at least we are having two and a half months instead of two months to perform in the quarter, and this is a very important quarter.
All PSU banks are justifying with productivity. It's congratulation and best wishes that it sustains the same momentum for quarters to come.
Thank you, sir. Thank you.
Thank you.
Thank you.
Thank you for answering all my questions.
Thank you.
Thank you. Stay blessed.
Thank you. We will take the next question from the line of Parth Gutka. Please go ahead. Parth, please go ahead with your question. As there is no response, we will move to the next question from the line of Ashish. Please go ahead.
Hi, sir. Good afternoon. Sir, few questions.
Good afternoon.
Firstly, if you can share what was the interest on IT refund this quarter. I believe the number for June quarter was roughly INR 250 crore. Secondly, what was the quantum of AS 15 related provision in the June quarter as well as September quarter?
Okay, I'll ask CFO to answer. Please carry on.
This quarter, we could book the IT interest income around INR 90 crore. Your second question is regarding AS 15 provision. Pension and gratuity are put together, INR 950 crore we have provided as per actuarial valuation.
This INR 950 crore, sir, is for September quarter, right?
Yes, this is for quarter. Correct.
What was the corresponding number for the June quarter?
June was also more or less same.
Okay. Understood.
Another INR 450 crore was less, but more or less same trend.
Understood. Sir, and secondly, can you share any update on the ECL one-time provision impact, which we will see?
See, amount we have not calculated exactly, but what we roughly presume, it will be somewhere INR 12,000 crore-INR 15,000 crore. It has increased to INR 3,000 crore considering the hardening of yield, considering one-time provision for M2M we will have to provide. The kind of CRAR we are having 17.19%, which is as against 11.5% only, and CET1 also 8.5%, against 8.5%, we are having 12.80%. Even if in percentage term we count, it will be not more than 1.2%, 1%-1.2%. I guess we will be easily sailing through it. The kind of profit also we are making. Last year, we could make INR 19,000 crore of profit, and this year also, in half year itself, we have booked INR 10,000 crore. I think that will be not much.
Only thing we have decided in how many years we are going to do it, considering RBI has given dispensation for five years. But nobody will take it to five years, let us decide. A kind of PCR also we are having is 95.34%, so it will also help. A kind of asset quality improvement in asset quality is also going to help you.
Understood, sir. Sir, you mentioned-
Yeah
some additional impact because of the, or rather some revision in estimate because of the hardening of yields. Can you just explain how the yields factors into the ECL calculation?
See, all those books now on date of reckoning, that 1st of April. They are like how we are doing mark- to- market as of now. So we have to do it mark to market. But yes, HTM will be also mark- to- market. So that will affect us by INR 2,000 crore -INR 3,000 crore, depending upon how much holding we have on that day and what is the yield rate on that day. We do not know. It will further harden or soften.
[inaudible]
But if we at the same level we have calculated, then it also, it will INR 2,000 crore to INR 3,000 crore. So there is not much impact of that also. And that is also going nowhere out. It will remain with you only. That provision, that is a provision, so it will come, it will go. Sometime you write back, sometime you have to provide.
Okay. Sir, in that case, how do you expect to protect your ROE of 1%? Because it seems like the credit cost will inch up next year.
Credit cost is not a Yeah, you answer, please.
This is credit cost will only increase if I make a provision for that. Extra provision for going forward. It is yet still not decided what the industry will do, whether a part of it will be passed on. That will be based on the industry scenario. At this point, we do not see that will affect much. There may be some. In case we decide to make provision for that going forward, that will have some credit cost effect. As you have seen, our credit cost today is below 0.5%. And the kind of asset quality improvement that is happening and the kind of slippage restrictions are happening, I think that will automatically offset, if any, such provision requirement.
Understood, sir. Sir, another thing you mentioned was on the gold loan yield, that the yield has gone up by roughly 15 basis points quarter-on-quarter. Do you expect to take more hikes going forward? Can this yield go up further?
Yeah, certainly. When it comes to gold loan, we are earning as of now 9.10%, but it is going to give further because rates are now hardening. I think we can have better yield than our gold going forward. Still, we are lower than many of the peer banks.
Understood, sir. Sir, just lastly, one data keeping question. If you can share the slippages across segments for the quarter.
Okay. Total slippage is INR 1,844 crore. Segment-wise, I will tell you. Slippage, I will just tell you. Yes. INR 687 crore, we slipped in agriculture. INR 13 crore in corporate. Gold by INR 40 crore. INR 777 crore in MSME. Retail INR 327 crore. All taken together, INR 1,844 crore.
Understood, sir.
It is not somewhere very concentrated sort of, yeah.
Understood, sir. Thank you very much for answering the questions.
Yeah. Thank you.
Thank you. We will take the next question from the line of Param. Please go ahead.
Yeah. Hi, sir. Congratulations on a great quarter. Yeah. Sir, firstly just to, again, pick up on the comment you made on ECL. Did I hear you correctly? You said that the extra provisioning may not pass through to the bottom- line. There might be some, say, pass-through to the customer. Is that what you were trying to imply?
No, no. We said actually how market is going to respond. We will be aligning with the market. As of now, there is no plan to pass it on to the customers. Even if we are not passing, then okay, then ROA will be not, say, in excess of 1%. Then new normal will become 80 basis points, you see. That is also very handsome and good. Yeah.
Yeah. So that is what we're trying to understand, sir, as investors, that will we reset to a new normal or will our effort be-
That will be
to defend that 1%.
Very premature. That will be very premature to say.
At this stage.
That market will decide. As of now, we do not see much of movement out of that also.
Okay, sir. And this INR 12,000 crore to-
Yeah
INR 15,000 crore, sir, when I look at it as a percentage of your net worth, your reported book value, sir, it is like almost 10% of your book value. So even that will get. So when you are saying the phasing of that over five years, on day one, will your net worth look 10% lower or will that also get spread over five years?
No. So-
Yeah. You are right, sorry.
Yeah.
Its net worth will be spread over five years. That option is there, but we do not think we need to spread it over beyond two years. It should be, if not in first one year itself, it all depends if the bond yields remain elevated, then we may have to cover it in two years. But I think two years should be more than enough, given a profit of more than INR 20,000 crore and asset quality improving, still maybe coming to below 0.3%, and the provision coverage going up beyond 95% to 96%- 97%, hopefully. I do not think that we will need more than, without denting even your credit cost and even ROA, for that matter. Because one thing, you should also look at that overall profit improvement going forward.
I feel that even if we have to provide, that will neutralize given the increased absolute profit figure.
Okay. Got it. On the quarter, sir, I wanted to understand. There is a very strong growth in Agri quarter-on-quarter, 10%. Is that largely the gold loans that you have seen or anything to call out over there?
No, this is not only gold loans. Core agriculture also, we are growing close to 9%. That is there. Because we have seen growth in the first quarter, that is June, September, in the same line. We have done exceedingly well under core agriculture also.
Okay. It is a mix of both. Yeah.
To be very specific, out of the total Agri of INR 3 lakh 4,000 crore, gold is INR 1 lakh 74 crore and core Agri is INR 129 crore-INR 130 crore.
Similar numbers for last quarter? Yeah.
Last quarter was INR 1 lakh 51 crore. INR 1 lakh 51 crore was Agri gold and core Agri INR 1 lakh 25 crore.
Okay. Got it. Thank you so much, and congratulations.
Sir, growth is broad-based. Thank you so much.
Thank you. We will take the next question from the line of Parth Gutka. Please go ahead.
Yeah. Hi, sir. Can you hear me?
Yes, please.
Yeah. Hi. Thanks a lot for the opportunity, sir. Sir, I would like to know what is the amount of disbursement we have done under ECLGS?
Okay. So INR 13,000+ crore.
Okay, fine. INR 13,000+ crore. And what were the advances given against the FCNR deposits?
$3.2 billion. Out of $ 5.8 billion, $ 3.2 billion.
Okay. Fair enough. My last question was, is it fair to assume that a large part of the FCNR deposits that we have garnered have been utilized this quarter, and from next quarter onwards, we will again have to rely on the bulk deposits if we want to maintain these levels of-
No. Part of it has been utilized, but part of it has been used for replacing. Our bulk has not increased. It was constant.
Okay. Fair enough, sir.
Yeah.
Thanks a lot.
Thank you. We will take the next question from the line of Pranav. Please go ahead.
Hi, sir. Thanks a lot for the opportunity. Sir-
Yes, Pranav.
any other avenues of fees that you are investing your time and capital on? What kind of upside you see on latest MDR inclusion for UPI money transfer? Thanks a lot, sir.
We are investing heavily, both in terms of money and time also, in all those digital advancements. We are just working on adoption part of it. May it be QR code, may it be school fee collection modules, internet payment gateways. Regarding the second part of your question, that we have not calculated as it has not come yet. As of now, we are out of cash only by way of paying some switching charges, you can say, switch charges and all. We do not see much earning considering our penetration in PSPs. We have also one payment service provider platform that is called ai1Pe. That has not been popularized very much. We do not see since much of earning will be there. That, too, it will come on more than INR 2,000 , and again, it is capped at INR 300 .
I do not see much of earning out of it. But as going further, if volume further increases, our platform is widely utilized, then only we will get to earn something. As of now, we are out of cash only, considering we have to pay charges to others since other platforms are being utilized or somewhere acquirer is different, somewhere pay bank is different.
Understood, sir. Thanks a lot, sir.
Thank you. We will take the next question from the line of Aman Singh. Aman Singh, please go ahead.
Hi, sir. Thank you for the opportunity.
Hello.
Sir, can you help me with the all ticket size SMA of 0, 1, 2 for the quarter as on date?
Okay. If it is INR 5 crore and above, then our total SMA, including zero, is only 0.51%. And in outstanding term, it is INR 7,000 crore. That's all. On a book of INR 13 lakh 75,000 crore. And when it is all taken together, not INR 5 crore and all, everything taken together, then it is 2.42%. That is in absolute terms is INR 33,340 crore. That's all.
Sir, can you break it down into SMA 0, 1, 2 also?
Yes. If you take SMA 2, then if INR 5 crore above we are talking about, it is 0.21% only, INR 2,838 crore. If we are talking about SMA 1, in INR 5 crore and above, it is 0.09%, INR 1,304 crore. Taken together, SMA 1 and 2 is 0.30%, INR 4,142 crore. All SMA 0 is INR 2,901, and in percentage term it is 0.21%. Altogether, 0.51%, INR 7,043 crore. If we take all, even INR 1, then SMA 2 is 0.9%, SMA 1 is 0.53%, total SMA 1 and 2 is 1.43%, and SMA 0 is 0.99%. Taken together all, it is 2.42% only.
Right, sir. Thank you.
Yeah, thank you.
Also, sir, can you give me the LCR for the quarter?
Pardon, LCR? 115% as of 30th of September. 115%.
Okay, sir. Thank you so much.
Yeah, thank you.
Thank you. We will take the next question from the line of Lovish. As there is no response, we will move to the next question from the line of Saket Kapoor. Please go ahead with your question.
Yeah.
Yes, please.
Yes, sir. I am audible, sir?
Yes, please.
Yeah. Sir, firstly, in terms of the impact of the treasury, that MTM is negative of INR 600 crore for this quarter. What is the total number for H1 and the comparable number for last year, sir? If we are seeing an impact of INR- 600 crore in this quarter in profits, then what was it in Q1 and what is the total in H1?
Okay. Relax.
I will respond to this. In June, the total trading, MTM, OMO, and others, cumulatively it was INR 654 crore. In this quarter, it is INR 153 crore. If I compare to previous year, it was INR 1,217. Basically, on MTM profits of INR 762 crore in September last year.
Last year it was profit of INR 762 crore, and this time it is a loss of INR 61 crore.
On MTM, it is a loss of INR 61 crore. If I compare to previous quarter, it was INR 611 crore MTM profit.
Sir, what our MD, sir, mentioned was that for this quarter, we have booked losses of INR 600 crore. That understanding is correct?
No. As compared to last quarter.
Last quarter.
There was a INR 550 crore earning in last quarter. This quarter is INR 50 crore loss. If you add them, it becomes INR 600 crore.
Yeah.
It is like that.
Sir, next, coming to the valuation part, sir. Our book value currently INR 124, closer to INR 125. The market price is closer to either INR 120 or INR 125. So we are trading at one time book. What according to you, sir, are the steps that are still in the anvil that will improve the valuations for the investing community as you have guided for 2.5% NIM and ROA closer to 1.02%? Where are we, sir, in terms of that valuation curve that will benefit your investors? Second point is on the bid pipelines of loans. If you could just give us some color how that pipeline is shaping up and our win ratio in the same.
Yeah, also we secondly when people start showing interest into it. It is trading on book value or a little less than also. But today we have gained some market after this result, and I guess if you people are spreading good thing about us, all these analysts and all, it will further go up. I have personally, and along with Mr. Majumdar, our ED, went Mumbai and met many of the analysts or our investors also, just to bring about our perspective. For our part, we have to perform. We are performing continuously for last two, three quarters, you see. Last year also, we have posted INR 19,000 crore and we have given 220 basis points of yield also. Our yield is also more than saving bank rate of interest. So people will understand and they will start investing and remain invested.
It will take our share to some greater heights. That is iB- Sentry. Regarding pipeline, we have got 30,000 hot lead and 17,000 already sanctioned but not disbursed. Taken all together is INR 47,000 crore, close to INR 50,000 crore. This is basically all from green energy, battery energy storage, power evacuations, and data centers. Some HAM projects also, one or two. It is widespread. A lot of good pipeline we see. Going further also, we absolutely have no dearth of good leads and proposals. From these sectors, we are getting good deals and all. We have given many BGs also, so those things also will come and materialize.
Thank you. We will take the next question from the line of Shobhit. Please go ahead.
Hi, sir. Thanks for the opportunity. I know we have spoken a lot on ECL, but just one last bit on the steady state impact. I think last quarter we had called out that it will be very minimal, like around 4 basis points-5 basis points. So have we had a chance to firm up those numbers?
Come again, please.
Sir, last quarter, I think we had mentioned that it would be 4 basis points-5 basis points, the steady state credit cost impact.
We said, if you remember last time, we said INR 10,000-12,000 crore will be the requirement. Now, with the given market conditions, that is firming of our yields and this, we are saying it for HTM category because we need, we understand even HTM may require a provisioning. So if this kind of yield continues, then we expect it to maximum, maybe instead of INR 10,000 crore-INR 12,000 crore it may be INR 12,000 crore-INR 15,000 crore, maybe a INR 14,000 crore -INR 15,000 crore. But we are also optimistic if the oil prices comes down, the de-escalation in political scenario happens, even we may come back to the previous forecast of INR 10,000 crore- INR 12,000 crore. But maximum, we envisage around maybe INR 14,000 crore- INR 15,000 crore. And you have seen in that my CRAR is today above 17%, and 17.19%. And even my CET1 is very comfortable at 12.8%.
We have a real control on the risk-weighted assets, which is coming down quarter-on-quarter, and there is no reason this trend will not continue. Keeping all that into consideration, we feel now the question is whether we should provide in one year or we should spread across a couple of years since we have the flexibility given by regulator. That we'll take a call maybe as we come towards in the last quarter.
Yeah.
Thank you, sir.
Yes, sir.
Sorry. Sir, thanks for that. But I meant the steady state impact, not the one-time impact. If you could clarify on that.
See, that may not be, because you are talking of April going forward in the coming year.
Reversal
That we will have to see, wait and watch, whether I do provide for that or we decide to pass it on. That, the market conditions will decide. But I do not see a much effect on the overall financials, because even if we decide to provide, given the dwindling credit cost and the other parameters I said, that should get offset. There cannot be any upside to that. I do not think what projection we gave earlier, we need to enhance that. As on today, I do not see that happening.
Thank you. We will take the last follow-up question from the line of Jai Mundra. Please go ahead.
Yeah. Hi, sir. Sorry, sir. On this ECL, INR 10,000 crore- INR 12,000 crore going to INR 12,000 crore- INR 14,000 crore, is this including HTM, which on investment also, right?
Yes
The loan loss provision. Do they also impact on that?
No. It is including HTM. Yes, you understood correctly.
Correct. But, sir, do you have a number? Because I think yields impact will be uniform across banks, right? Depending on their HTM.
Absolutely. Yes.
But on loan loss only loan-related provision, do you have a number, sir? For how much will be the advances plus maybe credit.
No
together?
No. We have not crystallized the number, but this, what we have just said, taking into HTM, I don't think it should vary significantly on that. Total number.
Right. You have made the, sir, this September 30th, banks were supposed to make the final kind of a run on ECL, right?
No
done anything?
No. There is nothing that September 30th. We have time up to April, maybe by end of this quarter we will.
We have had our this thing, understanding our technological, our knowledge partner, Coforge is also there. Technological capabilities we are working on, models we are writing. Those things are all under testing and final stage. Somewhere in this quarter we will have that dry run and all. Technical capabilities also we have to grow, at the same time.
Right.
Yeah.
Okay. All right, sir. Thank you so much.
Thank you.
Thank you. That was the last question for the day. I hand over the call to the MD, sir, for his closing remarks.
Thank you, all who have participated and very enthusiastically you have understood our balance sheet also and probed and asked questions also. I would request all of you to please, just like some of the analysts asked why our share price is not fancy in the marketplace. I would request all of you to propagate something good about us, our fundamentals. You see, we are continuously working on our efficiency parameters more than top lines and kind of strength we are giving to balance it. Like you have seen, 175 basis points we have increased in PCR. We would have shown more profit. Instead that we have provided for PCR, which is going to help us in ECL, considering there were many questions in ECLs also. We are very well capitalized. Our assets are very balanced, very good quality of assets we have got.
We are going at a very good pace. Our NIM are protected. We are making good kind of profits. So there is no case that we are not being rewarded in the marketplace. Today, yes, market has responded very well after our results. Let us hope, I will ask your help also to give us support in the marketplace so that our market capitalization increases. So that is all from my side. Thank you all for being there for us and every time, every quarter I see some of you and most of you are there. That means that shows your interest in Canara Bank. Thank you and appreciation for that also. Thank you all. Have a good rest of the day.
Thank you. That concludes the Canara Bank Q2 call. You may now disconnect your lines.