On behalf of Antique Stock Broking, we welcome you all. We have on the Canara Bank management team side, Mr. K. Satyanarayana Raju, MD and CEO, sir, Mr. Debashish Mukherjee, Executive Director, Mr. Ashok Chandra, Executive Director, Mr. Hardeep Singh and Mr. Bhavendra Kumar, Executive Director, along with other senior members of the team. Thank you, sir, for giving us this opportunity to host the Q2 and 2024 post result earnings call. Without further delay, I hand over the call to MD, sir, for his opening remarks, post which he'll open the floor for any queries. Thank you, sir, and over to you.
Good evening, sir. For all the investors and all our well-wishers, I wish to share some few of the highlights of this quarter performance with all of you. Of course, by this time, you might have gone through our presentation. Still, for the starting, I want to share some few of the glimpses on this. Our total business has grown year-on-year, first time double-digit growth in the last few years and reached, touched in a high level, total business level of INR 21.56 lakh crore. Our gross advances has grown at 12.11% and stood at INR 923 lakh . Our operating profit has reached INR 7,616 crore, with year-on-year growth rate of 10.3%.
Our net profit has reached INR 3,606 , with year-over-year growth rate of 42.81%. This profit, operating profit and net profit, we could achieve it because of good growth in the net interest income, with 19.76% in the year-over-year, and reached to that position of INR 8,903 crore. Our RAM credit has grown at 13.63% and stood at INR 516,000 lakh crore. Our gross NPA has reduced 161 basis points year-over-year and reached to that below 5%, that is at 4.76%. Our net NPA has declined 78 basis points year-over-year and reached at 1.41%. Our PCR has further improved to 88.73%, with a year-over-year change of 337 basis points upwards.
Our retail credit growth has now crossed a double-digit figure, and it has grown at 10.56%, and the total amount stood at INR 148,000 lakh crore. It is led by the housing loan with a 12.32%, and education loan at 14.68%, and vehicle loan at 9.29%. Our return on equity, we continued that the good performance that stood at 22.551%, with a year-on-year improvement of 514 basis points. Our CET1, that's the common equity, it's through internal accruals, we could achieve 11.58% all-time high, at a year-on-year improvement is 44 basis points.
Our return on assets, first time in the last decade, we have crossed 1% and stood at 1.01% with a year-on-year improvement of 30 basis points. We are able to contain our expenses and maintained well below the 45% of our cost-to-income ratio, and it stood at 43.68% with an improvement of 53 basis points year-on-year. Our net interest margin, though there is a stress on the interest expenses, we are able to maintain just above the 3%, that we stood at 3.02%, with year-on-year improvement of 19 basis points. These are all the few glimpses we have shared with you, sir, but I am sure that you might have gone through all our presentation, entire presentation. Along with me, all our four executive directors are there, and all our top management is here.
We are happy to receive any clarifications or queries on our performance in this quarter, sir. It's now open for all of you, sir.
Thank you, sir. So we'll now open the session for any Q&A. I would request participants to limit their questions to two per participant so that everyone can get a chance. Okay, so we will wait for some time. Okay, so we have the first question from the line of Mahrukh Adajania. I would request to please mention the company name as well. Thank you.
Yeah, hello, sir. Good afternoon and-
Good evening, Mahrukh.
Congratulations. Yes, congratulations, sir.
Thank you. Thank you, madam.
Yes. Sir, basically, my first question is on the outlook ahead for margins, and the reason for that is in the festive season, all banks are offering lower rates on incremental loans, like some retail incremental loans, and all banks have increased their, flagship deposit rates as well. So would that, from year on, will we be able to hold margins at three, or what is the outlook like, given that there's so much deposit competition, lower, higher rates, et cetera? That's my first question, sir.
Yes, madam. Actually, it is true that there is a stress on the interest expenses. But sourcing of liabilities is not an, a big issue. There is a consistency growth in our liability side. As we've given the guidance of 8%, we are growing the domestic deposit more than 8.8%. Even retail term deposits in absolute number, there is a growth of almost INR 20,000 crore in the last six months. Even in the savings bank, there is a INR 4,000 crore growth. In current account, there is a more than INR 1,000 crore in absolute numbers growth is there. That means the growth is there, but it is the present rate of interest what we are offering to the public and the term deposits is high.
I don't see any further increase in the term deposits, because there is a continuous inflow is there, and we are not finding any difficulty in raising the resources at this rate of interest. So that's the said, but because already we are offering at a higher rate of interest, our pressure on margins is continuing. So if the liquidity improves in the system for next two quarters, then inflow may increase. If the inflow increases, our cost of deposit may come down, then we may able to maintain the around 3.05 what we projected. But if the current scenario continues with a high interest rate and the same liquidity issue is there in the next two quarters, we may land up at 2.9. That is the range what we are expecting in the coming quarters.
Okay, sir. That's so clear and helpful. My next question is on the new investment guidelines by RBI, which are not yet applicable. What will be the impact on Canara Bank?
We have made some assessment. Not much impact will be there in our case, because our mostly holdings are in HTM portfolio, so not much impact. That is all we can say right now.
Okay, sir. Thank you.
Okay, so we have the next question from the lines of Mona Khetan. Please unmute yourself and go ahead.
Yeah. Hi, sir, good evening, and thanks for taking up my question. So, my first question-
Hi, Mona Ji.
Yeah. So my first question is on the provisioning lines. There is this other provisions of INR 222 crore. What exactly is that about?
See, this is, see, last one year also, we are building up this. We have some stress in one big account of LRD. That, of course, as it is, it is continuing in that SMA, but in anticipation in future, if any shocks is there to prepare ourself, we are providing additional provision for that. That is only a cushion what we are taking that. But as it is, that account is still continuing in the stress, but it is not NPA. And last two quarters also, we have provided INR 458 crore for that account. The same account, now we have provided additional INR 200 crore.
Okay. So total, you have provided INR 458 crore ?
INR 650, INR 650, INR 650, INR 650 crores.
Got it. And how large is this account? I mean, we have provided INR 650, so what - how much have you provided?
This it will be sufficient to meet the requirement of the provisioning.
Okay. Okay. And so.
Even if it slips, but we don't see that, but in anticipation, why to keep that when we have surplus? We are in anticipation of that, we are providing this.
Got it. So will it be like 50% provisions against this account or higher?
Pardon?
Will it.
Pardon.
Will the INR 650 crore be like, 50% provisions against that account, or will it be higher?
Ultimately, whatever it is required, we have provided it.
Okay.
Volume going into.
It's not.
Got it, sir. So, I mean.
Volume going into suddenly, yeah.
So, apart from the NPA provisions, which we provide under the PCR, do we have. And the INR 650 that you already mentioned, do we have any other provisions made, made against the SMA book?
No, that's all. Always, we take a future-ready. That's the stand what we have taken, the Canara Bank, for last three years, that always our provisioning will be aggressive, saying that the future-ready balance sheet. The same tendency is continuing every quarter. Our provisioning will be always in aggressive side.
No, so what I'm trying to understand is, against our SMA book, you mentioned this LRD account, and against which you provided INR 650 crore. Is there any other provisions apart from the INR 650 crore against the SMA book or any provision against.
See, like, see, when we are PCR is more than 88.73, that itself shows that how much extra it is there. It's not required to be disclosed individual account-wise, how much we provided. We are already maintaining a provisioning PCR coverage ratio. We have given a guidance that we will try to reach 90% by the end of this financial year, and we are moving on that direction. That means that it's not that required, only the required provisioning we are making, we are making provisioning beyond that. In addition to that, whatever the employees' expenses, because you know that the bipartite settlement is due for that, agreement, and it is due for the last November 2022 onwards. We started providing that 15% every month, and this quarter also, we provided only for that in incremental.
In future, suddenly, if we have to pay that arrears, there should not be any shock to that balance sheet. That's why we, in anticipation of that, this quarter also, we provided INR 345 crore for that.
Got it, sir. And just finally, on the restructured book, can you share the outstanding amount and how much has slipped through the quarter so far?
See, including RF one, RF two, and MSME restructuring everything, originally it was INR 24,000 crore, madam. As on date, it is approximately INR 20,000 crore outstanding was there, and INR 14,000 crore still continuing in the standard assets. Around INR 6,000 crore is under NPA.
Sorry, how much is NPA?
INR 6,000 crore is already slipped to NPA. INR 14,000 crore is continuing in the standard asset. INR 4,000 crore liability has come down.
Got it, sir. Thank you. That's very helpful. I'll come back in the queue.
Thank you, madam.
Thank you. The next question is from the line of Mr. Ashok. Please unmute yourself and go ahead.
Compliments to you, sir.
Thank you, Ashok.
The entire team for the excellent result in this quarter. In fact, if you see on all the parameters, including the operating profit, net profit, your gross NPA has come down, net NPA has come down, credit cost is also under control, and ROE is also 1.10. So, excellent result, sir. Just, I picked up one point out of that, that LRD account, sir, which is under SMA two. Now, the SMA two total figure is INR 4,413 crore. In the last quarter, it was INR 3,367 crore. So if this INR 4,413 crore includes, was it, was it in SMA two even in the last quarter also? Which is not possible.
No, sir. Now this quarter, now this quarter, that is in the SMA two, sir.
It means the other SMA two, the balance?
Has come down.
Has come down. Yeah, that's what.
Has come down. That has reflected in our SMA position also, if you see that, our SMA position, INR 5 crore and above, last quarter it was 1.11%, now it is 0.70%, all-time low.
That's very good, sir. Sir, this being an RD account, we must be having very good security, in, in-
We don't have literally any problem in that account because we are secured by more than 150% hardcore, heart of city properties. It's not the question of any issue is there. It's a... but in anticipation of any such sudden shocks, it should not impact our balance sheet. We are preparing ourselves. That's all.
That's definitely a prudent, and that gives a lot of comfort actually, because, I mean, even if it slips, the recovery prospects are very fast and very good, being having 150% coverage. Point well taken, sir. Sir, on the CASA side, sir, I mean, historically, our CASA percentage is lower as compared to many of the peer banks. As compared to the last quarter, it is improved a little bit. So going forward, sir, are we doing something aggressive even in this scenario? Is it possible to increase CASA, and what is our target so that we become more competitive in the market on the interest rate front, sir?
We strongly believe that CASA can be garnered by improving our customer service, by reconnecting with them. So for that, we have taken several initiatives in the first quarter. We already shared with you all that the products, innovative products, what we launched for the targeting the salaried class, retired people and, specialized, the non-salaried class people. We have come out with several new initiatives, and that has attracted very well. And salaried employees, new, though, because of that product, that product covers, that gives the term life insurance coverage to the people who opt to the Canara Bank as their salary disbursing, bank. They are getting a term life insurance at a free of cost instead, in addition to that, accidental death. That has helped a lot in that.
Our existing, actually, before commencing this product, the total salaried class who draws their salaries from Canara Bank was INR 14 lakhs. Now it has touched INR 20 lakhs. That is the last six months, we almost garnered INR 6 more lakhs, new salaried class. And simultaneously, for Jeevan Dhara, our pensioners, we have given the new accounts. In that, we have had a tie-up with one TPA, whatever it is there, in that we are extending some benefit to them. And we have created a customer relationship manager to handle the top 150 customers of individual HNI customers of individual branch in 5,000 branches, and several initiatives we have taken. Even we are popularizing our digital footprint, and we are the first bank who has come out with so many new initiatives in the current financial year.
Interoperability in credit card linking with the credit card with the UPI, making more friendly by our mobile app. So many initiatives we are taking to attract the younger generation, the existing loyal customers and the separate sectors. We are also coming out with two more new features, new products, targeting the younger generation, professional students and the women separately. There are two more new schemes we are working on that. We will launch very soon on that. We are also launching a corporate mobile app for corporate clients. That also is a very, I can say that very few banks are in India now it is offering that, benefit, that we are already launching, we're about to launch in another one week time. And API Banking, we are making it more and more customer-friendly.
We are taking several initiatives on focusing of this CASA. So we believe that we can improve that, because you can see that the absolute numbers, there is an increase. Almost INR 4,500 crore, INR 4,200 crore in savings bank, and almost INR 2,000 crore in current account, that you can see that the absolute numbers is increasing. That itself is creating a confidence. Once the liquidity in the system improves, our CASA will improve definitely as we expected. And definitely, we are targeting at least by our immediate target is to maintain that existing level of percentage, because the balance sheet is growing at double digit growth. To maintain that, it first we have to grow double digit in the CASA, then we have to think beyond that, then to improve the legacy issue of low percentage.
So our first focus is we don't want to slip from that, the existing percentage, we want to maintain that, and there afterwards, we want to further, build on that with our initiatives. I am sure that with our initiatives, we will, build up that.
Thank you, sir, for such an elaborate answer. Sir, from here, can I just take it on our digital journey, sir?
Sir?
I mean, some color on our-
Ashok, sir. Tell me, sir.
Can you hear me, sir, now?
Sir, yes, sir, I can hear you, sir. Tell me, Ashok, sir.
From here, can you take us through the digital journey, sir, now? Because you said so many initiatives. Can we have a little more detailed report or kind of an answer on our total digitalization or digi banking with your all these initiatives and what kind of budget which we have and we have spent? How much has gone to P&L and how much has gone to capital account aspects?
Definitely, sir. Definitely, definitely. Let me explain to you that on that. First of all, before the... Because you are expecting us to talk on the digital, let me share it with you on a happy moment. I can say that consecutively last two years, MeitY Ministry of Electronics and Information Technology is ranking the Indian public and private sector banks together. There are 47 banks. They rank it every year based on their journeys, their target versus achievement, and the growth in the transactions, growth in the POS machines, growth in the merchant establishments, growth in the reaching of the villages and northeastern states and all. And consecutively, last two years, among these 47 banks, the Canara Bank stood number one.
Oh, congratulations.
With 92 marks out of 100 marks. 92 marks out of 100 marks. 90 above, no bank has scored. All are in the below, 87. I can say that the 87 is the highest marks. That, that shows that how much importance we are giving for the digital front. Whatever I shared last time, continuing to that, even CBDC, we are the first banker who made it inter-interoperable in the Canara Bank. Though the we started our CBDC onboarding in the third stint, but we are the first banker made it interoperable so that, that the other person need not have a wallet of CBDC. Even if he is having a UPI, he can transact with CBDC currency transactions. That interoperability in India, we are the first banker who has introduced that. The second one is when the RBI is talking about a frictionless credit, the fastest STP route.
First, initially, they have started implementing on an experiment basis in Madhya Pradesh, and the seven, six banks have started on August 10, and we are the one among that six banks. It is will be spread across all the remaining. It is expected to be spread in 25 states based on the revenue record, digitization, and all. Once that has been done, and there will be a sea change in the sanctioning of the agriculture credit, it will be no time the credit will be happen. It's a, it, you can say that it's less than three minutes or four minutes. That we have fortunately RBI Innovation Hub in Bengaluru headquarters, and we have very good relation with them. We are continuously having a separate team engaged with them.
Recently, just one week back, on self-help group frictionless credit, and we are the first banker. We experimented, we successfully launched, and we are expanding it on that self-help groups STP route. There won't be any manual intervention. Directly, that self-help group loans and all will be done. Then simultaneously, we onboarded the digital lending platform from end to end, and the progress integration is going on. We expect that the six products will be launched end to end by December thirtieth. And in that, including Mudra loans, and the clean loans, the personalized loans, first, initially, we will start that. There afterwards, we will extend it to the other personal loans. And there are several such initiatives we are aggressively going on that, sir. Especially, we are making our analytics, business analytics, the wing so strong.
We increased their strength from earlier, originally started from three people to now it is almost touching 45 people. We want to further strengthen it by using the latest tools on that. That we want to use it effectively in enhancing our business, new garnering the business, and we are giving more trust on cross-selling by using the business analytics.
Thank you, sir. The next question would be from the line of Mr. Mayank Kumar Ganguly. Please unmute yourself and go ahead.
Yeah. Hi, sir. Thanks for taking my question. So first, like, interest on balance with RBI, that amount used to be INR 500 crore-INR 600 crore one year back, and it has increased to INR 1,000 crore-INR 1,100 crore. Can you tell like, like jump in the balance?
That is interest earned or interest spent?
Earned.
See, the interest earned is generally when there is a liquidity issue is there in the market. If your treasury operations are effective, whatever that's overnight lending to the other required needy reported entities, so you can earn more interest. Overnight interest, whatever it is there on that. So that's the effective operations, that benefit we are getting it. And another is the automatically whatever the interest we are getting it, you see, interest on investment is there. The interest on call money market, CBLO, whatever we are investing it, that income, it is increasing on that.
Actually, jump in interest income, and that amount is much sharper than, like, movement in cash and equivalent.
No, if you compare to the June to September, it's hardly INR 230 crore.
Yeah.
It's not a sharp increase. You might be comparing one year back.
Right. One year or two.
One year back, system itself is having ample liquidity. There is no much demand in the overnight lending and all, call money market and all. It's in market driven. If tomorrow ample liquidity is there in the system, again, this interest income may come down.
Okay. There's no one-off. It's pure money market and balance with RWA. There's no one-off in this. There's no swap interest income from swap. There's no one-off in this amount.
These are all the. That's the details what we have given it to you. Further details, if anything is required, our CFO will forward to you.
Okay, sure. And, within a fee-based income, this quarter, miscellaneous has jumped to, like, INR 840 crore. It used to be INR 500 crore-INR 600 crore. So can you share, like, jump in that line?
Yes, sir. Just see, debit card annual fee, that check. See, these are all the fees, SMS alerts, recovery in written-off accounts. So these are all the regular job, various parameters, those incomes, that annual fee of the debit card has increased, that annual card fee also is there. Actually, what will happen last time, I can say that clearly compared to that previous year, last year, the whatever the hike in that interest, the acquiring cost of the debit card has been borne by the bank. And for passing on to the customer, it took time, six months time. The plastic card cost was increased enormously last year, from INR 24 to INR 84. But the first six months, it was absorbed by the bank. That's why it was not reflected in the last year.
Thereafter, from December onwards, it was started passing on to the customers. That has helped us in getting the same amount.
Okay, got it. So this will be a recurring income going forward also. Like, it will be like around INR 800 crore or so.
There may not be a reduction on that much on that.
Got it. That was helpful. And lastly, like, recovery from the return of account, it was INR 1,612 crore in non-interest income, and on asset quality slide, we have shared INR 1,791 crores. So can you share accounting treatment of remaining INR 179 crores?
No, sir, actually, exactly account to account share karna, it will be not good personally.
No, but actually NCLT, I'll tell you that through NCLT, recovery is under written-off accounts. The total, whatever it is we received that, there's around INR 650 crore we got through NCLT settled accounts. The remaining all amount has come through either the OTS or the existing small ticket size recoveries. I, I, I'm looking from the entire income from written-off accounts.
You explain. Just one minute, one minute. Our CFO will explain to you that the difference.
Your query is that in this, in one place, we are saying 1,612, and in the slide number 28, we are saying at 1,791.
That's the interest.
That is your query, isn't it?
Interest amount.
That difference is that interest amount.
Interest amount.
Whatever amount is received-
Interest on those written-off accounts, if you received book balance, it will be treated as an actual recovery. If we are received beyond that, that will go to the income head. That is an interest amount. Interest amount. There's the difference is only the interest on written-off accounts also recovered. Thank you, Mayank.
Balance amount from. No, the balance amount is taken as part of the interest income, other interest income.
Okay, thank you, Mayank. The next question would be from the line of Mr. Jai Mundra. Please unmute yourself and go ahead. Jai, I'm not able to hear you.
Can I come in?
Okay. We'll take the next question from the line of Mr. Anand Dama. Please unmute yourself and go ahead.
Yeah, thank you for the opportunity. So basically, the LRD account that you're referring, is it more specific to, the bank where you or basically that account itself, where you're seeing a stress, or is there a general stress in the LRD segment? Number one.... And any other bank also have exposure to that account?
It's a specific. That's, that is a specific, only single account.
Okay. And otherwise, basically, you're not seeing any stress in the LRD segment?
No, no, no. Not at all.
Okay. And so any other bank has an exposure to that account?
Pardon?
Any other bank also has an exposure to that account?
No, no, no, no.
Okay.
LRD is sole accounts only will be there, generally 99%.
Okay. Basically, what is the reason for the stress in that account then?
See, it's actually it has started from, COVID. It's a mall.
Okay.
So when it is a mall, COVID, there is an issue. When there is a reoccupancy has come, that's sometimes they were struggling in the cash flows and all. That was the reason. But we expect that the promoter will take care of that, whatever it is required. But they are trying their best. But in anticipation of futures ready, we are making additional provisioning. It's a precaution, nothing.
Okay, so we are 100% provided on that account, is it, sir?
No, there is no question of 100% provision. Whatever it is required, we already provided.
Okay. And sir, secondly, the effective tax rate seems to be again on the higher side. So is it more to do with that, we have had decent recovery during the current quarter, that's the reason it's been on the higher side?
Effective tax rate.
CFO, sir.
No, no, this is the tax. Whatever provision we made is in anticipation of the profit that we expect to make during this year. You, you must remember, so far, whatever tax provision we were making, that we were having accumulated losses with us. Now, that is completely wiped off. There is no accumulated loss with the bank. Now, whatever is the expected operating profit, based on that only, tax provision has been done.
So basically, we have moved to the new tax regime, right? So our effective tax rate-
Yes, yes.
25% for this year?
This provision is based on the new tax rate only.
For full year, it should be 25%, right? Effective tax rate.
You are aware of it. It is 25% only is my tax rate, and whatever provision we are making-
Okay.
is in, based on that one.
Okay, sir. Lastly, sir, on PSLC fees. So this quarter, the PSLC fee has actually come off. So any strategic reason for lower?
No, actually, see, you should be, you should aware about that. I am sure that you are aware about those things. The PSLC certificates demand will be there in the first quarter, because the bank also will get a full, full year benefit, the bank which purchases. That's why whatever the opportunity it is available, we try to encash it in the first quarter, and the, the same benefit will not be there in the remaining three quarters. That is the general phenomena. And again, in the June quarter, we can earn more money on that.
Next year. Sure, sir.
Yes.
Thanks a lot.
Thank you, Anand.
Yeah. Yeah. Hi, sir, this is Jai Mundra. Sorry, I could not speak earlier. Congratulations-
Good evening, Jai Mundra.
On a great, great set of numbers, sir. I have a question, sir, on your loan yields, right? So loan yields, whichever way I calculate, they have increased at least by 25 basis points QOQ. And someone was also asking that, you know, is there any component of NPA recovery in the interest income? So if you have that number, is that number like INR 200 crore or there is some more number, some more income that has come from NPA recovery? And, sir, increase in loan yields, because if you look at RBI data, right, they give the monthly WALR and, you know, lending rate number. And also the other commentaries of the other banks, the lending rate seems to be stabilizing only, but for our bank, it has increased. So any comments there?
No, our lending rates, actually, we are very closely, very, margin-conscious decisions we are taking when we are giving a corporate side the decisions, credit decisions. But we are focused more on RAM sector, where our average yield is always around the 9%. So you can see that the growth in the current quarter, quarter-on-quarter, the 5%. More than 5% we have grown in the RAM sector, as against that, 2.5% in the corporate sector. That is helping us. And in the corporate sector also, we are trying to reprice our existing low-yielding advances. If necessary, we are trying to reduce that exposure and redeploying it in a better pricing way. So that's the reason rejigging is happening at a corporate level, that is helping us in maintaining that increase in the average yield.
Okay. What is the total NPA interest that has come in interest income, sir?
That will be regular routine. I think it will be, it will not be in even a four-digit, it will be very three-digit figure only. Exactly, I didn't remember.
No, no, no.
Our CFO will share it with you directly.
If, if that is the difference, what previous, that is, is-
No, interest on NPA accounts.
No, no.
He's asking. Sir, that's what I read, around INR 1,000 crore-INR 1,100 crore, sir.
Okay.
No, no, no.
INR 450, INR 450, INR 450 crores. INR 450 crores.
Okay. So, sir, I mean, so INR 450 crore is the NPA interest that has come in the interest income, right?
No, that every quarter you get, so it's not that this quarter you are getting it. Wherever in the NPA balance is there, if you can recover beyond the balance-
Right.
That interest on NPA will be there. It's a part of the general banking. And every year, every quarter, that will be there. It's not that this quarter you got additional amount in the form of that INR 450 crore. Every quarter on an average, INR 300 crore-INR 500 crore, you will find that interest on NPA accounts.
Okay, so nothing unusual here?
No, no, no, no, nothing unusual.
Okay. Secondly, sir, on your cost of deposit, while you mentioned that, you know, cost of deposit remains under pressure, but given your envisaged deposit growth, you know, where do you think this should stabilize? Or you think it will not stabilize at least for the next two, three quarters?
No, at this moment, we see that there is a stress on our margins because of interest on deposits, but there is no struggle in mobilizing the deposits. There is a continuous flow in our retail term deposits, in savings bank and current account. Maybe savings and current, the growth is very slow compared to the retail term deposits. Retail term deposits growth is good. Even quarter-on-quarter, the retail term deposit growth is more than 3%. So that is growth is there, but that rate of interest, what we are offering is a special scheme, 7.25%. 7.25% is comparatively very high.
Right.
That is continuing now at this moment. At this moment, there is no plans to reduce that rate of interest. At the same time, there is no plan to increase also, because there is a continuous flow. Whatever we require, we are getting that funds at this rate. So we don't see any further increase in that day re-rate of interest. But however, paying 7.25% is definitely a burden in coming quarters.
Okay. Sir, if you were to put a median number to your bulk deposit wholesale rate, what would that be? A range, I mean, let's say, what would be your blended rate for bulk deposits, and how has that trended?
No, bulk deposits, depending on the period, it varies from 6.5 to 7.5, 7.7. That is the average rate. It is coming even 6.5 if you are taking at a short-term deposits. That's why we are making our bulk deposits or CD in the composition of that. A combination of three months, six months and 12 months. In that way, we are on average, we are trying to maintain below 7.5.
Okay, understood, sir. Last question, sir, some of the banks have reported treasury loss this quarter. Of course, our treasury team has done phenomenally well, but just wanted to check, was there any, you know, MTM in the G-Sec, which would have been offset by something else, or, you know, there was no MTM?
No, no, no such anything special, sir. It is a regular job we are doing, same transaction, but the... Look at that, you are comparing with the last quarter, then you are telling that last two quarters you are doing better here. But if you compare year-on-year, I lost almost 50%.
All right. Okay. And, sir, if you have this number of loan mix by benchmark, how much is repo, how much is MCLR and, you know, fixed rate? That would be, that will be helpful.
It's almost 50% is in MCLR, sir. 38% is in RLLR. The remaining is staff loans, loans against deposits, and all those things are there, sir.
Sure. Thank you so much, sir, and all the very best.
Thank you, sir.
Thank you, sir. Thank you.
The next question would be from the line of Ashlesh. Please unmute yourself and go ahead.
You hear me?
Yes.
Hello. Hi, sir, hope you can hear me.
Yes, sir.
Sir, just a couple of questions. Firstly, on the wage hike provision, which you have taken at about INR 345 crore, what is the percentage wage hike which we are assuming here?
15%. Actually, the last two wage revision, it was around 14%-15%, the settlement was happened. In anticipation of the same line, we are continuing to provide 15% every month. We have more than INR 1,150 crore provisioning in that so far, and we continue to provide.
Okay. Sir, and secondly, on the MCLR-linked loan book, we have taken a hike of only around 10 basis points since March 2023. Do you expect any further repricing left in this MCLR-linked book?
Permits a growth in the loan book, sir?
In the MCLR-linked loan book, do you expect any repricing left?
No, that's the repricing, almost it is coming to the end. See, the MCLR, 50% our exposure is there, and we have revised MCLR there. It's almost coming to the end.
Okay, sir. Okay, and sir, just one question, to end with. The profit on exchange transactions line item within non-interest income, that has been steady, steadily declining. Is there any reason for this?
Pardon?
That is the profit on exchange transactions.
That is a treasury, that is a treasury transaction, sir. You know that the treasury transactions are happening because of market conditions only. It's nothing beyond the control of the individual, sir. It's because of market conditions. It's a trend is like that.
May I come in, sir?
Okay, sir. Perfect. Thank you.
Okay.
Thank you. Thank you, Ashlesh. Before we move on to the next participant, just one question from my side, sir. Your SMA number has reduced to 0.70. How do you see fresh liabilities panning out in second half of the year?
We feel that we can continue with that, sir. The percentage what we have shown, that 0.70%, we are confident that we may maintain that percentage.
Okay, sir. Okay. So next question would be from the line of Sushil Choksey. Unmute yourself and go ahead.
Congratulations, Team Canara, for excellent performance!
Thank you, sir.
Sir, my first question is, based on the entire digital spend, you worked out rolling out with a lot of co-lending and various other partnerships, onboarding of corporates and SME for digital initiatives you would have taken for many products. Will second half not do much better than the first half because of your outlook on RAM, as well as existing retail products is getting better?
No, business front, we see that definitely, the second quarter, third and fourth quarters will be better than the second quarter in business front. But, we are very conscious, on the margins, too, sir. It's not we are taking the decisions based on the margin also. Only, we are not looking at the top line. We are looking at both top line and bottom line. So our growth will be steady. I don't say that there will be an, too much change in that, but we have given the guidelines, guidance that our advances will grow at 10.5%. But we already told initially itself that our advances may grow between 12%-14%, and we think that definitely we'll grow at about 12%.
Total business, we given a guidance of 10%, and we are going above 10%.
Sir, that is typical of Canara, be conservative and outperform, so that's fine. Sir, second thing is your outlook, specifically based on where money market is concerned in India or globally, what is our treasury outlook and what is outlook on our international book, which may be yielding rewards right now?
Mukherjee sir will answer you, sir.
Sir, with regard to the treasury book, not much significant difference will be there in the current quarter. That is what we anticipate. So far as our international operations is concerned, we are seeing steady growth there. Incidentally, we have gone in for opening of one IBU in GIFT City, as you are aware, and that will be fully operational, you know, in this quarter. We have already started business. So, so far as our international business is concerned, it is growing steadily. With regard to treasury operations, it will maintain the same pace as it was in this quarter. This is all I can say.
Sir, based on the outlook and what we have highlighted in press, that we may be capitalizing on some of our subsidiaries with IPO and some of our subsidiaries where market was seeing some problems that have been resolved and they've started performing well. Can you give a gist? Because this time I don't see anybody asking you a question on them. Rather, give some positive or color on the positivity which has emerged in last one quarter.
Sure, sir. Actually, whatever we promised on the subsidiary, the actions are continuing it. We told already that in two cases we will come out with that public issue, and the respective companies are taking the necessary steps towards that. Because since it's a long period duration, it is, the things are going in the right direction. And again, we told that in one Can Fin Homes, now you are seeing that the uptrend is there, and the... We are very closely associating with them in their day-to-day functioning. And we are- and nowadays, we are trying to give as much benefit to the technology benefit to them also, to internal control and to have a better monitoring systems.
They are doing their very good business, but they need support from us in the form of a technology support, that which we are extending to that subsidiary, so that we are confident that that subsidiary also will do well in the days to come. Then fourth one is the shifting of our credit card business to a subsidiary. That is also action is going on. Now, recently, we posted a GM level, a person as a general manager, to take forward whatever the initiatives we have taken into that, as an MD of that company.
Sir, congratulations on excellent choice for Can Fin Homes. Sir, my next question is on the digital spend, which we had decided for a large amount. How much of that work would be over in current year, and what percentage of money would have been spent by now?
See, generally, every year, we are targeting a capital expenditure of around INR 1,000 crore-INR 1,200 crore in that, sir. This year, almost 80% of those transactions have been completed. Maybe the payments may happen in a staggered manner, but the purchase orders and all have been given through; it has been done everything through GeM Portal only. When you are investing heavily in the capital expenditure continuously for three years, naturally, that ATS, whatever the annual maintenance charges and all, it increases your operating expenses to some extent, but that we are able to maintain even with that ATS extra charges by controlling that internal operating expenses, by regulating our branches and all, that we are able to maintain that well within that.
Sir, do you see your cost of income coming to 40% in next 12 months?
No, sir, we don't see that. We. See, we given the guidance below 45, we maintain that. It's a too big bank, sir.
Thank you, and all the best, sir, for years to come.
Thank you, sir. Thank you, sir. Thank you.
The next question would be from the line of Omkar. Please unmute yourself and go ahead. Omkar, can you unmute yourself and go ahead?
Hello.
Yeah, you are audible.
Yeah, hi, sir. Thank you for the opportunity. I just wanted to ask-
Hi, Omkar.
Our agri book has grown very well at almost 6% quarter-on-quarter. I wanted to know how much of this has come from the gold portfolio. So-
Actually, of course, gold portfolio is also has contributed a good amount in this agriculture. We can say that the 4% is out of this 6.3, only I'm giving that bifurcation. 4% from the gold and 2.37 from the core agriculture. But the core agriculture also has started picking up because of the self-help group lending and rural infrastructure lending. Those things, there is areas we have focused, and we introduced some area-wise products also. That is getting a good traction on that. That's why first time we are seeing even a core agricultural double-digit growth.
Thank you, sir. That's all.
Sir, we have one question from the chat box. If you could provide slippages breakup for this quarter?
Sir, you can note down that, that is INR 800 crore is from agriculture, INR 900 crore from MSME, INR 400 crore from retail, the remaining is corporate. Corporate is around INR 750 crore, sir. Thank you, sir.
Can I come in?
Sorry. So the next question is from the line of, from Chintan Sheth.
Yeah. Hi, and thank you for the opportunity. So, sir, two questions from my end. Firstly, on the branch network. So I see, sir, our branch number has been consistently declining, and it's almost near to three-year lows. So, just wanted to understand, what is the strategy here on the branches expansion?
Actually, the post-amalgamation, wherever it is a repetition of that branches in the same location, has to be gradually either relocated or the merger. That was the decision of the board. In that direction, every year, we are identifying some things, and we are continuing to close or merge or relocate those branches. But at the same time, this year, we identified such 400 branches, but at the same time, we are also permitting all our field functionary circles and regional offices to open 275 new branches, where the potential CASA potential is there. So that is actually the part of the CASA, when we focus more, this rationalization of branches or relocation of branches or opening of new branches is also a part of strategy to improve that CASA.
That is indirectly helping us in operating expenses control also.
Sure, sir. So but this rationalization is going on since the past three years, you mean, right? Since the merger.
So the rationale behind that is, if suppose two branches are in adjacent of just 500 m or 300 m of the same bank, when the technology is so high, and it's merely because it's because of the olden days, the two different banks, they have the two different branches. When it is merged, slowly we are looking at those merging of those things, branches.
Okay. Sure, sir. And, sir, just one thing on this stress account, just to catch up on that again. You talked that one account, which is LRDs under... So apart from that, any other accounts which are kind of very much sticky in SMA, and where do we think that we could you provide some-
No, sir.
In case we have any buffer or something? Nothing at all.
No, sir.
There are no other sticky accounts.
From our SMA figure. No, no, no, no account. That you can easily make out from our SMA figures.
And so, sir, a provision on that usually, so you told we have been provided adequately, so that is like 15%-20% or there or more? Or will you just drop a comment on that number or something?
When we say that, we are in anticipating and providing more than what it is required. You should get the answer from that.
Sure, sir, sure. That is very helpful. Thank you, sir. Yeah.
Thank you, Chintan.
Thank you.
The next question is from the line of Bhavik Shah. Please unmute yourself and go ahead.
Hello, am I audible?
Good evening, Bhavik.
Good evening, sir. So congrats on good results. So just two questions. Sir, RBI has been flagging concerns of low savings account rate. As an answer, how should we read through that? Like, are you anticipating increase in savings account rate over the couple of quarters?
At this moment, we are not anticipating any upward revision in the savings bank account interest rate. But we keep observing the market. If necessary, we don't mind to take such decisions, but I feel that the savings bank deposit, by increasing the rate of interest, you can increase the, balance. It may not be the case, but it's more or less depends on the service and the satisfactory level of the customer. That gives you more savings.
Understood, sir. And sir, circling back to one more comment that you might have indicated earlier, that whenever there is periods of constrained liquidity, that interest on balance component of the interest earnings will be high. Sir, is that also to do with your LCR ratio? So whenever the LCR ratio is high, you will kind of keep deploying-
No, no, no, no, not at all. Our LCR is very comfortable. Actually, the last year, our LCR was 119%. This year, we have touched almost 130 above. Now, as on date, we are maintaining on an average 130 above. The regulator expectation is 100%. Our internally, we kept a barrier is 120, but we are maintaining well above that, even 120, and we are maintaining on an average 130-135.
Okay, so, sir, that excess that you are holding, is that helping you on that income? Like, how should one read that?
No, that excess holding means you see that we already increased our CD Ratio 75%.
Okay.
We also increased our investments portfolio also. You can see that in the last six months. And this, because we have excess SLR, by using that window, we are borrowing from the RBI, and we are effectively using that money to earn the funds.
Understood.
Additional income.
Understood, sir. So that was very helpful, sir. Thank you, sir.
Thank you, Bhavik. The next question is from the line of Hrishikesh. Please unmute yourself and go ahead.
Hello, am I audible?
Yes, Hrishikesh.
Hi. Thank you for the opportunity. So my question is with respect to the credit cost. So how do you see credit cost for coming, let's say, one to two years? Could you please give some light over here?
No, actually, we are giving guidance of credit cost is 1.2. 1%, that's 1.2. That's now we are reached to that 1.102, 1.22. Now we are already reached to 1.02. I don't see a drastic reduction on that. We may maintain around that.
Okay, and, how would that shape up for-
Because there is still scope for me to increase our PCR.
Okay. How do we see that for FY 2025 and FY 2026, if you can share for that, too?
That's what I'm telling, we can manage around 1%. So till we reach our PCR is around 95%, that percentage now.
Okay. Okay, no. Thank you.
Thank you, Hrishikesh. The next question, the last question, oh, from, is from the line of Bharat Jain. Please unmute yourself and go ahead.
Sir, very good evening. Small question is on the slow pace of recovery on NCLT referred accounts. So, like, if you have any comments on what is happening on those lines?
Mukherjee, sir.
Actually, let me tell you, you are all aware about the workings of NCLT. In spite of our best efforts, although some, we are getting some fruits of NCLT processes, but mostly by way of liquidation, that is number one. Number two, some of the cases are just at the verge of, you know, getting some results. So yes, the pace is very slow, but we still feel that NCLT as a process, IBC as a process, has a deterrent factor, which also helps us indirectly in recovery. So that way, it is pretty helpful.
Thank you. Thank you Sir . Due to time constraints, this was the last question. Thank you, sir, for giving Antique Stock Broking the opportunity for hosting this call. I would request MD, sir.
Thank you. Thank you, thank you, sir. Thank you, investors. We are continuing whatever we told that, what our guidance we have given at the initial stages of this financial year. Hope you all realize that we are going, moving in the same direction in a much better, stronger way, and we continue to do that. We will try to see that our value of this bank is increasing multifold in the coming days, and whatever the hard work we are continuing in all the parameters, the same focus will continue. Thank you, sir. Thank you very much for your support.
Thank you, sir. I request participants to please hang up. Thank you.