Canara Bank (CANBK.NS) Q3 FY2026 Earnings Call Transcript & Summary

Good evening, everyone. Welcome to Canara Bank Q3 FY '26 Earnings Conference Call. I would like to thank the Canara Bank management team for giving us this opportunity to hold the call. From the management side, we have with us Shri Hardeep Singh Ahluwalia, MD and CEO; Shri Bhavendra Kumar, Executive Director; Shri S.K. Majumdar sir, Executive Director; and Shri Sunil Kumar Chugh, Executive Director. With this, I now hand over the call to MD sir for his opening remarks, post which we'll start the floor for the Q&A. Thank you, and over to you, sir.

Good evening to all of you. First, let me share the highlights of December quarter results. Our bank's global business stood at INR 27.1 lakh crores, and it grew at 13.23% on a year-on-year basis. The global deposits stood at INR 15.21 lakh crores and grew at 12.95% year-on-year basis. The global advances stood at INR 11.92 lakh crores and grew at 13.59%. Operating profit stood at INR 9,119 crores and increased on a year-on-year basis at 16.36%. The net profit stood at INR 5,155 crores and grew at 25.61% on a year-on-year basis. The return on asset improved by 9 basis points year-on-year basis and stood at 1.13%. The PCR on a year-on-year basis improved by 293 basis points and stood at 94.19%. Our credit cost was at 0.64% and improved by 25 basis points year-on-year. There was a GNPA decline of 126 basis points on year-on-year basis and stood at 2.08%. Our net NPA stood at 0.45% and declined by 44 basis points year-on-year basis. Now our -- more than 13% credit growth is driven by RAM credit, which stood at INR 7.04 lakh crores and grew at 18.70%. The retail credit grew at 31.37% and stood at INR 2.73 lakh crores. The housing loan grew by 17.58% and stood at INR 1.21 lakh crores. Vehicle loan also shown fantastic growth. The growth was 26.20% and stood at INR 25,098 crores. MSME has also shown robust growth of 13.74% and stood at INR 1.60 lakh crores. The earnings per share was at INR 21.48 and improved by 22.11%. Our CET1 stood at 12.37%, which improved by 40 basis points year-on-year. Our slippage has shown enormous decline. It declined by 32 basis points year-on-year basis and stood at 0.64%. Now coming to the guidance parameters. In the beginning of the year, we have given guidance numbers for 13 parameters, and we have easily surpassed and comfortably surpassed 11 parameters, except CASA and NIM, which is industry challenge. Now I am joined, along with me Mr. Bhavendraji is here, who is the ED. Mr. Majumdarji is here, who is also CFO -- ED; and Shri Sunil Chugh is also there. He's also ED. And all my CGMs, vertical heads are now ready to respond to all the questions. Thank you.

[Operator Instructions] We have first question from the line of Mahrukh.

Yes, hello. So I had a couple of questions. Firstly, on your margins. So I appreciate that the repo rate was cut and there was pressure on margins. But from a strategic longer-term point of view, see our margins are already slightly lower than peers, right? And people are ruling out a policy cut in the forthcoming policy. But these things are still evolving. Maybe after 1 or 2 policies, there are rate cuts again. So given that our margins are already lower than peers, what are the steps we would take to bring them at least in line with peers? Is there like a growth margin trade-off? Is there a level below which we will not want margins to fall even if there are rate cut still a quarter down the line or 2 quarters down the line? What is the absolute level of margins that you would be comfortable with at any point in time? Otherwise, we can slow down growth and improve margins a bit, given that we have a traditional issue with CASA. So that's my first question. And my second question is on ECL. So what would be the broad impact of ECL? Not the impact of onetime transition, but on an ongoing basis. So if ECL were already implemented today, what would your credit cost have been instead of what you have reported this quarter? So that's my second question, sir.

Okay. So madam, now I respond to it. Regarding margins, our NIM contracted by 2 basis points because the yield on advances because on fifth, there was a reduction in repo by 25 basis points, and about 49% of our advance is repo-linked. So immediately, that transition was happening in those accounts. So yield on advances contracted by 6 basis points, although the cost of deposit also reduced by 4 basis points, which had a net impact on NIM of 2 basis points. So going ahead, if you see, there is a strong drive in the RAM sector. Our RAM is showing a growth of 18.70%, and it is led by retail, which is showing 31.37% growth. And MSME also, you see, is growing at 13.74%. On MSME, the yield on advances 9.28%. In retail, it is 8.88%. So our strategy going ahead is to further capitalize because if you see our guidance number on advances, our advances growth is more than 13.59%. So to capitalize on this retail momentum that has been built. Now coming to the CASA front also, if you see, our savings bank is growing at 8.51% and savings bank individual is growing more than 10%. So we are performing better than the peers in savings. Even if you see the current account, it is growing at 14.92%. Only due to one single transaction that has happened previous quarter of INR 26,000 crores in current account. That is why Q-on-Q, some dip is there, but CASA growth is shown as 9.32%. So I think we will retain this margin with the same momentum going ahead in the CASA and RAM growth. So even if further reduction in repo happens, we presume that our NIM will be in the range of 2.45% to 2.50%. Coming to ECL, the other parameters, madam. It is going to be implemented from 1st April 2027. Now our bank is making -- last year, it has made a profit of INR 17,000 crores. This year, going by the same trend, our profit will be in the range of INR 17,000 crores to INR 20,000 crores. So in the ECL, under Stage 2, because Stage 1 and Stage 3 does not have any much material impact because it is almost similar to IRAC norms. But in Stage 2, some impact will be there because the provisioning increases from 0.4% to 5%. And there, we see that INR 2,500 crores additional provision will be required. And for NFP also, nonfund limits, some INR 2,500 crores will be required. Coming to the default rate on Stage 1. Additional provision of INR 5,000 crores may be required. So if I total that one, it will come around INR 10,000 crores and that can be amortized in 4 years. So the impact may come to INR 2,000 crores to INR 2,500 crores. Going by the profit, we are earning year-on-year, it is very much absorbable and our CET1 is very strong.

Yes. No. But sir, the credit cost on a quarterly basis, will that figure change? This is the transition impact, INR 10,000 crores over 4 years. Is the transition impact on a run rate basis?

I'll answer to it. If you see my slippage ratio, it is 0.64%, which is the industry best if you can compare with our peers. And our SMA, in absolute numbers, it has come down from INR 46,000 crores to INR 35,000 crores. And from 4.16%, our total SMA has come down to below 3%. So on both fronts, we are very, very comfortable to absorb this one. We don't see any...

What will be your SMA? And below INR 5 crore your total SMA, that is above and below?

Yes, total SMA is INR 35,604 crores. Last year, in December, it was INR 43,917 crores. So even our advances has grown above 13%, our SMA is on absolute numbers it has come down from INR 43,917 crores to INR 35,604 crores. So that's a credible achievement, I tell you. And slippage also, it is in absolute control, and our slippage ratio is 0.64%, which you can compare with others, it is industry best.

Yes, sir. Got it. And sir, just one last thing. How much of deposits are left to reprice? A lot of deposit repricing has been done, how much of it is left in terms of term deposit repricing?

Only 15% is left for repricing. If you see year-on-year, there is a 77% dip in the cost of deposit. On retail term deposit, I mean.

We'll take the next question from the line of Anand Dama.

My question was related to our PSLC fees, which has been pretty low as compared to what we saw in last quarter. Is it more of seasonality or you are strategically booking lower PSLC fees in this quarter? Or is it something to do with an RBI action where the PSL, some reclassification has happened, if you can explain on that front?

Mr. Dama, if you have followed us, PSLC, it was only a product or earnings of the first quarter. For third, 3 consecutive years or 2 large consecutive years, we have only earned in the first quarter of INR 1,200 crores to INR 1,300 crores. And this quarter, not only we have earned around INR 1,240 crores, we have earned INR 900 crores in the second quarter. Hard quarter, actually, there is no chance for a PSLC. There also, we earned INR 140 crores. And I assure you, we'll earn a substantial amount in the fourth quarter also. So it is the industry. If any regulatory thing has happened, it is only helping us. And it is helping us as a renewed avenue of a sustainable quarter-on-quarter earnings, which was not so till last year. You will see it is in the first quarter and last quarter, some amount we -- it is now a sustainable thing over 3 quarters. Our total priority sector against 40% norms is now at 45.25%. So there is still some space for offloading PSLC in the fourth quarter to supplement what Majumdar sir has said.

And sir, similar kind of fee income is what we should also build in for next year, if things remain same?

From PSLC perspective, we don't see much difference, unless the banks which purchase from us starts doing -- change their portfolios. As of now, though, it should not -- I mean at least next year, there should not be any effect. Going forward, we can't say. There will be always surplus and efficient players of PSLC, and Canara Bank has that advantage.

Sure, sir. And sir, what explains a quarter-on-quarter jump in our other OpEx? Is there any line item where we have seen some surge in the current quarter?

If you see the other operating expenses, there are 2 onetime items. One was IPO charges that Canara Robeco and Canara HSBC, that needs to be absorbed by the promoters. So there is around -- for that, there is a fees of around INR 80 crores. Another INR 80 crores is of depreciation, that is for the employee benefit as a part of the furniture scheme. The furniture for employees were replaceable every 10 years, which we have brought down as an extra facility for employees to 5 years. So to do that, we had to provide additional depreciation. It is onetime and at par with the industry, most of the bank. So it is -- so that's around INR 160 crores. Another INR 100 crore on technology-related expenses were there. That is AMC charges and that on the ongoing CapEx that is happening, that has happened. So this is more or less around INR 250 crores, which is of additional, which is not of routine image.

Sure. And sir, taking from Mahrukh's question, so should we see a margin bottoming out if there is no further rate cut or we should still see some contraction in the margins going forward?

Yes. Yes. With the OMO coming up and the swap being announced, the liquidity will be injected, and we see that cost of deposits further cooling down. So yes, we -- if the rate cut doesn't happen, we see that it will stabilize.

We'll take the next question from the line of Piran Engineer.

Sorry, your question, sir? Not audible.

Please go ahead with your question. We'll move to the next question from the line of Parth Gutka. Parth?

Sorry. So sir, first question is out of the total recovery from the return of account, what went to the interest income line item?

Total write-off recovery, more than INR 2,000 crores, it is here -- interest income...

INR 370 crores.

About INR 370 crores went to interest.

Okay, sir. Fair enough. And my second question is, you have raised your -- so within the term deposits within the 1- 2-, 3-year bucket, you have raised the deposit rates by 35 bps in January. And so should we expect that to flow into the cost of funds say, by Q4 or Q1? And therefore, the decline in the cost of funds will not be as much as what we are anticipating. Is that the right assessment?

So almost 15% is now replaceable, the term deposits. And we see there is a steep decline, whatever we have raised last year. If that is getting replaced, we are getting some 70, 77 bps lower in the new deposits.

We will take the next question from the line of Jai Mundhra. Please go ahead with your question.

Congratulations on the quarter. First question is, sir, if you can bifurcate SMA-0, 1, 2 separately out of INR 35,000 crore number. And have you started providing anything on SMA-1, 2 just for ECL transition?

Sir, our SMA, in absolute terms, it has come down from INR 43,000 crores to INR 35,604 crores. The SMA-2 has come down from INR 21,268 crores to INR 15,454 crores, and SMA-1 has come down from INR 11,882 crores to INR 10,593 crores. So SMA-2 has come down from 2% to 1.30%. SMA-1 has come down from 1.13% to 0.89%. And INR 1,946 crores in 3 accounts, we have done additional provision as prudent banker outside the SMA purview.

If you see that SMA-1 increased due to shifting of only one account, Kaleshwaram Irrigation Project...

But that is INR 5 crores and above. Total, I am telling you. That gives a bigger picture. Our SMA has come down from 4.18% to 2.99%. And our slippage has come down to 0.64%, that is industry best. So on both accounts, our bank is doing extremely well on slippage also and reduction of SMA also.

Right. And out of this INR 15,000 crores and INR 10,000 crores of SMA-2, 1, sir, outside of this Kaleshwaram and some other large accounts, are we providing any rule-driven provisioning? Or as of now, there is no rule driven provisioning on SMA-1, 2?

Sir, as on date, the provision coverage ratio is 94.12%. And in these 3 accounts, we have provided INR 1,946 crores. The outstanding is INR 6,600 crores, although we don't see that it will slip because continuously, these are appearing in SMA.

Right. Okay, sure. And secondly, sir, on your gold loan. If you can quantify, sir, how much is the agri gold loan and retail gold loan as on December? And is there any change in the way you classify retail or agri gold, because there have been observation at other banks in this assessment by RBI or in general also.

Sir, our total gold loan portfolio, INR 2,21,000 crores. Out of that, agri gold is INR 1,48,000 crores. And non-agri is INR 72,661 crores. So very consciously, we have rolled back the products of gold loan in metropolitan and urban centers because that was the RBI observation, and now we are totally compliant to it. And our gold loan portfolio is improving at 30% on a Y-o-Y basis.

Right. Right. And sir, there's a lot of -- I mean, strong jump in the retail, right, 30% plus? Is this a buyout thing? Or this is totally organic growth? How should one look into this?

This is totally organic. This is totally organic.

No buyout in the retail side?

No buyout, sir. No buy out, totally organic.

We'll take the next question from the line of Ashok Ajmera.

And compliments to you, Ahluwalia sir and the entire team. Compliments to you for the, I think, highest ever quarterly profit of INR 5,155 crores. I think last time we touched INR 5,000 crores was in Q4 '25, if I am correct. So my compliments to you and the entire team. Sir, my first question is on the credit growth target. In 9 months itself, you already achieved around 11% of the credit growth, whereas your target for the overall whole year was 10% to 11%. So would you revise it now upward on this. Similarly, in case of opposite side in case of deposit, the target is 9% to 10%, but we could achieve in 9 months, only 6.39%. So little divergence here? Would you maintain your target or the credit the same or you will increase by, say, 2%, 3% up?

Sir, coming to the first point regarding compliments on profit. Sir, this net profit we have made despite increase in provision ratio by 293 basis points. So despite making huge PCR, and still, we have maintained the net profit and recorded the highest net profit. Regarding credit growth, sir, you have told, we have given a guidance of 10% to 11%. But already, we are crossing 13.59%. And we see that going ahead, this will be maintained. And in the deposit side also, we have given a guidance of 9% to 10%. We are already near 13%. And we see that it will be maintained in the fourth quarter also.

Yes. No, there were some disturbances, but anyway, I could hear you properly. Sir, in fact, one of the major contributor of the profit in this quarter was treasury income also, which is almost doubled from the last quarter. So INR 3,056 crores now. And profit on sale of investment is INR 2,590 crores out of that. So going forward, whether the treasury will continue to contribute so much in the profit for the last quarter of this FY '26, or we might see it slowing down and maybe the income on the other -- the net interest side, the income is higher? And this is how we'll be able to maintain the 5,000-plus quarterly profit?

Sir, in the Q3, due to listing profits of Canara Robeco and Canara HSBC. In Canara HSBC, we offloaded 14.5% stake. And in Canara Robeco, we offloaded 13% stake, and could gain INR 2,006 crores. So going ahead, if the yields soften, then definitely, this will be maintained. But at the moment, the yields are not cooling. I suppose the more OMO operations takes place and with the buy sell swap, if liquidity flows and cost of deposits come down and the yield soften, then definitely treasury will take an upturn.

Sir, as regards to the NBFC portfolio, I know that the Canara Bank is always, not very optimistic and encouraging the co-lending part and other things. But of late, is there any change in that stance on the NBFC side and co-lending side? And what is our present exposure to the entire NBFC sector, the loans given to NBFC for onward loan lending, sir?

Sir, the NBFC exposure is at INR 1,51,000 crores and it is growing at 6.09%. We are open to NBFC lending, provided the rates are good. So normally, the AA, AAA-rated NBFCs, when they approach us but the rates are not competitive, then we are shying away for that because protection of NIM is also our major criteria. And while we are growing at more than 13.59%, we don't see any reason to entertain low-yielding advances.

No, point well taken. Sir, in the recovery in the return of account is good in this quarter of INR 2,051 crores. What is our total written-off book? And do we expect to maintain the same momentum of recovery from the written-off accounts?

Sir, if you see last 3, 4 quarters, continuously, our recovery in write-off has been consistent, and that will continue, sir.

What is the total written-off book, sir? Size?

INR 66,000 crores.

INR 66,000 crore. So are we going in the range of some 7%, 8% kind of recovery from this book for whole year?

Sir, we have taken a conscious call that it has to be more than INR 2,000 crores range, and we are continuously trying to achieve that number. If you see last December also, it was INR 2,008 crores. This year, INR 2,051 crores. Although my total NPA book is falling, but we are trying to maintain this recovery ratio.

Sir, any ballpark -- any calculation has been done, like one of the other bank is also doing. On the underwriting standards, like over the last 5 years, post-COVID, how many -- how much amount of the loan has been sanctioned and disbursed? And what is the NPA ratio out of this new underwriting of this last 5 years? Is there any such, which will give the color to the present underwriting standards? And how the bank is going forward.

Sir, already, if you see our underwriting standards has improved and our slippage ratio is now industry best at 0.64%. That kind of -- is a reflection of good underwriting standards already prevailing with Canara Bank. And your SMA also has drastically come down from 4.16% to below 3%. So definitely, underwriting has played a very, very important role in that.

We will take the next question from the line of Bhavik Shah.

Sir, what would be your average LCR for the quarter? It was around 150% last quarter.

Our LCR is 125%.

125%. Sir, fair to assume that borrowings increased in the quarter, approximately of INR 60,000 crores was like back ended? And also wanted to understand at what yield and what instruments were these?

Please repeat your question, Bhavik.

Sir, our borrowings increased by INR 55,000, INR 57,000 crores this quarter -- quarter-on-quarter. It was INR 90,000 crores and it is [ INR 1.5 trillion ] more. I just wanted to understand what instruments are there and at what cost have they come in?

No. If whatever borrowings have increased, it is on 2 fronts. One is we have raised 81 bonds this quarter. And we -- there was refinancing from NABARD and SIDBI of our existing loans. These are the only borrowings that we had in this quarter. And a part of this -- that is 81 bond is replacement of old also, that maybe the net increase is only INR 600 crores, INR 700 crores as far as Tier 1 bond is concerned. So it cannot be and the rest is mainly SIDBI and NABARD refinancing at a lower rate.

What sir is asking is borrowing increase.

That is part of the borrowing only.

Our SLR is 24%. And the prescribed is 18%. We have excess SLR of 6%. And whenever the opportunity comes, we borrow and take that advantage.

Understood, sir. Okay, sir. And sir, would you be comfortable to share the refinance cost of these for NABARD and SIDBI?

It is around 5%.

Okay. Okay. And sir, last thing, sir. Standard asset provisioning last quarter was also INR 300 crores. This quarter is also around INR 286 crores. Sir, anything specific to read here.

Standard asset provision, one is we had to provide for DCCO extension that some provision of around INR 80 crores is there -- around INR 90 crores is there. And other than that, I think these are routine in nature. There is nothing else.

We will take the next question from the line of Param Subramanian.

So I wanted to ask on the recovery from written-off account INR 2,050 crores in this quarter. If you can give some mix between retail and corporate? Were there any chunky accounts that we've seen? Or is there a retail granular mix?

Actually, in this written-off recoveries of INR 2,051 crores, there are 4 major accounts. One is Chenani-Nashri we have received INR 288 crores, Karanja Terminals INR 271 crores. So that is the -- but a few bigger accounts will always materialize.

Got it, sir. Sir, but would there be a reasonable chunk of retail recoveries also?

Yes. That is around 50-50, retail and...

Retail and corporate. And even for the 9 months, it will be like that?

That is retail recovery, PA and TWO. That is around INR 1,000 crores per quarter.

INR 1,000 crores per quarter you are getting retail recovery.

That is, yes, from retail recovery in TWO is around on an average. In some quarter, it may be more, some quarter, it may be less. On an average, around INR 1,000 crores -- INR 900 crores to INR 1,000 crores.

We'll take the next question from the line of Ashlesh Sonje.

Two, three questions from my side. Firstly, on the margin front, do you see any room to cut your term deposit rates or hike your loan pricing, let's say, on housing, in order to boost your margins from here on? That is one. The second...

We are continuously -- see, we are continuously studying the market, and our term deposit is pricing according to the prevailing market conditions.

Got it. And on the home loans, you think you can increase the pricing there potentially?

It is repo-linked and prevailing market conditions.

Understood. Secondly, the borrowings which have gone up, how much further can they go up from here? And how do your explanation on what is causing it, but how much further can it go up from here?

I mean, we feel we are already at an optimum level. It is borrowing is always as a product, and we don't want to increase it. It is -- we borrow just to leverage our cost. Just to see that is, as sir said, a major chunk is overnight. That also to -- that with excess SLR that we do to neutralize the cost.

And take opportunities in the market.

So it will be -- I don't see that going up much. That is at an optimum level.

Got it, sir. And lastly, the bad loan recoveries have been quite good for the last couple of years, both from the written-off accounts as well as from NPAs. What is the outlook you have for FY '27?

Sir, it will continue because the recovery tools in market today, we have NCLT options, we have DRT options, SARFAESI options, your Lok Adalats being regularly conducted. We have aggressive OTS schemes. So we don't see any shortfall coming. So that has -- we have been consciously maintaining that. And recovery actions are prescribed as per the accounts.

So similar run rate as this year is possible?

Yes, sir, it will continue.

We'll take the next question from the line of Piran Engineer. As there is no response, we will take the next question from the line of [ Akshay Badlani ].

Firstly, I wanted to ask around -- so we got this INR 2,000 crores of one-off profit. Have we utilized that to make any contingent buffers? And what would our current contingent buffer be?

Sir, in 3 accounts, we are maintaining INR 1,956 crores as abundant precaution. Although we don't foresee any slippage in this account, but as prudent banker, we have done so. And whatever regulatory provisions are coming up, like for DCCO extension and all, we are making that adequate provisions for that.

And also you see our provision coverage is going up in the quarter. It is also -- it is as you said, we are still -- I mean, when you compare us with our peers, we are a shade below them. So we also want to be in that space of our peers as far as provision coverage is concerned. And as sir said, in standard asset, wherever there are some weaknesses, we are proactively making provisions within the regulatory framework.

Understood. Understood. And my second question was around current account balances. There has been overall, a lot of fluctuations when I see on a quarter-to-quarter basis. So -- and overall, on a deposit strategy, I wanted to understand what are we trying to do in order to improve the deposit franchise since it's relatively weaker when we compare it to the peers?

This correct account fluctuation is due to one account. In September quarter, we have got some INR 26,000 crores deposit in that account. If we subtract from the prevailing -- this one, the September, this thing, then from INR 49,000 crores, it has grown to INR 54,000 crores. So in current account also, we have seen 15% roughly growth. In savings also, we have seen a growth of 8.51%. And within savings, actually, individual is more than 10%. So we are performing quite well in that CASA space. It is growing at a rate of 9.32%.

The next question is from the line of Jayant Kharote.

First question is there's a strong growth in retail at 31% Y-o-Y. I see vehicle has grown at 26%. If you could also tell us which are 1 or 2 top products outside vehicles that are growing in that book? And also if you could help us with your average yield on vehicle book as well as some of the other products, ex housing. I believe you spelled out your average yield on retail book is 8.83%. What would it be on vehicle and some other fast-growing products?

In retail, sir, our yield is 8.79%. So that comprises of the total retail portfolio of housing clubbed with your vehicle loan and other retail products. And in RAM sector, it is 8.88%.

So what is the yield on vehicle book? What is the yield on our vehicle book?

It should be -- it should be above 8.5%. It's around 8.5%.

Okay. And sir, what are the other products ex of vehicle and housing that are growing rapidly in retail?

No, no. In that, it's around INR 70,000 crores or INR 74,000 crores, INR 75,000 crores is gold loan portfolio, which is growing at a jet speed, more than 30%.

And what would be our yield there, sir?

There, it is around 8.8%. It is around 9%, a little below 9%.

So you are confident of this 8.79% holding up and expanding next year as well?

Absolutely, yes. That portfolio will grow at this speed.

The next question is from the line of [ Gaurav Jani ].

The first is despite a strong retail growth, sir, why is our -- why is our margin down sequentially by 5 basis points? And while our LDR has also gone up.

Sir, margins are low because the CASA is not growing to the level. It is growing at 9.32%. And our average -- your CASA is 30%. That is, I think, on a lower side, although our endeavor is still to improve that, and it is improving also, but not to that levels.

No, I'll add to this. Your question is why it got reduced? You must agree with us that whenever there is a policy rate cut, that has to be passed on to RLLR linked loan immediately. And my 49% of the portfolio is RLLR linked whereas deposit repricing takes minimum 6 months -- 6 months to 1 year. That is to answer your question, that is the reason for reduction. And that is the main reason for the compression that you see. And I think that will continue until that rate cut stabilizes. To some extent, that challenge will continue for, I suppose lenders like us.

Sure. And sir, my last question is how are you looking at deposit growth, right? While this quarter did have the benefit of CRR, it has been kind of lagging. So how do we kind of plan to ramp this up, to meet our guidance on loan growth?

See, our deposit is growing at 12.95% against the guidance given, 9% to 10%. So going ahead also, we will continue with the same performance for the last quarter also.

So just a bookkeeping one. There is a restatement in deposits for September. So anything to reiterate on what has been reclassified?

Sir, there was an RBI observation that overseas branches, that deposits taken from bank were taken as -- were earlier considered as borrowings. Now we -- earlier they were considered as deposits. Now we have reclassified as borrowings. So -- and subsequently, we have changed in other previous quarters also. That effect has been changed. So INR 33,000 crores reclassification has been done -- has been reduced, and it ranges from INR 23,000 crores from December '24 in subsequent quarters. Accordingly, in the December, INR 33,000 crores has been reduced.

There is a question in the chat box. What is the breakup of the fresh slippages during the quarter?

Yes, sir, in agriculture, it is -- total slippage is INR 1,857 crores. INR 789 crores is from agriculture sector; INR 739 crores is from MSME; Retail, INR 294 crores; and INR 35 crores is from gold. No corporate accounts have slipped.

The next question is from the line of Sushil Choksey.

Sir, congratulations to team Canara for excellent performance. Majority of my questions are answered, sir, I have typical same questions from maybe what is our digital spend because we are focusing on RAM and enhancing our business. And what is the cost for human resource, which we are going to incur for enabling technology as well as new initiative?

Sir, our staff cost is now stabilizing at INR 4,900 crores. And efforts are being taken to continuously upskill our staff. So there, we have our definite expenditure, and we see that entire staff goes -- they undergo training. Last year also, entire staff underwent training as per their KRIs so that their performance improves.

Sir, are we spending on enhancing the current management as well as top management and other staff members' capability? Because tomorrow, AI will be there, many other technology initiatives, new product initiative. So what is the digital spend for all these initiative and additional incentive and other focused costs? This is your regular staff expense. I'm saying over and above...

Sir, we are conscious that what our future workforce will look alike. So accordingly, we have recruited data scientists, your Python engineers and all for AI capabilities and all. So a vertical has been created separately for AI, which is working on identification of used cases that can be implemented in the bank. So already under fraud prevention and default prediction, AI is implemented to some extent. So you will see more and more use cases coming up. And further also, we will enhance the capabilities of our employees under training. There are a lot of products, sir, we have introduced. One is our business around has now been nominated to be adopted across industry. We have a dedicated business analytics team. So that works for lead generations within the system.

Sir, secondly, your total digital spend for the year, the budget for the total spend, which you are going to do on digital and what is your future outlook on that?

Around INR 1,000 crores we are spending, sir, annually on digital initiative.

For last 3 years, sir, we have been spending around INR 1,000 crores -- between INR 800 crores to INR 1,000 crores every year. And I think this year also, I mean, it is -- we should be able to reap the benefits now. I think now it is the time to reap the benefit. But AMC charges and all will go up. But as sir said, AI related, we have established a department where we need both from people side and technology side, some investment will go going forward.

Sir, as we have 3 other listed companies under our fold. In the cross-selling of business as well as for touch points, how are we benefiting? And if we are able to succeed, how many products are we selling to our existing customers?

No, no. For our Canara Robeco and Canara HSBC, including the Can Fin Homes. So 2 of our subsidiaries -- so we are getting substantial benefit out of this. So insurance company in the previous NFO, what we have launched. So against the target of INR 500 crores, we have reaped some INR 6,050 crores. In 15 days, the room, what was given to this. So we are valuing this subsidiary and we are enhancing the value for the customers by cross-selling. So the -- whether it is the Canara Robeco SIPs or mutual fund selling, or it is the insurance what we are selling through our branches, 10,066 branches so we are getting substantial benefit out of these 2 subsidiaries by cross-selling in a large scale. And our company has also benefited, and we are earning close to INR 500 crores income out of these subsidiaries by selling their products.

Sir, INR 500 crores income, but do you mean to say that majority of our CASA customers are taking 2 products from us, 3 products from -- let's say, I'm a CASA account. Is the car loan coming to you? Is it...

Sir, that is what I wanted to say. So apart from car loan and housing loan, we are also selling credit card. We are selling the other product, the Demat account we are selling to them. We are giving so much of benefit by way of this, engaging with them, sir.

Sir, we have our business analytics wing, And that is responsible for creation of leads. So they have certain machine learning models and they scrub the data. And accordingly, they suggest a person how many products we can sell to him. So whenever a customer approaches the counter, so they have this opportunity how many products, what other products can be sold to this customer. So leads are generating from our customer relationship models and, leads generating through our own machine learning models. So that conversion rate is also very high. That is why you are seeing that our credit growth in RAM sector is 13.5%.

Sir, my last question in this round is, sir, the market is favoring PSU banks over all other sectors, including private banks. We are showing healthy profits. We may not -- for a nominal growth, which we are doing, we may not need equity. But if the market is rewarding in the past, we had capitalized ourselves by doing QIPs ahead of time. Do we plan something in this quarter or coming time or we look into it a future date?

So QIP, I don't think QIP is now lined up.

Chokseyji, as you know and you have seen that my capital adequacy is already at 16.5%. We are adding around INR 17,000 crores to INR 20,000 crores profit per annum. So there is no -- I mean, as of now, we are adequately capitalized to do business -- to have a double-digit growth going forward next couple of years. And if as and when -- if any moment it is required, I don't see a challenge raising it. But in the immediate future, I don't think bank will require that.

So basically, self-reliances are going to work in your growth machine that is your summation?

Exactly sir. Strongly, it should work.

Sir, right now on business growth front, on profitability front, capital adequacy front, asset quality front, bank is doing extremely good in all parameters.

The next question is from [ Chetan Vadia ].

Can you hear me, sir?

Yes, sir.

Yes. I only have one question. In terms of your growth in advances, if I written correctly you're saying, advising 13% growth in your credit growth for the next year. Which are the 5 areas of -- top 5 areas of growth that you see for yourself? And what are the yields on those advances?

Sir, RAM sector is the strength, which is growing at 18.70% and where the yield is also 8.88%. Under MSME also, if you see, we are growing at 13.74%, and the yield on such advances is 9.28%. So -- and gold is also growing at 30%, where the yield is around 9%. And apart from that, we are generating income through PSLCs. So the surplus priority sector that we have. So these are strength areas of the bank and the return of recoveries also, so that we will continue.

Sure. Noted. And my second and the last question is that you said the NIM range would be around 2.45% to 2.5%, as you said in the beginning. Any scope for improvement over there over the next 1 or 2 years? Is there any such deliberation internally happening to make it to 2.6% to 2.7% range?

Sir, definitely, yes, that will happen as the rate cycle effect settle down, because now there is always a time lag on passing on the RLLR-based loans and the deposit repricing. Once that stabilizes, automatically 15, 20 basis point will immediately rise across lenders. So we should be no exception. It should be more, in fact.

We will take the last question from the line of [ Ankit ].

Hello?

Yes, sir?

Sir, my question is on ECL, sir. Sir, are you doing any ECL provisions? Or what is the total number of ECL provisions from 1st April 2027 that you will be doing?

It is -- as our MD said, it will be less than 5 digit, the number. And it is -- as you know, if one side, it is less than 5 digit number, it has one more year to get implemented. In a year, we will add a minimum between INR 17,000 to INR 20,000 crores of profit. There is my provision coverage will be all-time high of over 95%. So the requirement of ECL by the time it gets implemented will further come down from that 5-digit figure to a much lower figure. And even if we implement, as we said in the past, my CRAR and CET1 will get affected by only 1 percentage point. That means even then, my CRAR will be at above 15 and CET1 will be above 12 -- above 11. But this is if we implement in one go. But as we understand, RBI has allowed it to be spread across 4 years. So it has got almost no effect, and we will be able to maintain. ECL, differently, will have no impact, sir. The provision release that has happened or -- not provision release, it is the release of funds that has happened on account of this CRAR cut over during September and November, that itself has cushioned all that. I think there is no effect on this. Across banks, I don't see there will be much effect.

Okay, sir, I got your point, but your peer bank are doing the ECL provisions like PNB have done. I'm just asking, are you doing any ECL provisions in this quarter? Or you are doing just in one go?

Sir, we feel we don't need to do any preemptive provision before that. That will come from -- my quarterly profit will be sufficient at any point in time to absorb that without hindering business growth and capital position.

That was the last question for the day. I hand over the call to the MD sir for his closing remarks.

So sir, I have already said, it is strong numbers, be it business growth, be it asset quality, be it profitability, operating profit, net profit and capital adequacy. And I don't see any reason that this growth will not continue, it will continue in the last quarter also. So thank you, sir.

Thank you. That concludes Canara Bank conference call.

Thank you.