Canara Bank (CANBK) Earnings Call Transcript & Summary

Yes. Good afternoon, Mr. Prabha. You can start the proceedings, and directors are assembled here. They're waiting.

Yes, sir. Good afternoon, sir. Good afternoon.

Yes, very good afternoon.

Good afternoon, everyone.

Go ahead.

Sure, sir. Good afternoon, everyone. I hope everyone is safe and doing well. On behalf of Antique Stock Broking, I welcome you all to first quarter earnings call of Canara Bank. We have with us senior management of Canara Bank, represented by Shri L.V. Prabhakar; Managing Director and Chief Executive Officer; Shri Debashish Mukherjee, Executive Director; Ms. A. Manimekhalai, Executive Director; Shri K. Raju, Executive Director; Shri Bridge Mohan Sharma, Executive Director; along with other team members on the call. Without taking any more time, I will hand over the call to Shri Prabhakar, sir, for his opening remarks. Post which, we'll open the floor for question and answers. Thank you. And over to you, sir.

Yes. Good afternoon to all of you. Thank you very much for participating in this interactive meeting. I will just highlight the performance for Q1 of FY '22. First, I would like to talk about the business. Global gross business has grown by 9.38% Y-o-Y, and domestic business has grown by 9.23%. We did well as far as the deposits are concerned. Global deposits have grown by 12.34% and domestic deposits have grown by 11.60% Y-o-Y. Credit, yes, as far as advances are concerned, global credit has grown by 5.23% and domestic credit by 5.94%. And in all the parameters, quarter-on-quarter, there is a positive growth. Generally, in the banking industry, Q1 of any financial year will have a neutral growth. However, Canara Bank has shown positive growth in business, in deposits as well as in advances. I would like to emphasize regarding the performance of CASA. CASA has grown by INR 37,971 crores in absolute terms and the savings bank has grown by 14%. CASA has grown by 12.91%. Retail term deposits has grown by 12.14% and the growth in absolute terms is INR 46,000 crores. I would like to emphasize on the mandatory norms of priority sector because it has, nowadays, a great impact on the income side also. Against norm of 40% of priority sector, we are having as on date, after selling the PSLC certificates to other banks, still, we hold about 45.47%. And in agriculture, against requirement of 18%, still, we hold at 20.93%. This difference is available for Canara Bank at any time to sell in the market and to earn commission in terms of sale of PSLC certificates. Quality of the advances has improved. For example, A and above A rated accounts, from 65.15%, it has now increased to 67%. And the percentage of accounts with the BB and below BB has gone down from 19.72% to 18.82%. Now let me talk about the income parameters. Interest income quarter-on-quarter, yes, we have shown a growth of 2.79%. Year-on-year, there is a degrowth of 7%. As you all know, in the last one year, because of the reduction in the repo rate of 40 basis points, we have passed on to our customers the reduction of interest of 50 basis points as far as MCLR is concerned and 40 basis points as far as our RLLR is concerned. Noninterest income, Y-o-Y, there is a growth of 67%. Quarter-on-quarter, there's a degrowth of 14%. If you compare with the June to June, because the situations which will be there in the June and the situations which were there in the March, are entirely different. So Y-o-Y, when we compare, there's a growth 67%. Fee-based income has grown by 43%, trading income by 38%. And we have given more focus on a recovery in written off accounts. It is about INR 680 crores. For tax purposes, we are taking INR 600 crores, and it is 131% Y-o-Y growth. Other income has grown by 96%. So total income has grown by 3% Y-o-Y, and quarter-on-quarter, it is at 1% minus. Interest expenses, Y-o-Y, the expenses has come down by 11%, and quarter-on-quarter, about 1%. Operating expenses, quarter-on-quarter, it has come down by 5%. However, year-on-year, there is a growth of 8%. This is basically because of staff cost, where there is an increase of 15% of salary as per the bipartite agreement. And we have also given 15 days PLI to our employees because of excellent results as on March 31, 2021. Because of which, the staff cost has increased by quarter-on-quarter 2.3% and year-on-year 10%, which is comparatively a better figure. And we have a great control on operating expense. Q-on-Q, we have reduced 18%. So total expenses, Y-o-Y, there's a reduction of 5.74% and quarter-on-quarter 2.29%. Now coming today, total income and total interest expenses, if you see, the NII quarter-on-quarter, there is a growth of about 10%. And operating profit, as on 30th of June, it is at 5,751, showing a growth of 34% Y-o-Y and about 1% quarter-on-quarter. Provisions, yes, for NPA, we have done less. But as a prudent measure, we have done ample provisioning, and the provisioning figure is at INR 4,574 crores. The outcome of these 2 things, that is the net profit, it is at INR 1,177 crores, showing a growth of 16% quarter-on-quarter and 190% year-on-year. If you go and understand what type of provisions we have done. By earmarking INR 4,574 crores, out of this, for NPAs only, it is INR 2,335 crores, that is a reduction of about 47% quarter-on-quarter. And then this time, we have made for income tax INR 845 crores provision. Last year, same June quarter, it was only INR 53 crores. And the other provisions, which we have done for restructuring and other things, that is about INR 1,344 crores. ROA, we have blocked 0.41. And we are confident going forward, we are going to improve this figure. Cost-to-income ratio, which was at 51%, now we have brought down to 45%. Going forward, we are hopeful this will be a still attractive figure. Earning per share, it is at 28%. Yes, we are hopeful that this figure will also improve. Book value, from 241% which was in the last quarter, now it has increased to 254%. We have taken various measures to control the cost of deposit, and now it has come down to 4.02. And yield on advances, in spite of passing on the benefit to the customers borrowers, we still maintain an yield on advances of 7.09, then giving a NIM of about 2.71, increasing from 2.50, which was there in the last quarter. Gross NPA, from 8.93%, it has been reduced to 8.50%. Absolute terms, there is a reduction of about INR 2,000 crores. Net NPA, from 3.82%, it has been reduced to 3.46%. In absolute terms, again, there is a reduction of INR 2,000 crores. Provision coverage ratio, we have achieved 81.18%. Going forward, we'll be improving this ratio. And credit cost, we managed at 2.04, with a slippage ratio of 0.69. The recovery, this time, we have given more emphasis on upgradation, and we achieved a figure of INR 2,292 crores. And cash recovery, other than recovery in the written off accounts is INR 1,598 crores, and recovery in written off accounts is INR 680 crores. Put together, the cash record is about INR 2,458 crores. Cash recovery plus upgradation is about INR 4,750 crores. And the slippages are 4,391, including the debits in the existing NPA. That is that collection is more than the fresh slippages. And because of which, we could maintain a good NPA ratios. Restructuring. In the restructuring resolution framework of 1, we have restructured about INR 5,000 crores against a target of INR 10,000 crores, and we have made required 10% provisioning. Under the resolution framework 2, that is during the last quarter, that is Q1 of FY '22, when 2.5 months out of 3 months, the shops were closed, business were not happening and lockdown was there, the SM -- MSME and retail people really, they got hit. And proactively, we have approached all our people and encouraged them whoever is affected with the COVID to use this facility. And then we have also advised them that if they have good cash flows, they can pay back even though there is no demand. We have restructured or we have resolved to the extent of INR 13,234 crores. Number of accounts is 3.5 lakh. But after this, the people have started repaying the amount. And INR 64 crores, we have already received as on 30th of June, out of which, INR 35 crores is advanced payment. And we are hopeful that during the current month and the months to come, the people who have availed this resolution process, our resolution facility, they will be paying back their installments without waiting to pay subsequently after the reviewing the moratorium period because now they are getting the cash flows. And these borrowers are, I can say, where the unit is there, where it is functioning. And they are conscious about the interest cost. So to avoid the interest cost, they prefer to pay back the installments even though they are not due. Regarding the capital, capital ratios have improved. Tier 1, it is at INR 10.34 crore, and CRAR is at 13.36%. So with these few words, now I open the session for questions and answers. You are free to ask any question. Over to you, please.

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

Congratulations on team for the excellent results. A very good profitability. Good income maintained in spite of all the difficulties which are faced by the bank. I have certain observations and some concerns also. Our income, the profit comprises of mainly the treasury operations in this quarter of almost about INR 2,593 crore. An appreciation of -- quarterly appreciation of more than INR 1,100 crore and INR 450 crore. So this becomes a good point also, appreciation, and add a lot colors to the treasury. But at the same time, there is a concern also that if there is a pressure on the treasury, because these are not the group income. So then what will happen? I mean if -- because the asset deployment to the treasury, the additional asset deployed for the quarter is only INR 10,000 crore. But returns are very high. So this is one thing on which I need your observation and reaction on this comment. I have a couple of other questions that disappoints also. Now one is that selling off PSLC of INR 700 crores, we shall -- so out of INR 953 crores of the other income, I mean in the income. So is it going to be a consistent kind of a -- for the remaining 3 quarters? Or this is one-off during the whole year going to be? Because this also...

Yes. Shall I answer?

Yes, sir. You can proceed. There seems to be some network problem.

He has to hear, no? Whether Mr. Ashok is online, please, can you check up?

I think he is not there. Sir, we will take the next question. Then we can come back to.

Because I want to answer when he hears, because it is his concern. So my responsibility is to answer him.

We have next question from the line of...

Yes. Ashok, you are back?

[indiscernible] Yes. I am Ashok Ajmera, here.

Yes. Please, please.

Yes, sir. I was muted by...

Okay. Allow to answer your question. See, generally, in any quarter, if any bank earns good noninterest income, the first question will be, whether next quarter, we're going to get or not. It is a normal concern. The issue is the treasury which we are having is a very efficient treasury. And if you see the book which we are having, still, we have a lot of scope to earn money. This is point #1. Second one is, if you compare the treasury income in the last 4 quarters, consistently, treasury is doing very well. And next quarter also, it is going to do well. There is no doubt about that. Another issue is, whether we are going to sustain for a long period. Yes, as long as our modified duration is under control and we can understand the market, there will not be any issue. Second one is PSLC certificates. This time, we earned INR 699 crores. The point is whether we are going to continue this or not. When I was discussing with the slide wherein, the mandated priority sector lending targets are there, there, I have said that priority sector lending target mandated is 40%. Today, even after selling the PSLC certificates, now I am at 45.47%. And now we are aggressive under health care sector also, which also counts for priority sector classification. Going forward, we will be having scope to sell the PSLC certificate if not in the present scale. But all the components of noninterest income, in some quarters, some parameters will have higher weightages. In other quarters, some of the new parameters will come up wherein we'll be making money. So overall, how we are faring as far as noninterest income is concerned is of importance. So we have many parameters wherein we can do it. And one more thing is when you see our fee-based income. It is at INR 1,337 crores compared to last year of INR 931 crores. So this is increasing because, again, it is linked with the business increase and also the way in which we are handling the business. There are many ways to increase the fee-based income. I can be a follower of some other bank in some credit proposal, or I can be a leader and I can have a premium as far as the fee-based income is concerned. That is the processing charges and other things. As you all know, our credit, domestic credit especially in spite of COVID in the Q1, it has grown by 6%. That means we are very active in the market even during COVID time. So our aim is to give more and more focus on noninterest income, including treasury, including other income. And we are hopeful to continue the trend. Thank you.

We have next question from the line of Mr. Jai Mundhra. Okay. We'll move to the next participant, Mahrukh.

A few questions from my side. Yes. First thing is we have accumulated losses from erstwhile Syndicate Bank of around INR 18,000 crore, right? So why are we still paying taxes on a quarterly basis? Why not -- why are we not offsetting those accumulated losses?

Let me clarify the figures. The accumulated losses from a Syndicate Bank is only INR 10,000-plus crores, and about INR 9,000 crores is from Canara Bank. Put together, it is about INR 19,000 crores. These are carryforward losses. I am paying INR 845 crores as income tax, but I am -- actually, there is no outgo of their money. So as long as I have the accumulated losses, I'll be continuing with the present system to take the advantage of the accumulated losses.

Right. Sir, the question is because, you have the similar situation with one of other PSU bank, which also had some accumulated losses. They have shifted to DTA computation on a quarterly basis, and they are showing tax write-backs. So what is it that is stopping you in terms of tax write-back? If not on a quarterly basis, then on annual basis, can there be a tax write-back in total? Or you would still be having accounting taxes paid?

As per the approval of the Board, as on date, we are continuing with the present tax system. And going forward, depending upon the balance sheet during that period of time, the Board may take addition to change or to continue. But as on date, we are continuing with the existing tax system.

No, no. So that is okay, sir. That is on the tax regime. I am asking for a full year basis, will there be any accounting tax provisions? Or on a full year basis, you will have tax write-backs?

I'm Ramachandra. See, there are 2 aspects. This is on the accounting tax provision. And the -- as far as the tax is concerned, we need not pay the actual tax because I have a -- I'm taken to carry forward the last, next 6 to 7 years. So I need not pay any tax actually for next 5 years. Yes, we are now taking as a conservative basis because we see the income tax matters on litigation in order to avoid making our balance sheet strong. We are making a conservative measure as a -- they are providing the tax. Actually, there is no outgoing tax.

Right. Understood, sir. So maybe you are avoiding litigation. Okay, understood. So that's helpful. Second question is, sir, on restructuring. So if I were to look at that outstanding restructured as on date or as on quarter end June. So it would be like COVID 1 plus COVID 2 plus MSME restructuring of some INR 4,000-odd crores, right? So it should be...

Correct.

I mean these 3 are additive, right? So COVID 1, COVID 2 and the MSME?

Correct. But here, there is a difference. But here, there is a difference. Please understand. The MSME restructuring of that INR 4,000 crores which you are talking that is -- it is called a restructuring, that is individual account-wise. Whereas regarding the resolution framework, that is restructuring of COVID 2, it is something different from the other resolutions. In the sense, in the last quarter, because of the lockdown, the shops were not open and there are no cash flows. So basically, the borrower is interested to open the shop, but he was not allowed to open. So naturally, it -- when it is not under his control, it is a responsibility of everyone to provide him a payment holiday, which otherwise is reflected in terms of resolution framework 2. Here, there are many good borrowers who have the capacity to pay. And after the lockdown, their shops are working. There is a good cash flows. And out of this already people, before June itself, they started paying. And they paid around INR 64 crores, out of which, INR 35 crores is advanced payment. That means people are interested to pay as soon as they get the money or as soon as cash flows are available to avoid the interest burden. So what we observed is this particular INR 13,000 crores of restructuring under framework 2, most of the people going forward will be paying the installment, which will be treated as advanced installment for all the practical purposes.

Right. Right, sir. And the last question, sir, if you -- last quarter, I think you were saying that -- I mean, sorry. So if you can include the below INR 5 crores loan and can give the SMA 0, 1, 2 figure, that would be very helpful. Because it looks like that the stress is particularly there in the below INR 5 crore loan accounts, right? Because your corporate has been doing reasonably much better. So just to understand the situation if you have the SMA 0, 1, 2, including below INR 5 crore loans.

Yes. Thank you very much.

Sorry, sir. If you have that number for SMA 0, 1 2, including below...

SMA 0, 1, 2, as far as INR 5 crores and above is concerned, we have given us INR 1.65 crore. If you include SMA 1 and 2, less than INR 5 crores, it will be the equal amount.

We have next question from the line of Mahrukh.

Sir, can you mean the breakdown of retail slippage, please?

Ma'am, retail slippage...

Sorry. Your breakdown of total slippage. Please pardon me. Breakdown of total slippage.

Yes, yes, yes. Out of this INR 4,200 crores, which is a fresh slippage, about 58% -- 56% is about MSME and about 36% to 38% is retail and rest is others.

Okay. Okay, sir. Sir, and my other question is that -- so what is the total COVID restructuring in 1 plus 2, including pipeline? I know there is a slide on it, but I just wanted to reconfirm the figure.

See, for resolution 1, there is no pipeline. Pipeline has been completed. And a resolution 2, most of the accounts, proactively, we have approached the people. And we have completed the exercise as on 30th of June.

Okay. So basically, there is no pipeline?

But there will be some as far as resolution 2 is concerned but the only thing is now the people who have not come forward before 30th of June for restructuring, now they should come forward. Then only the figure will increase. However, we feel that some people will come for restructuring during the current quarter also, but it will not be like the restructuring which we've done in Q1.

Got it. Got it, sir. The other, sir, I have one more question. Sir, open slippage retail that you gave, can you also break down what is the agri slippage?

Agri slippage?

Yes. Slippage from agriculture.

Yes. How much? It will be around 9% to 10%.

9% to 10% of group? Okay.

We have next question from the line of Mona Khetan.

Sir, my first question is on the agri NPAs. And it seems your agri NPAs are both lower than peers. And typically, Q1 is a -- in Q1, agri NPAs are seasonally higher across industry, but it has held up in your case. So anything that explains better agri NPAs for Canara Bank?

As far as agriculture outstanding is concerned, our outstanding is about INR 1.56 lakh crores. Out of this, if you see the KCC, where there will be hit, and where the, what I call, ancillary units are there under agriculture, that we have already restructured where our restructuring is eligible. And in the restructuring slide, we have given that agriculture, we have restructured to an extent of less than INR 1,000 crores. Because of that, the agricultural slippages are less and repayment is more. And the second point is, basically, underwriting under the agriculture by the Canara Bank is a bit different, in the sense. We go through the details of lending, so that tomorrow, the accounts will not become bad. So that has helped us in maintaining our gross NPA at 5.89% in agriculture. And I think going forward, we'll be maintaining the NPA percentage under agriculture close to this figure only.

Sure. And coming to your upgrades and recoveries of INR 3,900 crore this quarter. If you could just give some color on how much was from upgrade of -- due to completion of restructuring of some corporate accounts and how much were intra-quarter recoveries, if any.

Regarding the upgradation, there is no corporate account. Because of restructuring, it has become upgraded. All corporate accounts which are upgraded are only through recovery. And in this, corporate accounts are not significant. The second one is upgradation has happened mostly by collection of cash from the people, and a minor portion will be there because of the restructuring. And as far as cash is concerned, it is total cash. There is no [ person ] of any, what we call, restructuring. And that INR 1,598 crores which we have collected is pure cash. Apart from that, we have also collected from return of accounts about INR 680 crores. So both the things put together, it is coming to about INR 4,750 crores.

Okay. The INR 3,900 crore in your movement of NPA mostly pertains to NPAs in last quarter?

Yes. Plus INR 680 crore, also, you have to add, ma'am. That is [ INR 4,750 ], total figure. INR 1,598 crores, that's INR 2,292 plus INR 680 crore. INR 680 crore and INR 1,590 crore are pure cash.

Sure. Got it. And on the capital raising front, if you could throw light on what are the plans. And any color on whether you're intending to sell a stake in [indiscernible] and raise capital that way?

Ma'am, we have a board permission to raise INR 2,500 crores through QIP. And in a DR 2, we'll be deciding the data when we are going to hit the market. Second one is additional Tier 1 bonds. We have a permission for INR 4,000 crores, but we are waiting when to take a call. Tier 2 bonds, about INR 2,500 crores, we have permission. And that -- the current quarter, we are not planning. However, we'll take addition after 2, 3 weeks once we complete the QIP process.

Okay. And the -- on the recovery pipeline, if you could give some color as well.

In the beginning of the financial year, we have given guidance that our slippages will be somewhere about INR 14,000 crores to INR 15,000 crores, full year. And our recoveries will be more than that. Our cash will be about INR 10,000 crores. So if you see our recoveries, in the first quarter itself, almost INR 4,750 crores, we have [ cloaked ]. So getting a recovery of say INR 15,000 crores, which is more than the slippages, will not be an issue for us. Various reasons. First one is we have a specialized vertical and staff to take care about the monitoring and recovery. And we are very aggressive in work years. In Q1, we have done about 89,000 work years. And the amount settled is about INR 1,250 crores and the book liability is about INR 1,950 crores. So we are very aggressive as far as recovery is concerned. So that is why we feel that under the worst conditions in Q1, we could give such a better results as far as cash recovery and upgradation is concerned and slippages are controlled. So going forward, the efforts which we are putting in should definitely yield better results.

So -- and just final one from my side. So on the growth front, we have seen a very healthy growth on the -- from the corporate portfolio at 3% plus from a sequential perspective. So what is it -- where are the opportunities in the corporate segment?

In corporate sector, we are very aggressive in infrastructure, especially HAM projects. Second one, we are very aggressive in health care sector. Third one, we are getting good inquiries. And we are also taking exposure in steel and cement. Basically, industries. So this is where we are seeing a very good traction.

We have next question from [ Pranav Tendulkar ].

Sir, I have a few questions on -- regarding data. Sir, finally, what is the total restructured book? So there is a restructured book which was presented in Q1, around INR 8,000 crore. And if I'm correct, around INR 8,000 crore has been added this quarter. So it is -- is it around INR 16,000 crore total restructured book, including [ SMA ] -- sorry, restructuring 1 and 2 and other?

The total restructured book is INR 4,000 crores, plus INR 5,000 crores, plus INR 13,000 crores. But here, again, I say that this INR 13,000 crores, you cannot term it as restructuring. It can be termed it as a resolution.

Got it. Got it. Which is this COVID restructuring?

Yes.

Perfect, sir. Sir, that is one. Second is, in the last quarter's [ probability ], the NIM for the quarter was reported as 2.7. But this quarter, March NIM is changed to 2.5. So anything change that really?

In March, we give a quarterly -- a yearly figure. And here, it is a quarterly figures.

Sorry, sorry, sorry. Okay. So that is second. Third is, sir, now in this quarter, what is the total provisions which are outstanding which are not considered in PCR or anywhere else? Like COVID provision offer that we have.

Any provision which is made for standard and other than the NPA account is not conserved for PCR. So naturally, whatever the INR 1,500 crore, almost INR 2,000 crores made for the COVID restructuring provision is not imported in the PCR.

So that is INR 2,000 crore from the quarter?

Yes, approximately, include COVID and other, some -- or whatever the court order or whatever is related accounts, but that provisions are not include in the PCR. You can take it as INR 2,000 crores.

Correct, correct. Sir, if I see whatever is the net NPA amount right now, will it be safe to assume that even if there is a INR 30,000, INR 40,000 crore slippage and similar, the provision expense for next year could be below 2%. Is that right assumption? 2% of the advances?

Credit cards, as of now, 2.06%. It must. It will be less than 2%. It must be around 1.80% range in the same level of slippage as this one. Target is less than 2%.

Right. And guidance of the slippage is around INR 30,000 crore to INR 40,000 crore. But the recovery will be higher, right?

It is 13 -- it is INR 14,000 to INR 15,000 crores. And the recoveries will be more than the slippages. So at the end of the day, the outstanding gross NPA will come down.

Okay, okay. Sir, any idea about what will be the current embedded value of Canara supports [ HDFC ] life insurance company embedded value?

I think we have work -- we have to work on that.

We have next question from the line of Abhijeet.

Sir, a few clarifications. First one, on the restructuring itself, can you just explain what is the nature of this restructuring? How many months of moratorium have you given yet?

Total restructuring, it is about INR 13,000 crores, and number of accounts are 350,000. Out of which, retail is about 7,600, MSME, 3,300, and small business is about 1,400. The rest is about allied activities in the agriculture. Agriculture is a different criteria. There, it is not 24-months or 12-months. It is dependent upon the crop and the income which will be generated by the allied activities. So maximum, the period given is about 24 months. It varies from 3 months depending upon the requirement of the borrower.

And given that the retail has a good contribution in the second round, this is largely coming from mortgages?

Yes. Not mortgages. They are from housing loans. They are from housing loans, because there, we classify mortgages and housing loans a bit different way. In the sense, mortgages are recognized as properties. And these are pure housing loans where the people have taken this facility. But we are of the opinion that they will not be withholding the installments. They will be paying in spite of in the moratorium period.

And sir, when the borrower can -- borrower, let's say, does not use the moratorium, [indiscernible] that largely allows to operates these accounts?

They have already standard accounts.

No, as in upgrade as in remove the restructuring?

We will not be removing from the restructuring figures. However, going forward, we want to mention separately that, so many borrowers in spite of using the resolution vertical facility, they have prepaid the installments. That statistics will be given to the public going forward.

And the tag is removed only once the loan is entirely repaid?

Yes. But not entirely repaid. Once the 24-months or 12-months, whatever is crossed there, when the regular installment starts, no more it will be treated as a restructure. We'll say that the restructured, but it is -- restructuring is properly implemented.

Got it. And sir, second one is, if you can give some data on the mix of loan book across the different types of benchmarks? MCLR or the other one, the retail -- sorry, the [ repo linked ] loans.

That I can provide you. No problem.

You'll provide it separately or?

Separately, I'll provide. Because see, all MSME, they are under RLLR and retail. Agriculture, again, it is linked with MCLR, corporate MCLR.

Sir, what could be the -- if you have the number. Like on a weighted average basis, the MCLR versus RLLR, what would be the gap in yield?

See, RLLR, you can take this retail about INR 1.15 lakh crores and MSME about INR 1.06 lakh crores.

No. In terms of the yields, the underline gains of the RLLR book and the MCLR book, is there a very big gap between the 2 sets of loan book?

I can answer there is much gap. There is difference. But that -- I think those figures, we have to find out. But globally, if you see, retail and MSME, they are under RLLR. And about 30% to 32% is there.

And sir, you mentioned you've reduced the yields -- the rates on RLLR by about 40 basis points.

Yes.

But this is supposed to be a link -- this is supposed be a link to an external benchmark. No?

Yes, exactly. That's what I'm telling you. When the repo rate has come down by 40 basis points, correspondingly, we have also reduced 40 basis points in RLLR. Whereas in MCLR, even though it is 40 basis points, we have reduced 10 more basis points to pass on the benefit to our customers.

Got it. Sir, the last one is, there is a breakup of the industry credit, which is Slide #12. The infra book is INR 88,384 crores. The same number in the last quarter's presentation was a number about INR 72,000 crores. There is a INR 16,000 crore jump on that line.

Yes. As I said, infrastructure, we are a bit very active, especially HAM projects And other infrastructure, like what you call whatever, the construction activities are going on. So these are all high rated companies, and the disbursement is still pending. And I think you may see a good growth in this one going forward.

We have follow-up questions from the line of Mahrukh.

Sir, just 2 -- a few follow-up questions. Firstly, just to clarify again on restructuring. So the INR 13,000 crore is COVID 1 plus 2, INR 4,000 crore is MSME. And what is INR 5,000 crore?

Ma'am, INR 4,000 crores is previous -- that is from 1st of January 2019, what our restructuring is eligible for the MSMEs, that is the figure. And this INR 5,000 crores is the RBI resolution 1, where they said that you can go for corporates, personal, MSME and others, where we said that we will be restructuring up to INR 10,000 crores. But at the vertical -- when the scheme is closed, only borrowers to -- outstanding to the tune of only INR 5,000 crores, the agreed for restructuring. The remaining, they started paying the amount.

Got it, sir. Sir, my other question is that, on your retail loans, non-agri retail loans, what would be the composition of salaried versus self-employed? And then within salaried, what would be the composition of government versus nongovernment?

Ma'am, as far as salaried has concerned, it is a major portion is salaried, say, up to 80%, and remaining 20% may be other than salaried people. However, within salaried, government and nongovernment, that we have not classified it.

Got it. But is there -- so is it based on bureau scores? Or is it largely to government employees?

Mostly, it is a mixture of both because we have exposure to government employees as well as the private sector, blue chip company employees also.

Okay. Got it, sir. Sir, in your movement of NPAs, the upgrades were high. So any lumpy accounts there?

Ma'am, last quarter, we were fortunate to have that Bhushan Power and Steel. There, we got significant amount. But this quarter, it is totally all are small accounts. And this has come only because of the involvement of all my 10,000 branch managers.

Got it. But even in COVID, they were then collected?

Yes, yes. Especially, we used the work from home facility to be in touch with the people and use that opportunity for recovery as well as the restructuring of the accounts.

Got it. And in terms of Kingfisher, did you have any exposure, sir?

Fortunately, no.

We have next question from the line of Rajeet.

And congratulations to the team for a very strong pre-provisioning profit and recoveries number in these tough times. Sir, my question is on the capital. So we are right now at a CET 1 of 8.9%. And our loan growth is barely into mid-single digits. In fact, our risk-weighted assets have actually shown a quarter-on-quarter decline. So in such a scenario, what would actually be a rational for a capital raise?

We have given a guidance that our global credit will grow by 7.5% minimum. So it may touch 10% also. Then when the credit growth picks up, we want to be ready with the capital also. That is why we are coming out very soon for raising about INR 2,500 crores of capital through QIP. Once we raise that one, I think we'll be in a very comfortable position to take on any big projects also and to expand the credit.

Sure, sir. But sorry, if you look at our valuations, we'll be raising -- at a very dilutive valuation, we are still quoting at 0.4x book value. And we would understand that in December, when we raised the capital, that was a different time frame. We were coming out of the, wave 1, moratorium, Supreme Court judgment on asset classification, having all those uncertainties. And we needed to boost our Tier 1. So at that time, even going at a dilution at those kind of levels was, I think, was okay. But now going into a second dilution and when the growth picks up, we may even look at further capital. So shouldn't we be looking at monitoring our stake from the campaign homes rather than diluting at such cheap valuation, sir? Because it's actually very unfair on the minority.

There are 2 points. One thing is, through QIP, as per the vision of the Board, we want to raise about INR 2,500 crores to take care about the future growth. And second one is, if suppose tomorrow, if there is any impact because of COVID 3, we should be in a position to sustain. So that is the reason because for change, we want to raise only INR 2,500 crores through QIP. The second option of diluting the stake in subsidiaries, that option is always open. But only thing is, still, we don't see very attractive valuations as on [ date ] to dilute our stake. So we are waiting for an opportunity.

Okay. So can that happen? So once this raise is over, then maybe we will not have to go for a capital raise again, say, and we'll -- then we actually be exploring very seriously a stake dilution, maybe end of the current financial year or something when we actually need the growth capital. Will that be a fair assumption?

As on date, as per the approvals of the Board, we have a permission to raise only INR 2,500 crores QIP.

Okay. And that is for this current financial year? Is that the approval? Okay.

As on date, this is the permission, for this financial year.

We take next question from the line of Mayank.

Yes. Sir, my question is regarding PSLC. So like what is tenor for PSLC income? Meaning relative would be till 2022 for selling PSLC and we will be able to sell again in April 2022?

On 31st March of every year, it becomes 0. Again, from 1st April onwards, again, this lot will be available for you to again resell. Yes. As on date, remaining percentages, we have about 5.47% excess over the required norm as far as priority sector is concerned. And going forward, since we'll be lending to priority sector further, the figure may go up still further.

Okay. So 5% to 6% further, we can sell in the remaining years. And since then, it will be much lower, so income would be proportionately lower in that segment.

Yes. Every year, we can book it.

We have last question from the line of Sushil Choksi.

Congratulation on a great set of result among challenging times. And I hope that you succeed and you do well in the current year. Sir, I have a follow-up question to some of the participants who are asking on your dilution. Let's assume, I think in media, you spoke about 7% growth on business this year. And second thing is you spoke about a lot of rationalization which is aiding to the income currently. So if 7% growth is on target, do you need capital? Or if it's only exceeding 7% and you're looking at 10%, 12%, then you need capital?

See, our guidance is credit growth of 7.5% is minimum. It is a lower benchmark. And the second one is, as far as the rationalization of the branches that are concerned, we have already closed more than 600 branches and opened about more than around 60 specialized branches. So we are saving costs there. But at the same time, we are conscious of increasing the business and increasing the -- what you call, credit book, loan book.

I understand the credit book opportunity for a bank of your size is far greater, better off than many of the other banks where competition with lesser equity or their own internal problems and processes are there. Now you've guided that you're looking at HAM and some of the specific pharma, hospital. But pharma cannot give you that kind of growth as you may such. Government may ask and push for it, but hardly any pharma companies are borrowers. So you may get 10, 20 large account, but it's not much. So what kind of when you rely at pharma? What kind of -- are you looking at some supply chain discounting, which is a low-margin business? Or you're looking at CapEx of pharma or working cap?

Yes. Last -- when the scheme has come, we have said that we will be sanctioning about INR 4,000 crores and disbursing about INR 4,000 crores, to start with. So as ended, we are at INR 4,500 crore sanctions and about INR 1,800 crores disbursements. And disbursements happened in the health care sector, a phase wise. This consists of pharma, hospitals, medical colleges, oxygen manufacturing units, pathological units, it consists of all. And the number of accounts to whom we have sanctioned is 74,000 accounts. So it is widespread. Yes, you are right. Here, the scope may be about INR 4,500 crore to INR 5,000 crore, at the most, INR 5,500 crores. However, infrastructure, cement and steel, huge potential is there.

No. Cement and steel, I agree that with the current cycle, there will be CapEx, and it may not be a big gain from a high spread. It may be a stable spread because most of these companies are AAA and AA rated companies, but there is a scope of INR 8,000 crore, INR 10,000 crores, INR 20,000 crores easily because everybody is announcing CapEx in the plan. But what kind of other advances would you look at for more of a diversification from a bank point of view? And second question, on digitization process on the entire credit system.

Yes. Let me answer you regarding the, what you call it AAA accounts. Yes, AAA accounts, they demand good rate. But if you see our cost of deposits, it has come down to 4.02%. I am able to raise the deposits at 4.02% average cost, and fund cycle rise at 3.7%. So it is a very, very competitive price at which I am raising. And I can afford to [ lend ] this at a competitive rate to the AAA customers in cement, steel and whatever sector is there. So going forward, for Canara Bank, competing with other banks as far as A, AA and AAA borrowers are concerned will not be an issue. That's Point #1. Second, my savings bank is growing at a very faster rate. Last year, there is a growth of about INR 37,000 crores, which is at 2.9%. So cost is not a factor for me. Apart from HAM, steel, pharma, we are also active in retail. Retail credit and corporate, we want to maintain a balance of 55% and 45%. So in retail, housing, we are very aggressive. In the last quarter, in spite of COVID, our growth -- Y-o-Y growth is about 13% in housing. And quarter-on-quarter, there is no negative growth. There is a positive growth of 1.26%. Now in the current month, we see a lot of traction under vehicle loans, especially education loans also and personal loans. So I think it will be a mix of retail and corporate, where corporate, we want to -- what do you call, take up the proposals of industries and also infrastructure.

Sir, do you think in treasury profit of Q1, which might have been led by -- I'm just speculating, may have led by GSAP. And in the current year, GSAP may support you in the coming following quarters too also because government and RBI are working together towards keeping the stability in the current global challenges. What's the outlook for current year on that? And what would be your outlook on NIM and CASA as a percentage of -- and also cost to income?

See, our noninterest income is not totally dependent on treasury income. Treasury income, we are getting a very attractive yields. And the current quarter, I think there should not be an issue as far as the treasuries are concerned. And with the way in which the treasury is handling the business, going forward also, we'll be in a position to make money from the treasury. And we have already taken steps not to over-depend on any one particular noninterest income criteria. We want to spread over. And we are trying to get more and more fee-based income. That is apart from treasury income. So I think even if in a particular quarter, any of the particular component of the noninterest income goes down, the other component will compensate it. So we are working in that strategy, and we will continue to increase our noninterest income going forward.

Sir, your outlook on NIM, cost-to-income and CASA?

NIM, now we are at 2.71%. It is going to improve. And our guidance is, we said that we'll be at 2.75%. And we are confident that we'll be crossing this. So NIM will not be a problem. And cost-to-income ratio, last year, it was 51%. Now it has come down to 45%. Going forward, the way in which we are controlling the operating expenses and increasing the other income, cost-to-income ratio, bound to come down further.

Sir, you have any guidance where you were expecting by the year-end on CASA and this on a percentage terms?

Cost-to-income ratio by percentage terms will be coming down about, say, 1% more minimum. And CASA, we are targeting a growth of minimum 14% next quarter also. So as on date, it is about 34%, and we have given a guidance of 36.5% by the end of the year. I think we'll be in a -- comfortably, we'll achieve that because this is, again, a percentage of our term deposits and the CASA deposit. Term deposit, bulk deposits, we are not going to increase. It is at INR 2,013 crores -- INR 2.13 lakh crores. And we are going to maintain at that level, unless until we get the bulk deposits at a very competitive rate, that is where I can make some money. With this, I think, increasing the savings bank at 14% to 15%, and controlling the bulk deposits, increasing the retail term deposits, I think a CASA percentage of 36.50% by 31st March 2022 is comfortably achievable.

Sir, last request that I would request and urge that if Canara Bank can interact with large shareholders where your dilution is concerned because people have different opinions as compared to what the Board might be taking a decision on betterment of Canara Bank and not taking a negative step.

We are open to have a dialogue with any of the stakeholders.

I mean the top shareholders only I'm talking. I'm not talking about participants or analysts.

Definitely, sir.

Sir with that, would you like to make some closing remarks?

Simple remarks? Yes, our Executive Director, Shri Mukherjee, he would like to have some comments.

Thank you. Thank you for this interesting interactive session, what we had just now for past 1 hour or so. Like our bank has given the guidance, we will be definitely following those guidelines for this rest of the financial year. As a closing remark, let me also tell you that we are aware of the challenges which the economy is going through, and we are equipped -- we are equipping ourselves to face those challenges. And over the last 2, 3 quarters, you must have seen that our performance and recovery, our performance in slippage management has been better than the average of our peer banks. So we are going to continue that. So far as business growth is concerned, as our guidance is 7.5%, that is the minimum, we will strive to exceed that. And so far as cost cutting and the other operating cost decrease is concerned, we have already decreased the cost-to-income ratio to a reasonable level now. We will further strive to reduce it during the course of this year. So both in the business front, in the recovery front, in the profitability front, we will continue to move in this direction. Thank you.

Thank you. Thank you. With that...

Thank you.

On behalf of Antique Stock Broking, Prabhakar, sir, and his team, thank you so much for giving us this opportunity. Thank you all the participants for joining in. Have a good day, and good evening. Thank you, everyone.

Thank you very much.