Canara Bank (CANBK) Earnings Call Transcript & Summary

Yes.

Yes, we'll start the.

Okay. So on behalf of Antique Stock Broking, we welcome you all to the third earnings -- third quarter earnings call of Canara Bank. From the management side, we have Sri LG Prabhakar, MD and CEO; Sri Debashish Mukherjee, ED; Ms. A. Manimekhalai, ED; Sri K. Satyanarayana Raju, ED; Sri Brij Mohan Sharma, ED and other team members. Without much ado, I would hand over the call to Mr. Prabhakar for the opening remarks, post which we will open the floor for Q&A. Over to you, sir.

Thank you very much. And I sincerely thank my investors for the support they have given and the confidence they have reimposed on us, because of which we could deliver good results. Let me talk about the net profit, INR 1,502 crores, which is about 150% -- 115% Y-o-Y. But we are not happy with the net profit of INR 1,502 crores. Our philosophy is to see that the balance sheet is very strong, and the balance sheet is future-ready. In that direction, what we did is in the current quarter, that is Q3 FY '22, INR 1,355 crores. We have made a special provision for the pension of the staff which, otherwise, as per the permission of the RBI, can be done in 5 years. But we don't want to wait for 5 years to make the provision. And we have uploaded, front-ended, total INR 1,355 crores. And the second point is, last quarter, you were all very aware there was a big NPA account SREI, because of which the NPA figure has increased. And last quarter, we did 50% provision for that SREI account where the outstanding is about INR 3,100 plus. This quarter, what we did is, instead of 50%, we have increased the provision to 75% that is about INR 2,400-plus crores we parked as Provision for against SREI account to take care about the future losses. And the future recoveries are there, we will be [ plowing ] back provisions. So along with net profit, I would like to emphasize about the provision made for the pension and also the extra provision made for the SREI account, which is one of the bigger accounts. This time, Canara Bank has focused on growth in business, both liability side and also asset side. Gross advances has grown by 9.28%, and now we are at [ INR 7.3 trillion ] loan book. Apart from this, the retail, we have grown at 10.02%. Housing, 14.82%; and Agriculture, 12%; Corporate, 10%. So put together, the gross advances globally, it has grown by 9.28%, and we are targeting to achieve 2-digit growth under gross advances going forward. Apart from asset side, we are also very conscious about the liability side of the book. CASA continues to be our focus area, and we have grown at 10.28%. Now, the absolute terms, it is about [ INR 3.42 trillion ], and bulk deposits will have reduced and there is a normal growth of about 7%. Regarding the asset quality, we have improved the underwriting standards. And also, we have increased the emphasis, and the total staff energies are being diverted towards the recovery in return of accounts also. Because of which, as we have committed in the last 3, 4 quarters, that our recoveries will be more than [ slippages ]. We could get that situation during the current quarter also by recovering about INR 2,784 crores as cash recovery and about INR 1,100 crores as upgradation. And the percentages, gross NPA from 8.42%, it has come down to 7.80%. Net NPA has come down to 2.86%. Going forward, we are very conscious about these 2 ratios, and we are committed to improve these ratios in Q4 FY '22. Along with NPAs, we want to see that provision coverage ratio also increases. Now, we are at 83.26%, and we are of the view that we have to achieve 84%. Then capital. With all your support, this financial year, we have raised INR 2,500 crores QIP successfully and also AT-1 bonds and also Tier 2 bonds and at a very competitive rate. And today, our CRAR is at 14.80%, an increase by 111 basis points Y-o-Y. CET 1, it also increased by 135 basis points to 10.12%, and Operating Profit, we are at INR 5,803 crores, showing a growth of 10.16%. And the operating profit for the 3 quarters is taken. It is growing at more than 16%. Global business, we crossed the INR 17.7 trillion. And in the last 1 year, we have added a domestic business of about INR 1.17 trillion. Current deposits continues to grow and savings bank [ account ] continues to grow. This time, we have concentrated on SMA-1, SMA-2 and SMA-0 of those accounts where the outstanding balance is more than INR 5 crores. And because of the focused [ attention ], as on 31st of December 2021, the SMA-2 amount is only INR 2,400 crores, which is 0.28%. And SMA-1 is only INR 3,400 crores, which is 0.39%. Put together, SMA-1, SMA-2, it is only 0.67%. And even put together SMA-0 also, it is only 1.76%. We could maintain very good recovery percentages under retail also. Retail, the NPA percentage is 1.30%. Housing, the percentage is 0.90%. And in Vehicle, Education and Personal Loans, it is less than 2%. And we target to continue to have the NPA ratios under retail at this level only. Regarding Agriculture, again, our NPA is only 5-plus percent, which is, again, a very good sign. So with the overall increase in OP, [ MP ], growth in credit, growth in deposits, and reduction in SMA and also increasing the capital, we could make Canara Bank balance sheet ready for the future. Thank you very much.

Thank you, sir. We'll open the floor for Q&A now. [Operator Instructions] We have first question from the line of Mahrukh. Yes, please?

Sir. So a couple of questions. Firstly, there's a lot of lending that has happened to NBFCs during the quarter. So what kind of NBFCs are these because that's the key growth driver, correct? So what kind of NBFCs are these?

I cannot say it is the only driver, it is one of the drivers. And as far as NBFC is there, in the slide, we have given the rating of the NBFCs. 98% of the NBFCs today, they are A and above. At the same time, we are getting good yields from them, along with taking care about the future risk aspects. Yes, ma'am.

So sir, my other question follow-up is that -- what kind of, like, is it a Power Finance NBFC, is it other private NBFCs? That's what I meant. Whether it's PSU or it's private?

So along with these NBFCs, let me bring to your notice the credit code that has happened in other parameters also. For example, as I said, Retail you have seen 10% growth. Housing, 14% growth. Agriculture, 12% growth. Corporate also 10%, out of which NBFC is a component. Now, last time I have said that we are very aggressive in sanctioning HAM projects under infrastructure. Why I'm telling HAM projects is under HAM projects, most of the risk is being taken over by the [ NHAA ]. And there are milestones, after completion of those, only bank will be disbursing the amount. So safety is good. And the second strategy is Canara Bank, with a huge equity and also with the talent available to assess the infrastructure projects at head office level, we have financed big-ticket HAM projects. For example, previously, banks used to sanction INR 300 crores, INR 400 crores, where the debt requirement is about INR 700 crores. Today, Canara Bank is in a position to underwrite total INR 700 crores which, in turn, is giving Canara Bank bargaining power in terms of interest rate and also in terms of processing charges because of which you can observe the yield on advances has gone up. Apart from infrastructure projects, we have given for public sector undertaking NBFCs also on a calculated basis. So it is a mixture of this thing, but all the NBFCs are A and above.

Got it, sir. Sir, my other question is on asset quality. Sir, the first question is that, was there any reversal of provisions related to Air India this quarter? And will there be some more in the next quarter? And then on future retail, I mean, it would be part of the restructured book, and it's probably not performing as the restructuring terms, correct?

Ma'am, Canara Bank was having exposure to Air India to the extent of only INR 200 crores, and total INR 200 crores we have recovered.

Got it, Sir. Sir, and in terms of future?

Yes. As you see, Canara Bank PCR is more than 83%. Whatever recoveries are going to happen, along with the recoveries, there will be significant amount of provisions that will be written back. That is why I said we are making our balance sheet future-ready. Future group, yes, we have exposure, but it is not going to be NPA in the coming quarter because we have exposure to only one part, not to the other part.

We have our next question from the line of [ Suraj Das ]. Yes, [indiscernible], go ahead.

Mr. Suraj Das.

Yes, there was some issue on the unmute. So sir, my question is on this asset quality again. So can you, sir, bifurcate what is the slippages breakup for this quarter? I mean, segment-wise, like in Agri, Corporate, Retail and MSME? Because as you said, there has been some pickup in growth in infra, steel, textile and all that. So if you could bifurcate the slippages breakup segment-wise? That is my first question.

Right. Second?

Sir, my second question is on the restructuring. So while you have given a slide on restructuring, which consists of COVID 1.2 and COVID 2.0. But also, sir, you have one MSME restructuring pertaining to the earlier scheme. So I just want to know what is the total restructured amount, which includes COVID 1.0, 2.0, earlier MSME and all other previous restructurings? So what will be the total amount?

Correct. Now, let me talk about the fresh slippages, about INR 2,699 crores. In this, it consists of about INR 400 crores, 1 or 2 big accounts. And the remaining is Agriculture, Retail and MSME. And if you bifurcate about INR 2,200 crores under these 3 categories, it will be coming about INR 600 crores to INR 700 crores, INR 500 crores in these 3 sectors. And regarding that [ INR 593 crores ], which is there, it is existing NPAs, including big accounts also where the non-fund limits have been [ default ], so that we have paid. So basically, INR 2,699 consists of about INR 400 crores of 1 or 2 big accounts, not even big accounts because it's less than INR 400 crores. And [ INR 2,100 ] crores relates to Agriculture, MSME and Retail proportionately, maybe 5% this side or that side, that's all. And regarding the restructure, RBI has said that there is a restructuring package one. In that, we have clearly given the INR 5,000 crores, which is restructured. Restructured package 2, the RBI has said that you have to give the restructuring package and the resolution too, number and amount, so we have given the number as INR 3 lakhs, amount as INR 14,188. But the beauty of this restructuring in Canara Bank is because of the continuous follow-up and handholding and timely benefit was given to our customers, because of which 74.34% of these people, who have availed the resolution process have paid back the amount. And for your question regarding MSME, which is other category, it is about INR 3,200 crores which is freezed long ago.

Okay, sir. So if I have to arrive at the total restructuring, that would be this INR 5,000 crores of COVID 1.0, then this INR 14,000 crores of COVID 2.0?

No, because -- because that figure is on that date. Now the figure has gone down because there is recovery, there are closure of accounts, so -- and some extent, about 1% to 2% have been slipped into NPA also. That is hardly INR 150 crores, INR 160 crores, that is less than INR 200 crores. So, if you remove this, again, the figure will come to about INR 20,000 crores and INR 21,000 crores, not more than that.

INR 20,258 crores.

INR 20,258 precisely. And going forward, by next quarter, this figure will still come down maybe by INR [ 2,000 crores ] to INR 18,000 crores.

Right. Understood, sir. And sir, what would be the provision on this restructured pool, sir?

10%.

Okay. And do we have any other provision outside this? I mean, restructured pool over and above the [ PCR ]? Any other contingency [indiscernible].

Provision, which is not included in the PCR, there are 3 things. One is provision for standard assets; another is provision for RP; and the third one is, as we said, the provision which we'll do in a specific cases.

Okay. Sir, what would be the standard provision, I mean, as on date? Rough ballpark figure?

All these 3 things put together, other than PCR, it is about INR 6,000 crores.

Thank you, [ Suraj ]. We have a next question from the line of Mona Khetan. Mona, you can ask.

Congratulations on a good set of numbers. So firstly, on this -- so we have seen rationalization of employee expenses in FY '22. So how do we look at employee expenses going forward? Would this rationalization continue or we should see growth from here on in terms of the total employee expenses?

Ma'am, if you see in the last 2 years after amalgamation, most of the senior people have retired. And recruitment, we are a bit cautious, and selectively, we are recruiting the technical people. That is directly reflecting in the staff cost, which is coming down quarter-on-quarter. And after amalgamation, Canara Bank has changed its strategy of doing business by bringing in hybrid vertical types, which has boosted the business, and the available staff were properly deployed. Simultaneously, the digital transactions are increasing in Canara Bank at a very greater speed. In the last 3 quarters, about INR 256 crore transactions have happened through digitally. This has an impact on my staff strength. With the existing staff strength also going forward, I can do business with the help of digitalization and also verticalization. So this will be our plan, ma'am.

Okay. So probably in FY '23 also, the growth in employee expenses should be pretty contained. Is that a fair understanding?

Need-based recruitment will be doing, I can tell that. Need-based recruitment. Just like normal procedure as public sector banks used to do, we have to recruit every year. That policy, we have changed it. We now work on scientific lines, the requirement of the staff, proper deployment of the staff, proper accountability of the staff and then proper rewarding of the staff. These things we brought in the last 2 years, which has given us good results and employee participation and involvement has increased a lot.

Sure, sure. The other question is, if you look at Slide 21, there is a write-back in other provisions of INR 400 crores. What exactly is it pertaining to?

Yes. My CFO, Mr. Ramachandra, is there. Ramachandra, please explain.

This time, we have made a one-time provision towards the family pension of INR 1,355 crores. Last year, when we were preparing the [ query ], we have -- we made an ad hoc provision for the family pension to the extent of INR 400 crores. That same, INR 400 crores is reversed this time, that is why there is a reversal.

Okay. But this family provision should come in under OpEx. I was talking about the provision line item outside of the operating profit.

Yes. Correct. Family provision you have taken as an extraordinary item. Last quarter, the provision made towards the family pension included in the -- under the provision at -- below line, other provision. That INR 400 crores, since we have made as an [indiscernible], this INR 400 crores we have reversed.

Sure. Got it. And also, if I look at your corporate GNPA, sequentially, there is a decline of INR 1,000 crores in the GNPA quarter. So what has helped this decline this quarter?

Ma'am, if you see our recovery under NCLT accounts, this time, this quarter, we got about INR 333 crores of recovery in bigger accounts from NCLT. And also in other bigger accounts, because in terms of putting pressure on them and taking legal actions, we could recover good amount in big corporate accounts also because of which the percentage has gone down. And second point is, because the outstanding of the corporate credit has gone up, that also helped in reducing the percentage of NPA as far as the corporate is concerned. It is a double effect.

And on the ECLGS book, what is your outstanding quantum? And have you seen any delinquencies from the book so far?

Ma'am, it is about INR 16,500 crores. Number of accounts is about more than -- it is about INR 5 lakhs, 70,000 accounts. Generally, we treat 1%, 2% will be slippages will be there. And immediately, we'll be taking action on those things. So it is a continuous process, 2%, 1% will be slipping and accordingly, action will be taken. And this amount is included in our current slippages of INR 2,699.

Okay. Okay. Got it. And finally, what share of the loans is [ repo ] linked and similarly on the liability side, if there is anything that is linked to repo or external benchmark?

Liability side, no ma'am. Asset side, yes. We have a book of about roughly maybe around INR 30,000 crores to INR 40,000 crores.

We have a next question from the line of Jai Mundhra. Jai, you can ask. Jai, we cannot hear you. Jai, are you there? I think, we move on to the next question, meanwhile. We have a next question from line of [ Rishikesh ]. [ Rishikesh ], you can ask.

Am I audible?

Yes, you are audible. Please Rishikesh, so Rishikesh.

Yes, sir. Okay. Sir, my first question is regarding a broad outlook on the other income. So would it be fair to say that further income now more or less will be in the similar range?

Other income, it will be growing in the coming quarter also. Whereas Trading income, we presume that it will be at this level only. It will not increase. Fee-based income also, we are going to increase. So put together, I think we are expecting to compensate the loss in the trading income through recovery in return of accounts, through income from other sources and also through interest income. So finally, when we see, there will not be any impact whatever treasury is not giving to the Canara Bank.

Okay. Got it. And my second question, Sir, if I see previously, you had guided for somewhere around lower than 2% credit cost. And recently, just now you mentioned that there will be many provision write-backs and significant recoveries. So do you think this is a very conservative estimate? Like, net of [indiscernible], whatever write-backs we have. So don't you think the provisions can be even lesser than 2%? Maybe would we try to assume around 1.5%, like similar to [ INR 10,000 crores ] provision that you have guided this year. You may see that next year too, likely even lesser than that.

As I said, our philosophy is to provide more and more provisioning so that the balance sheet will be ready for the future. That is why we are projecting that it will be around 2%. But in real sense, it may not be 2%, it will less than that.

Okay. So around INR 10,000 to INR 11,000 for next 1 or 2 years. Is this a fair assumption?

I think I will be in a position to reply after March results.

We have next question from the line of Dixit Doshi. Dixit, you can ask.

Yes. My questions have been answered.

We have our next question from the line of [ Bharat Jain ]. Bharat?

Yes. Congratulations for a good performance. I have a few simple questions like what are our focus on digitalization of banking transactions to -- I mean, do we have any focus approved that 50% or x percentage of our transactions would be digital? So that is something there.

Sir, I request my Executive Director, in charge of digital transactions, Sri Raju, sir, to kindly respond.

Good evening, Jain, sir. We are very much focused around digital transactions. Last year, actually, the -- our digital transaction, so for the same quarter, December quarter, it was around INR 156 crores. But whereas in the same -- the December quarter after 1 year, or the first quarter, the digital transactions or year transactions have increased to INR 246 crores, that means almost 65% of growth in 1 year. This, we could achieve it because of our focused attention on various parameters. That is -- the reason is -- one is, we are very much aggressively marketing and making our product customer-friendly in the mobile app, that's why we could enroll almost 4 million people in the last one year. In the debit card also, we have made it almost 8 million people we are extended the debit card. And in the UPI, we are already touching the INR 2 crore enrollments in the UPI enrollments. That also last one year, we made it almost 80 to 90 lakh fresh enrollments. And in addition to that, we are encouraging semi-urban and rural and urban areas to do the transactions through BHIM QR code. That code in public sector banks, we are the actually pioneer, we can say that now at this moment, so we are actively participating. We are actively canvassing because from the PM SVANidhi [indiscernible] middle-class traders who are all doing the transactions, they have all been extended almost. We did 8 lakh, 80,000 QR codes have been distributed, and we are very much aggressive on that. And actually, the total -- if you look at the branch walk-ins as well as the digital transactions comparisons. Last March, our branch walk-ins for cash withdrawals is around 12%. But whereas in first 9 months, that has come down drastically to 7.75%, and our digital transactions have increased to 91% to 92%. And we want to continue further in the same direction, and we are initiating more and more digital platforms, and we are introducing even digital lending end-to-end straight through process from first April onwards. And many more, we are coming in that with new features.

Okay. Sir, do we have any statistics like what is the percentage of transactions which are happening through digital mode? If you say total out of 100, how many are getting digital [indiscernible]?

That's what I told you, sir. I already shared with you that the branch transactions have been -- now it is a single digit. More than 90% transactions are doing through e-transactions, digital transactions.

That is great, sir. And sir, another question is like as we have seen a successful merger with Syndicate Bank, what is the expectation that number of branches would come down in the coming -- coming year -- the existing branches? And any plans -- any also plans to, like, reach new locations?

Yes, sir. Actually, the last time when it has amalgamated, it was around 10,500 branches were there together. This year, we could -- last year, 150 branches, and this year, almost 750 branches. We have identified and already completed the exercise for closure. Wherever we find it that it is well within the 200, 300 meters we have [ two, two ] branches, those branches have been identified based on the PIN codes and all. That exercise has been completed. And in future also, wherever it is the possibility that because we have -- it's not that we are closing down the branches only, but we are converting many of those branches into a specialized branch. Most -- 16 mid-corporate branches, 33 large corporate branches, there are SME [indiscernible] are there 106. There are 243 [indiscernible]. There are special -- create special focused of the branches we are opening. We are opening -- we will continue to open like that special branches also. But it's not that we are not opening the new branches wherever potential is there. Definitely, we are open for the opening of the new branches, but our closure of the branches will continue in the next year also based on the duplication of the work to minimize the overheads, we are working on that.

To be more precise, sir, about the figures, December '20, we were having 9,870 branches. December 21, it has come down to 9,007 branches that is about 863 branches are closed simultaneously. December '20, we were having specialized branches of [ 625 ]. Now, that number has increased to 766. That is about 140 branches have increased, which are specialized branches, which give a lot of credit to the bank. The net effect, we can say more than 750 branches we have closed. And those [ paths ] will be reflected in the coming quarters which we are saving because of closing unviable branches.

Okay. One more question. Like, any updates on the [ NARC ], which is being setup?

Sir, it is on track. And I think some light we may be seeing by March of this year.

Okay. Could any percentage of NPAs would get affected [ reviewing ] this?

We have identified INR 4,000 crores, which, as and when time comes, we'll be transferring. It is only INR 4,000 crores.

Okay. And finally.

Mr. Bharat, can you move.

Yes, finally, last question, sir. Last question.

Yes, please. Please.

By when do we see Canara Bank as the #2 PSU, and do we look forward to a INR 10,000 crore of bottom line in the coming year?

Sir, let me tell you, this is a strong wish of my staff. So when staff, they themselves have this wish, I think things will become easier. This much I can tell you.

We also, as an investor, have this wish.

Yes, sir. Your blessings are required.

We have our next question from the line of Anand Dama. Anand?

This quarter, we have seen very strong growth on the corporate front. And within which basically, we also had seen very strong growth in the NBFC book. So anything that you can comment about where have we grown in the corporate side? Whether these are short-term loans or these are more of long-term loans that we have given, and what kind of yields are we taking on?

As I said, we are very aggressive in infrastructure HAM projects that is one thing under corporate. Second one is, in Industries also, we have started underwriting the projects. And third one is under Health sector also, we have underwritten most of the projects. And the type of loans, they are basically term loans. And second point is in corporate advances, now, we have changed our strategy. Previously, Canara Bank in a consortium used to have 5%, 3% or 7%. Now, we don't want 3%. Minimum, we want 10% in all the good accounts. So we have shifted our way of thinking. And whenever a proposal comes corporate, which are A rated and above, we are demanding 10% share in the working capital which, ultimately, increases my CASA also. So because of that strategy in corporate, this time, we have shown a good growth. However, under Retail and Agriculture, the last 6, 7 quarters, we continue to show good growth, which is under double digits. This time, under MSME, even though Y-o-Y growth is [ 1.29% ], quarter-on-quarter, we have increased by 4% by catching more of good MSME borrowers. So growth, I can say, it is widespread. And under retail, out of 1,23,000, 70,700 is housing loan, backed by collaterals and mortgages. And there, we are seeing 14.8% growth, which is again possible with the involvement of each and every staff member under verticals, where accountability is there, appreciation is there, and reward is also there. So growth is widespread. We continue to do this. And RAM sector, we maintain a percentage of 56%. Corporate, we maintain a percentage of 44%. That overall guidelines we'll be managing because we don't want to increase too much under [ Corporate ]. So this ratio of 56%, 44% or 55% 45%, this will continue in the future also. Thank you, sir.

So within the NBFCs, where have we [ land ] basically? Is that the micro finance, HFCs or the.

Microfinance doesn't come under NBFC. For our calculation, microfinance, we show it is a separate one. And microfinance, we have sanctioned about INR 2,200 crores and disbursed about INR 1,700 crores, which is guaranteed by the central government.

So what is there in the NBFC book, which has grown in this quarter?

NBFC book, we have grown in all the NBFCs, which are double A rated and above.

Okay. And those are PSUs as well as private, is it?

Yes, yes. But all the growth is as per the terms and conditions of Canara Bank. Because of which you can see, fee-based income, we could garner about INR 1,421 crores, and interest income is also increasing drastically. So since Canara bank, as you said, is going to be a market player in the future, we are ready to underwrite big ticket loans at win-win situation, not at the benefit of the borrower. It should be at the benefit of the bank also. And now, we are sufficiently in a position to dictate the terms in the market and where the customers are very happy. The way in which we give the credit within 7 days. At the most within 10 days, if the ticket size is about INR 1,000 crores. So this is there in the market, and we say yes or no.

Got it. And sir, secondly was the Air India exposure that we had on our books. So any provision reversal we have done during the quarter?

Sir, in Air India, hardly, we had an exposure of INR 200 crores. And the INR 200 crores, they have paid and they have closed the account. We are not having exposure to either Air India or Kingfisher. Canara Bank has not taken.

We have a the next question from the line of Mr. Ashok Ajmera. You can go ahead.

Yes, sir. Congratulations, sir, for yet another quarter of good set of numbers, business crossing over INR [ 17 lakh crores ], [ INR 17.70 ], and I think very soon, you will be next to State Bank of India the way you are going. And it's very encouraging to know that, you know, you have started a very big ticket size loan, taking standalone approach towards large loans. Sir, I have got some small -- some couple of observations and some queries. Number one is SREI, we are left with about, I think, INR 775 crores more to be provided, I think balance book. Are we planning it in the coming quarter -- this current quarter only now, January to March?

Sir, I cannot give a specific answer, but I will give Canara Bank wants to be future-ready and strengthen the balance sheet. This I can tell.

And sir, this SMA-0, what is -- it is about, I think INR 15,000-odd crores, SMA-0. So what is the experience now since one month has gone? What, according to you, something might finally become SMA-2 out of this INR 15,236-some-odd crores?

Sir, SMA-0 is INR 9,000 crores, not INR 14,000 crores, sir.

Sorry, I mean -- Yes, yes.

It includes SMA-1 and SMA-2 also.

Yes, yes, correct, correct.

SMA-0, during COVID time, it is a common thing that they will be paying with a delay of 2 to 3 days. And as on date, we are very comfortable as far as SMA-1, SMA-2 and SMA-0 is concerned, and we are hopeful that we'll be managing at this level going forward because I don't see any stress in any of my corporate accounts, where INR 5 crores and above is there. Even if it is there, I have 2 months' time, I can solve it, if any account slips.

Great to know that. Sir, now a bank like ours, there are 2 things which the bank has some negative legacy. One is that CASA. Our CASA is, though it is growing, but it is still under the normal 40%, 42% or 45%. One bank is having 55%. So some special approach is being adopted for that? And secondly, even the gross NPA, the percentage terms. Generally, every bank would prefer it to be less than 5% gross and less than 1.5% net. So ours is 7.8%. And with this NARCL, INR 4,000 crores going away, I think it will make about point some -- from 0.5% or 0.25% difference in this. So any other approach to reduce the gross NPA numbers in terms of at least percentage?

Sir, 2 questions. One is regarding the reduction in the percentages. And if you see in the last 8 quarters, except one quarter when RBI has given the dispensation moratorium. Otherwise, quarter-on-quarter, we are reducing the NPA percentage in terms of amount and also in terms of percentages. Same thing we are continuing with net NPA also, amount-wise and percentage-wise. And this trend will be continued going forward. And our wishes and our efforts towards that is, we want to have 1 of the best percentages in the industry as far as gross and net is concerned, which we feel we can achieve that. Regarding CASA. When Canara Bank 2 years ago, the CASA percentage was 30%. From 30%, we started growing, and now we have come to 34-plus percentage. And in absolute terms, if you see the CASA amount even in 1 year, it has grown by INR 32,000 crores, and growing INR 32,000 crores. Because if you recollect, 2 years ago, our provision coverage ratio was 70%. Today, it is 83%. At that time, our vertical NPAs are on a higher side. And before 2 years, earlier 4 years, every year, Syndicate Bank and Canara Bank used to make losses. In the last 8 quarters, the trend has changed, and there is a continuous growth. For example, June '20, the net profit, what Canara Bank showed was INR 406 crores. Next quarter, it has increased to INR 444 crores. Next quarter, it has increased to INR 696 crores. Next quarter, it has increased to INR 1,010 crores. Next quarter, it is INR 1,133 crores. Now, it is INR 1,502 crores. If you see the graph, we don't want to go back. We want to go forward only. That is the spirit with which we are working in Canara Bank so that all my investors will make justice to them. Thank you, sir.

And sir, this [indiscernible]. One last question. Okay. I will shift my question to one another question. Sir, NBFC, you have got a very good exposure. And still, I think you are comfortable for good NBFC A+ rated. Sir, what are your views on the real estate? Because now the overall business, real estate is being re-rated by most of the other banks. And this particular sector also has started doing very well, especially in last about 9 months to 1 year. But still, I feel that our bank has still had some reservation on even some good real estate projects also, sir. So what are your views on policy on this, sir?

Sir, our policy is, since the last 4, 5 years, when the experience was bad, when RERA was not in full force, it was cautious approach. Now RERA has stabilized, and even underwriting standards have increased in the big public sector banks like Canara Bank. Apart from that, to fall back in real estate, we take some comfort from the promoter. That is point number one. Second one is to have 15% to 16% housing loan growth, I have to sanction real estate projects, especially real estate housing projects. It is interlinked. Once we sanction real estate housing projects, I will have fast rate of refusal where I can finance housing loan and I can close my real estate loan. So now we are cautiously aggressive in sanctioning real estate projects, and we are sanctioning.

Okay, sir. On the treasury front, there is some pressure, sir, on the income now because of the hardening of the interest rate and -- I mean, the signals and message. So how are we going to -- I mean, planning to offset? Because treasury all along has given -- except this quarter, of course, it was still under pressure. What do you see in the future? One is that trading income and other one is the investment returns from the treasury where major allocation of the asset is there, sir.

Correct. Let me talk about the existing figures. With an average loan book of about INR 7 trillion, I can calculate at a yield of about 7.23% or 7.25% the amount of interest income that I -- going to earn, which will be very significant. And we are projecting a growth of 10% plus as far as credit is concerned, since we have already achieved 9.28%, our next step is 10%. We are confident of doing that. With this, whatever loss I incur in the sale of securities by the treasury, that I will compensate with interest income, point number one. Point number two, as I said, recovery in return of accounts, we are targeting INR 1,100 crores. That is going to give me a very good income. So business is always dynamic. If one channel reduces the income to the bank, bank should immediately shift to other channels from where they can earn the money that is a strategy we have adopted, and we are successful, and we'll continue to be successful. But a lot of efforts and a lot of research is being put into before we take a policy decision. Thank you, sir.

Congratulations.

We have our next question from the line of Mr. Aditya Singhania. Aditya go ahead.

Congratulations, sir, for excellent results.

Thank you very much, Singhania. Thank you very much.

So I have 2 questions, both are somewhat accounting questions. So one is, so you have made INR 2,700 crores as provisions for loans, loan loss provision. And the write-offs are around INR 1,300 crores. And the provision -- outstanding provision coverage has not increased in absolute terms. So I was just curious where is the balance INR 1,300-odd crores?

Ramachandra-ji, please?

Sir, the INR 2,946 for the provision -- the total provision, INR 2,705 crores is the -- towards the NPA provision we have given. See, in the total amount, INR 1,355 crores, we have taken it for the one-time family -- one-time extraordinary income. So that is why, towards the one-time extraordinary [ item ] towards the family pension. So to the extent to that, that the PCR has not gone up. Otherwise, whatever the multiple provision we made towards the loan has taken towards the PCR.

Sorry. So you're saying that INR 2,705 includes the INR 1,300 crores for pension?

No. It [ disposed ] that.

So that's what I'm trying to understand. So that if the loan loss provision was INR 2,700 crores, if there was no write-off, the outstanding provision coverage should have gone up by the same amount, right? [indiscernible] was INR 3,699 one. If there was no provision, it should have gone up to [ 39696 ], but the closing figure of outstanding provisions is [ INR 37074 ], like, that is a difference of [ INR 2622 crores ], but you have mentioned write-offs as INR 1304 crores. So I'm just trying to understand what is the gap? Where is the balance [ INR 1318 ] crores?

Sir, the provisions that -- the write-off is INR 1,300 crores, what Mr. Ramchandra was telling, that this provision that we have made for that family pension. That has not come as a part of the provision coverage ratio, and that is only making this difference, sir.

But you're saying INR 2,700 crores does not include the family provisions, right?

Yes. Yes.

No. It does not include [ revenue path ]. And of course, there is a write-off [ fee ] offset, to the extent we have written off a part of the loan that is being offset.

So that's what I'm trying to understand, sir, that if -- if the.

Sir, our Majumdar, sir, will be mailing you in detail.

Okay, okay. So the second question was on the accounting change that you did where you have mentioned in your notes to accounts that about INR 400-odd crores, INR 436 crores was the increase in interest income due to the change in accounting policy, and INR 342 crores was the increase in gross NPA. So in which [ head ] has this been accounted for in gross NPA?

Sir, existing -- existing or head only, it has been adjusted.

Debit.

Yes, exactly. It is existing, sir, what it was all other -- almost all our peer banks was following the process, what we have done now. So we have aligned ourselves in line with the industry, which we were not doing so far. So it is for nothing, but just to align ourselves with the industry present industry.

I understand that. I'm just trying to understand where this INR 342 crores is gone in the NPA? Is it debits in existing NPA accounts, or is it fresh slippages?

No, sir. These are all existing NPA accounts.

And in the.

These are all existing accounts.

In the original treatment, your income would have been lower by INR 436 and your outstanding gross NPA would have been lower by INR 342.

And provision also, corresponding provision also.

And what will be the balance -- what will be the balance, INR 90-odd crores, sir?

Sir, there is -- No, no. This is INR 436 is the interest there -- this -- another -- because some charges are there. Apart from interest, there are charges. So the charges, it has gone into the charges other than interest.

We have the next question from the line of Jai Mundhra. Jai?

Yes. Am I audible now, sir?

Yes, please, Jai, you are clearly audible. Please.

Yes, great, sir. Congratulations on good quarter, sir. I have a few questions. One is on capital, right? So you have shown that CET 1 has increased in absolute amount by INR 1,700 or INR 1,800 crores. Does this include PAT for this quarter?

Yes. It includes PAT for the quarterly profits.

Sure. And there looks to -- the increase is slightly higher than PAT. I mean, PAT is like INR 1,500 crores and the Q-o-Q increase looks like INR 1,800 crores. Is it also the DTA unwinding, which is also happening here?

DTA unwinding, [indiscernible].

Yes, it is a small amount, yes.

Sir, that DTA unwinding is a very small amount, insignificant amount this time. Around INR 100 crore, INR 150 crores.

Okay Sure. And second, sir, do we have any erstwhile SDR or 525 cases also, which are standard?

Very negligible, it is very negligible.

We have about 4, 5 accounts, which are still there. So that investment part is still continuing, although now some other restructurings have been done.

Okay, understood. Understood. And just on NBFC, sir, if I look at this number, like over INR 1 lakh crore, so on -- on -- as a percentage of loans, this is now 14.5%. So NBFC as a segment, and even if you are not including MFI, this is like 14.5% of gross loans. So is there any internal threshold? I mean, what is the internal threshold that beyond which you would not be growing this segment as a percentage of total loan book?

Our internal threshold is when you take exposure to double A and triple A, there is liberty to take it. Less than that already, we have a threshold not to take.

No. As a sectoral cap also, sir. So you -- NBFC, even if it is a triple A, you would have some sectoral cap also, right?

Internally, we are permitted to go up to 16%.

Okay. Understood, sir. And the last question, sir, from my side, is in ECLGS, right. If I look at this quarter ECLGS number, and if I compare that with last quarter ECLGS number, it looks like [ 5,000 ] plus increase in third quarter. So is that number right? Or what has happened in ECLGS in this quarter? Why there is a sudden spike?

This is as per the new norms that has come up, ECLGS 2. Under that, we have given, [ 5,000 ] is the correct number that we have given.

Okay. So you have topped up ECLGS 1.0 with additional 10%?

Yes. That was -- yes, exactly. That was 10%, 20%, so now it has gone up to 40% in certain cases. So we have done that.

Right. Understood. And sorry, if I may ask, sir, on your Slide 45, which gives some guidance. I mean, it looks like you have not revised despite having, let us say, GNPA is now lower than your guided range for March '22, you are already below that. So just to go back to -- I mean.

This -- this -- Sir, this guidance is when we have given at the beginning of the financial year, and some modifications were there subsequently. But our philosophy is this will be the minimum, and we'll be doing more than this what we are giving the guidance. It cannot fall below this guidance.

Right. No, just to understand, sir, this gross NPA number. I mean, as of now, it looks like it will increase because you are actually 7.8% and you have reported 7.9% as your sort of?

Yes, in the beginning, in my opening remarks, I said our endeavor will be whatever percentages we are having as on 31st December 2021. As on 31st March, it will be better. So gross NPA, 7.8%, we don't expect it will grow. Rather, we expect that it will come down. However, the guidance which we have given earlier, we don't want to change it so that we'll be doing what guidance we have given and what we have achieved. And there will be -- it will be very attractive.

A little time for the last question.

No, you close it.

Yes, yes. So before -- so before I hand over the call to Mr. Prabhakar, sir, for his closing remarks, thank you, Prabhakar, sir, and the entire Canara Bank team for giving Antique the opportunity to host you. We look forward to do the same in the future as well. Over to you, Prabhakar, sir, for your closing remarks.

Sorry, if the COVID situation improves, next time, we will have the investors meet in person. Maybe in Mumbai, maybe in Delhi or maybe in Bangalore as per the convenience of the investors. So that is one wish which we have, to interact personally with our investors and to see them and let them also see us how we are running this bank. And I think I should thank all the investors for the support they're giving because of which, quarter-on-quarter, we are giving results which are more than the market expectations and our wish is to continue this. Thank you, sir.

Thank you, everyone, for logging in. Goodbye. Have a good evening. Thank you.

Thank you.