Canara Bank (CANBK) Earnings Call Transcript & Summary

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; Shri Debashish Mukherjee Mokari, ED; Mr. A. Manimekhalai. Edi, Shikatani Raju, Ali, -- she Bridge Mohan, Sharma, ED and other team members. Without much ado, I will -- I would hand over the call to Mr. Rawaka for his 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 reinforced tuners 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 RBA 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 aware there was a big NPA account rate because of which,the NPA figure has increased. And last quarter, we did 50% provision for that account where the outstanding is about INR 3,100 crores plus. This quarter, what we did is instead of 50%, we have increased the portion to 75%. That is about INR 2,400-plus crores. We parked as provision for agonist say account to take care about the future losses and 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 vision made for this [indiscernible] account, which is one of the bigger accounts. This time, Kantar Bank has focused on growth in business, both the 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 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 3.4 trillion and bulk deposits, we 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 directed 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 the situation during the current quarter also by recovering about INR 2,784 crores as cash recovery and about INR 1,100 crores has upgradation. And the percentages -- gross NPA from 8.428 to 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 [indiscernible] 84%. Then capital. With all your support, this financial year, we have raised INR 2,500 crores QIP successfully and also AT1 bonds and also tie 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. CET1, 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 that 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 and cargo 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 detection, 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 when put together SMA-0, 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, NP, growth in credit, growth in deposits and reduction in SMA and also increasing the capital, we could make Kendra Bank balance sheet ready for the future. Thank you very much Thank you very much.

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

Yes, please?

Also 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 NBS pics today, they are A and above. At the same time, we are getting good deals 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.

Right. So along with these NBFCs, let me bring to your notice, the credit growth that has happened in other parameters also. For example, as I said, retail you have 10% growth, housing 14% growth. agriculture, 12% growth. Corporate also 10% out of which NPNBFCis 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 NHAI. And there are milestones after completion of those only bank will be disbursing the amount. So safety is good. And the second strategy is Kendra 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 Kendra Bank bargaining power in terms of interest rate and also in terms of crossing 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 NPLs also on a calculated basis. So it is a mixture of this thing. But all the NBFCs and A and above.

Got it. 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, Kendra Bank was having exposure to are India to the extent of only INR 200 crores and total INR 200 crores we have recovered.

Got it. Sir, and in terms of future?

Future, yes, as you see, Kendra Bank PCR is more than 83%. Whatever recoveries are going to happen, along with the recoveries, there will be significant amount of prisons 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 mine.

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, steam 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 10 and CD20 -- but also, sir, you have on MSME restructuring pertained 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 restructuring. So what do you be the total amount?

Correct. Now let me talk about the fresh repage 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 nonfund limits have been devolved. 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 2,000 crores relates to agriculture, MSME and retail, proportionately, maybe 5% disasters that one. And regarding the restructure, RBA has said that there is a restructuring package one. In that, we have clearly given the INR 5,000 crores, which is restrictive. Restructured package 2. The RBA said that you have to view the restructuring package and the resolution 2 number and amount. So we have given the number as INR 3 lakhs, amount is INR 14,198. But the beauty of this restructuring in Canara Bank is because of the continuous follow-up and handholding and timely giving timely the 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 freeze 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.

No, sir. That figure is on that date. Now the figure has gone down because there is recovery, there are closure of accounts. So -- and to 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 to INR 21,000 crores, not more than that.

INR 20,258.

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 will 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 piece. Any other contingent we sort of COVID go ...

Provision, which is not included in the PCR, there are 3 things. One is corrosion for standard assets. Another one is provision for RP. And the third one is, as you said, the provision which we do in a specific cases.

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

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

We have a next question from the line of Mona Khetan

Am I audible.

Please go ahead.

Congratulations on a good set of numbers. on this -- so we have seen rationalization of employee expenses in FY '22. So how do we look at EnPro 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 Kendra Bank at a very greater speed. In the last 3 quarters, about INR 256 crore transactions have happened through distantly. 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.

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

Need-based recruitment we'll 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 deployment of the staff and then proper rewarding of this stuff. These things we brought in, 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. Ramchandra is there. Ramchandra, please explain.

This time, we have made a onetime provision towards the family pension of INR 1,355 crores. Last year, when we are preparing the reserve we made an air 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 an verse.

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

Yes. Correct. Primary provision you have taken as an extraordinary item. Last quarter, the provision made towards the family pension included in under the point below other provision. That INR 100 crores since we have made as an external data, this INR 400 crores we have reversed.

Sure. Got it. And also, if I look at your corporate sequential there is a decline of INR 1,000 crores in the GMP 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 lakh 70,000 crores -- 70,000 accounts -- 570,000 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 currency pages of 2,699.

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

Liability side, no. As I said, yes, we have a book Avvataroughly maybe around INR 30,000 crore to INR 40,000 crores.

We have a next question line of Jay Mundra Jay, you can ask. I think we move on to our next question, meanwhile. We have a next question line of Rishikesh.

Am I audible?

Yes. You are audible.

Great. Okay. Sir, my first question is regarding your 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 to 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 centric.

Okay. Got it. And my second question is, 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 recovery. So do you think this is a very conservative estimate, like net of the whatever write-backs we have. So don't you think the provisions can be even lesser than 2%? Maybe would it be try to assume around 1.5% like similar to 10k provision that we have guided this year, we may see that next year, too, likely even lesser than that?

As we said, our philosophy is to provide more and more protein 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 be less than that.

Okay. So around 10 to 11k 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 is.

Yes. My questions have been answered.

We have a next question from the line of Bharrat Jain, Bharrat.

Congratulations for a good performance. I have 2 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.

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

Good evening, [indiscernible] . We are very much focused on digital transactions. Last year, actually, 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, the per quarter, the digital transactions or transactions have increased it INR 246 crores. That means almost 65% of growth in 1 year. This, we could achieve it because of our focus of 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 1 year. The debit card also, we have made it almost 8 million people who have extended the debit card. And in the UPI, we are already touching the INR 2 crore enrollments in the UPI enrollments. That also last 1 year, we made it almost 80 to INR 9 million of fresh enrollments. And in addition to that, we are increasing semi-urban and rural and urban areas to do the transactions through BeamQRcode. That code in public sector banks we are actually pointed, we can say that now at this moment. So we are actively participating. We are actually canvasing because from the PM [indiscernible] so with middle-class traders who are doing the transactions. They've all been extended almost, we did 880,000 fewer ports 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 transaction comparisons, last March, our branch working 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 [indiscernible] how many are getting deep?

I already shared with you that the branch transactions have been now it is a single digit. -- more than 90% transactions are doing through transactions, digital transactions.

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

Yes, sir. Actually, the last time when it has a committed, it was around 4,500. 10,500 branches were there together. This year, we could -- last year, 150 branches. And this year, almost 750 branches. We are identified and already completed the exercise for closure. Wherever we find it that it is well within the 200, 300 meters, we have 22 branches. Those branches have been identified based on the PIN cores and all. That access has been completed. And in future also, wherever it is the possibility that because we are -- it's not that we are closing down the branches only, but we are converting many of those branches into a specialized branches. Most to 16 midcorporate branches, 33 large corporate branches, there are -- SME slips are there 106. There are 243 [indiscernible] there. There are special create -- special focus of the branches we are opening. We are opening -- we will continue to open in 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 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 specialist banks of 627. 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 costs will be reflected in the coming quarters, which we are saving because of closing unviable branches.

Okay. Yes. One more question. Like any updates on the NAIC, which is being set up?

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

Okay. Would any percentage of NPAs would get affected this?

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

Okay. And finally, Lara, can you move ...

Yes. Finally, last please SP08 By when do we see Canbank as the #2 PSU and do we look forward to a 10,000 crore of bottom line in the coming years?

Sir, let me tell you, this is a strong wish shaky staff. So when staff themselves how this wish I think things will become easier , this much I can tell.

We also, as an investor have the wish.

Yes, 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 basically -- we also have 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 taking on it?

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 the 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 in the last 6,7 quarters 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 123,000, 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 that overall guidelines will be managing because we don't want to increase too much on the cartons. So this ratio of 56:24 are 55:45. This will continue in the future also.

So within the NBFCs, where have we lend basically, these are the micro finance, HFCs or the ...

See, microfinance doesn't come under NBFC. For our calculation, microfinance, we show it as a separate one. And microfinance, we have signed 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?

Our NBFC book, we have grown in all the NBFCs, which are doubled and above.

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

Yes, yes, yes. But all the growth is as per the terms and conditions of Kendra Bank. Because of parts you can see, fee-based income, we could garner about INR 1,421 crores. And interest income is also increasing drastically. So since back, 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 do 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, no.

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 20 crores -- and the INR 200 crores, they have paid and they close the account. We are not having exposure to either Air India or King future. Kendra Bank has not taken.

We have to launch [indiscernible] Our next question from the line of Mr. Ashok Ajmera

Congratulations, sir, for yet another quarter of good numbers and business ...

Sir, we lost you.

Over INR 7 lakh crores, INR 17.7 crores. And I think very soon, you will be next to State Bank of India, the way you are doing. And it's very encouraging to know that you have started very big ticket size loan, taking stand alone approach towards large loans. Sir, I have got some small -- some couple of observations and some queries. Number one is that in say, we are left with about, I think, INR 775 crores more to be provided. I think the balanced growth . 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 Kendra 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. So what is the experience now since 1 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.

Includes SMA 1 ME2 also. SP00 Yes, yes, correct. SMA during cobetime, 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 were INR 5 crores and above is there. Even if it is there, I have 2 months' time, I can follow 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 crore going away, I think it will make about 0.5% or 0.5% 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 one 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 Centra 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 year side. And before 2 years, earlier 4 years, every year Syndicate Bank and Kendra bank used to make classes. In the last 8 quarters, the trend has changed, and there is a continuous growth. For example, June 20, the net profit, what Kendra Bank owned 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 No, 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.

And sir, this 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 plus rated. Sir, what are your views on the real estate because now the overall business, real estate is being rerated 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 over bank has still had some reservation on even some good real estate projects also, sir. So what are your views and policy on this?

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 I sanction real estate housing projects, I will have faster 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. Thank you. 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 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 INR 7.23 trillion, INR 7.25 trillion, 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, banks 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 will continue to be successful. But a lot of efforts and a lot of research is being put into before we take a policy decision.

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

Congratulations of our excellent results. So I had 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, please?

The INR 2,946 the provision being the total project, INR 2,705 crores is towards the NPA provision we have given. So in total amount, INR 1,355 crores we have taken it for the onetime primary onetime extraordinary income. So that is -- that was a onetime extra item for the primary pension. So to the extent that, that the PCR has not gone up. Otherwise, whatever approach we made towards the loan has taken towards the PCR.

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

No. [indiscernible] does 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? Was INR 3,699 crores. If there was no provision, it would have gone up to INR 396 crores, but the closing figure of outstanding provision is INR 3,707, that is a difference of INR 26,022 crores, . But you have mentioned write-offs at INR 13,004 crores. So I'm just trying to understand what is the gap. Where is the balance INR 1,318 crores?

Sir, the provisions that the write-off is INR 1,300 crores, what Mr. Ramachandra 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

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 is 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 [indiscernible]

Our Majumdar sir will be mailing you SP00 In detail.

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.

Existing head only, it has been adjusted 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. 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 in.

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

No, sir. These are all existing NPA accounts.

In the original treatment, your income would have been lower by INR 436 crores and your outstanding gross NPA would have been lower by INR 343 crores.

And provision also corresponding provision also. [indiscernible]

What would be the balance, INR 90-odd crores, sir? About the expenses -- sir, there is -- No, no. This is INR 436 crores is the interest, this another -- because some charges are there. Apart from interest, there are charges -- so the charges, it has gone into the charges.

We have the next question from the line of Jai.

Am I audible now, sir?

Yes, please, Jay, you are clearly audible.

Congratulations on good quarter, sir, I have a few questions. One is on capital, right? So you have shown that CET1 has increased in absolute amount by INR 170 crores 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 PET. I mean, PAT is like INR 1,500 crores and the POP increase looks like INR 1,800 crores. So is it also the DTA unwinding, which is also happening here?

DTA Unwinding. Yes, it is a small amount,yes. Sir, that DTA unwinding is a very small amount in significant amount is tech, around INR 100 crores, 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.

Understood. Understood. And just on NBFC, sir, if I look at this number, like over INR 1 lakh crore, so 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 AA and AAA there is liberty to take it. Less than that already we have a threshold not to take.

As a sectoral cap also, sir. So you -- NBFC, even if it is a AAA 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 INR 5,000 crore is the correct number that we have given.

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

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. Just to go back to -- I mean...

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 will 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 ...

In the beginning, in my opening remarks, I said our endeavor will be whatever percentages we are having as on December 31, 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.

Did you time to the last question.

Close it.

Yes. So before I hand over the call to Mr. Prabhakar sir for closing remarks, thank you sir. an entire back team for giving Antique opportunity to host you. We look forward to the same in the future as well. Over to you, Prabhakar, for your closing remarks.

Sir, if the coverage situation improves, next time, we will have the investors meet in person, maybe in Mumbai, maybe in Delhi or maybe in Bengaluru as per the convenience of the investors. So that is 3 wish which we have to interact personally with our investors and to see them and let the also see us how we are running this bank. And I think I should thank all the investors or 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 moving in. Goodbye. Have a good evening. Thank you.