Canara Bank Ltd Q1 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sri Karthik Velamakanni - Investec - Analyst : I had a couple of questions. The first 1 was with regards to e-Syndicate's Q4 numbers. As you have reported in your presentation, there's a significant loss that you have taken. What sort of normalization have you assumed in that provisioning requirements and a decrease to the net worth and CET that has happened during the quarter?

Question: Sri Karthik Velamakanni - Investec - Analyst : Understood, sir. Sir, my second question is with regards to the moratorium disclosure you made. I guess in your press conference yesterday, you suggested your corporate moratorium number is lower compared to all the other segments. Could you throw a little bit more color on which are corporates who have taken moratorium 2.0? Are these like really good AAA corporates? Or are these like very weak corporates who have taken moratorium?

Question: Sri Karthik Velamakanni - Investec - Analyst : Got it, sir. And just a last clarification. You mentioned you've uploaded it on your website. It's available for all of us to see?

Question: Deepak Agrawal - AXIS Asset Management Company Limited - Analyst : I wanted to understand your view yesterday, RBI came out with the circular regarding current accounts. So how should we read it? Is it that it will go in favor of large banks, and midsized banks will struggle in terms of a large part of that current account money going to the larger banks?

Question: Deepak Agrawal - AXIS Asset Management Company Limited - Analyst : And sir, do you believe for -- obviously, you are a much larger bank, so you're staring to benefit because you will be more than 10% of the system-level exposure of the large corporates.

Question: Deepak Agrawal - AXIS Asset Management Company Limited - Analyst : Sir, but say, in the smaller accounts, there, less than 10%, your ability to get business from those corporates in terms of, one, obviously, is a balance, and second is related to ForEx and treasury and all. Does that go down for you in those accounts where you are not a dominant lender?

Question: Mahrukh Adajania - Elara Capital - Analyst : So my question was also related to current accounting. I did hear your response to the previous question. But so basically, there's a lot of feedback coming across from various participants. I would like to know from someone as experienced as you, sir. Basically, was it the problem that the State Bank is giving a lot of cash in, but the private banks were kind of taking away the cream of business, was that the issue? Or was it like a general sector-specific issue because what is coming through as feedback? Is that probably the State Banks we had big exposures to the borrowers in the form of cash credit for the private banks for taking away the cream of the business. And even in terms of NPLs, receivables and account was about to default. The private bank would actually appropriate the cash flows earlier than State Bank. So was that the issue? Or was it your general sector-specific issues without any segment buyers like private versus state?

Question: Mahrukh Adajania - Elara Capital - Analyst : Got it, sir. Sir, my other question is on onetime restructuring. I know it is too early, but what would be a broad policy around it as in that do you see a lot being restructured because in general, people are scared of the word restructuring, right? Because in the past, a lot of restructured loans have paid. So what is your view? And how would you view it for your own loan?

Question: Mahrukh Adajania - Elara Capital - Analyst : Got it, sir. Got it. But sir, sir, would you be in favor of doing a lot of retail restructuring corporate? I understand that all the large corporate accounts would already be restructured, your corporate moratorium is not very high. But would you be more inclined to do a lot of retail restructuring? Or how do you view your current moratorium in terms of restructuring? Do you think a lot of them would be eligible for restructuring in the retail segment?

Question: Mahrukh Adajania - Elara Capital - Analyst : Got it, sir. And sir, just 1 last question then on the MSME portfolio, on the loans restructured, do you have any data on how much has slipped?

Question: Mahrukh Adajania - Elara Capital - Analyst : Got it, sir. Sir, in MSME, I was just asking more about MSME, that what would be -- what of the restructured MSME loans in the past, how many would have slipped?

Question: Ravi Singh - HSBC - Analyst : Sir, my question is on this new resolution window which RBI announced yesterday. So for that, there is a provisioning requirement of 10% on the residual credit, residual debt. But whatever the sacrifice between existing debt and residual debt? Do you have clarity, I mean, how will that have provided, will has to be immediately provided? Or could that be spread over some time?

Question: Ravi Singh - HSBC - Analyst : Sir, given that the guiding guidelines are from the June last year notification from the RBI on the resolution framework. Under that framework, was any sacrifice on the debt needed to be provided immediately? Or were other options available?

Question: Ravi Singh - HSBC - Analyst : Okay. Okay. And sir, just last question. Based upon your understanding of borrowers in MSME, corporate and retail who are getting impacted by COVID related impact on their income levels, do you think there could be significant gap in the sustainable debt versus the debt which they have right now? Or do you think the impact is temporary and with some rescheduling, NPV loss may not be very large?

Question: Abhijeet Sakhare - Kotak Securities (Institutional Equities) - Analyst : Couple of clarifications on the moratorium number to start with. This is as of June end, right? And fair to assume that these many loans have not repaid us anything during the tenure of the moratorium, has it?

Question: Abhijeet Sakhare - Kotak Securities (Institutional Equities) - Analyst : Sorry, just to clarify this -- on this, ma'am. So INR 120,000 crores worth of book is not prepaying as of (inaudible)?

Question: Abhijeet Sakhare - Kotak Securities (Institutional Equities) - Analyst : Got it. Second question is what would be the expected aging related provisions for the rest of the year on the current stock of [NPAs]?

Question: Abhijeet Sakhare - Kotak Securities (Institutional Equities) - Analyst : Okay. And the last clarification is trying to reconcile the net worth from the opening balance sheet to June end number. It looks like there is a difference of about INR 850-odd crores, if I compare the opening balance sheet and the June end numbers. So the opening balance sheet net worth was about INR [51,400] crores, and June end is about INR 52,700 crores. The difference is INR 850 crores more than the net profit for the quarter. Anything that we're missing here?

Question: Anirvan Sarkar - Principal Asset Management Pvt. Ltd. - Analyst : Just 1 question for my understanding. Just wanted to know if securitization transactions could be allowed to be restructured under this?

Question: Anirvan Sarkar - Principal Asset Management Pvt. Ltd. - Analyst : Sure, sir. And also, just adding on to that, I mean based on your initial reading of it, I get it that loan pool buyouts will definitely -- should be allowed provided the additional criteria. But about PTCs, for example, if it's restricted only to banks. So let's say there are no mutual fund participants in a PTC, so there is no question of SEBI approval or anything. So if it's stated only to banks, should PTCs be -- should PTCs be eligible also that just understanding, not just... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 5:30AM, CNBK.NS - Q1 2021 Canara Bank Ltd Earnings Call

Question: Mahrukh Adajania - Elara Capital - Analyst : Sir, I just had 1 regulated clarification I required that in terms of, again, this current accounting, was there an RBI norm earlier that you cannot open a current account without NOC. Was there any such norms of other lenders or any such thing?

Question: Mahrukh Adajania - Elara Capital - Analyst : Okay. Okay. But it was not probably being strictly followed?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir. I had a couple of questions. What are the plans for Can Fin Homes?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. So in case of your wish list, will you do a rights issue? Or will you do a QIP? Because looking at assets under management and the market performance of Can Fin Homes, why won't you consider a rights issue favoring the shareholders at the attractive price, which shows off the capital and shareholders are not diluted?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Going to equity raising for nongovernment shareholders in Canara Bank, why would we not consider that looking at the performance? Reward the shareholders patients for losing value over a period of last 2, 3 years. But now time has come where we can raise equity and make it attractive, whereby at least that 24% of shareholders who are non government holders. Government holding goes below 75% and it's at a price which is attractive and shows up our capital.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Now sir, looking at NCLT, what's your estimate for current year in terms of recovery?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir, where do you see our NIM going forward?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : The same as what you appeared on television and said. Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 5:30AM, CNBK.NS - Q1 2021 Canara Bank Ltd Earnings Call

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Now sir, where CASA is concerned, what would be a wish list? And where do you stand today?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Where do you see your gross NPA, net NPA by the year-end? And what is the growth estimate as per you in corporate book and retail book?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir. Second thing is, where do you see -- as I can understand from your retail credit, your loan growth Syndicate Bank has not performed well in retail, whereas Canara has a reasonable share, is that assumption, right, looking at the CASA numbers and your case numbers?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : No, I understand that. So how are we benefiting or utilizing the strength of Syndicate Bank CASA, which is higher than ours, on cross selling, housing, vehicle and education and personal loans are specifically as specified.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : What is the loan book on gold, sir? Sorry, I missed out in the presentation?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : So this would be agriculture connected or stand-alone leasing? Is it more related to agriculture, right?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : And what pricing are we giving these loans now? .

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Secondly, yesterday, RBI had some change in rules where gold lending is concerned. On how much are we likely to do in LTV? And what is the estimated growth now going forward on this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 5:30AM, CNBK.NS - Q1 2021 Canara Bank Ltd Earnings Call

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Sir, second thing, smaller questions, more as your outlook on your trading book and outstanding on Jan-Dhan, what kind of losses are you estimating on Jan-Dhan?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : And the gold disbursement, which we have done through the weaker section and the government scheme, what kind of book is outstanding? And what kind of loans are under NPA in that?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. And second thing, do you -- I asked you on the last quarter results also the digital initiative and the spend you had spelt out, are we ahead of the reality because as far as the rate of future digital is concerned? And how are we focusing on certain states where you have a larger market share as for my understanding and strength to grow our bank on a higher scale than where we are today?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir, secondly, you hired a new CEO (inaudible), who is an excellent person with the capital markets. Known name. What's the plan on Canara Robeco? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 5:30AM, CNBK.NS - Q1 2021 Canara Bank Ltd Earnings Call

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Any highlights there?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Secondly, only on trading book, you didn't give me any guidance.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : No, I'm not talking about equity. I'm talking about the treasury business.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : What's your outlook for the year on the trading gains? That's what I meant. Looking at the current quarter, where do you see the year -- for the next 3 quarters? That is the current quarter the following 2 quarters.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : So would you consider equity first Tier 1 bonds (inaudible)?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : What size, sir?