Canara Bank Ltd Q4 2024 Earnings Call Transcript

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

Question: Mahrukh Adajania - Nuvama Wealth Management Limited - Analyst : So sir, I have a couple of questions. My first question is on your guidance. That relative to what you have achieved in FY24 on credit growth, your credit growth guidance is slightly softer for next year, and everyone is quite bullish for the next few years, in terms of loan growth in retail and corporate. And then even on margins, your guidance of 290, that's like 17 basis points lower than the fourth quarter exit rate, right? So these are some questions on the guidance portion. And then I have a question on the new RBI draft circular, first your comments. And then companies like L&T Finance, REC have actually quantified the impact from the draft circular based on the initial estimates. Sir, if you could give any --

Question: Mahrukh Adajania - Nuvama Wealth Management Limited - Analyst : Hello, thank you, sir. Just what is your marginal cost of deposits, incremental cost of deposits?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Hi. Just a few clarifications. So firstly, when I look at your CRAR balances, it was up 30% -- over 30% this quarter. So what exactly has driven this higher?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Got it. And secondly, on the operating expenses front. So what led to the sharp rise in other effects? And what sort of pension provisions have been made this quarter? And given that there was retrospective impact of wage hike this year, what sort of normalized employee expense we can expect in FY25?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Got it. And just finally, what's the outstanding standard provisions on our books? And what is the PCR we hold against the restructured book?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Okay. And what sort of provisions do we hold against the INR12,000 crores of standard assets?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : So say around 10% or thereabouts?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Okay. And other than the general provisions of 40 bps, we may not be holding any other excess standard provisions. Is that a fair understanding?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Okay. But that was a slipped account. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:30AM, CNBK.NS - Q4 2024 Canara Bank Ltd Earnings Call

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : This is INR1,800 crores is the standard asset provisioning.

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Okay. And this excludes the restructured book, the minimum requirements of restructured book?

Question: Mona Khetan - Dolat Capital Market Pvt. Ltd. - Analyst : Got it, sir. And if I could just squeeze in one last question. So on the recoveries front. We have seen, when it comes to recovery from written-off accounts, we have seen very strong numbers at about INR5,900 crores this year if I take the full year -- so -- and this constitutes a very large part of your overall profitability at around 40%. So what would be the guidance here on? What sort of -- because -- I mean the pool may be coming down, et cetera. So what will be the guidance on this front?

Question: Rakesh Kumar - - Analyst : Sir, a couple of questions I have. So firstly, like we have a total gross NPA and written-off pool of 11.6% of total loan book. So what is the total unrealized interest income that we have on the book?

Question: Rakesh Kumar - - Analyst : Unrecovered unrealized interest income on the gross NPA and the technical --

Question: Rakesh Kumar - - Analyst : So for this quarter, sir, this quarter, the interest income that we have accrued, what would be that number, sir, from NPA recovery and TW recovery?

Question: Rakesh Kumar - - Analyst : Correct, sir. No sir, interest income part, sir, interest income part, that we have accrued this quarter sir. How much that would -- that number would be?

Question: Rakesh Kumar - - Analyst : And sir --

Question: Rakesh Kumar - - Analyst : Yeah, sir, nonperforming asset and the technically written-off loan that we have recovered this quarter.

Question: Rakesh Kumar - - Analyst : Great, sir. Sir, on the other OpEx, I would like to come to that number again. That number has gone up by around INR600 crores-odd this quarter. So what is the incremental number here in that other OpEx if you can share?

Question: Rakesh Kumar - - Analyst : Sir, just 1 last question, sir. Our non-retail term deposit --

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Sir, in your opening remarks, you mentioned that you are still studying the RBI new circular on project under implementation. But out of your infra book, you would have an idea as to how much of the loans are under DCCU as of now, maybe within the infra book of INR129,000 crores?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Understood. Okay. Sir, and on April 1, there was a new RBI regulation on reclassification of investment portfolio. You must have redrawn the balance sheet as on April 1. Was there any accretion to CET1 or AFS reserve or general reserve out of that exercise? And if you can quantify that?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Point well taken sir, INR1,400 crores is a decent amount. It's just that it is a combination of both AFS reserves and general reserves, right?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : No, sir, just I wanted to check, is this the reevaluation of both HTM as well as AFS or only the AFS?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : And last one, if you can give the breakup of slippages during the quarter and the loan breakup -- slippages breakup and breakup of loans.

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : And breakup of loan book sir, by benchmark by EBLR, MCLR, fixed rate?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : If you permit, I can ask one more question.

Question: Ashok Ajmera - - Analyst : Sir, yes, definitely, sir, the profitability of the bank has improved and it is one of the best quarter as far the net profit is concerned. Having said that, sir, I have got, again, a question on our credit growth. Sir, if you look at this current quarter, I mean, the last quarter, the credit growth is -- net credit growth is only INR6,717 crores in the domestic book, which is just 0.75%. So overall, you said you set a target of 10% and you achieved 11%. But going forward, how are we going to -- if in a quarter, the credit growth, and that is also in the March quarter itself, if it is only 0.75%. So how can we expect the credit growth to come in, in the coming quarter? So does it mean that a big chunk of loan has been repaid and a fresh loan -- ?

Question: Ashok Ajmera - - Analyst : Yeah, definitely sir.

Question: Ashok Ajmera - - Analyst : Yes, sir.

Question: Ashok Ajmera - - Analyst : That's great, sir. Sir, you said that the additional provision over and above the IRAC norms is INR1,800 crores. Sir, out of that one major account, which was slipped last year -- this year. How much out of that INR1,800 crores is of that particular account?

Question: Ashok Ajmera - - Analyst : Overall INR300 crores because INR300 crores you made this year.

Question: Ashok Ajmera - - Analyst : Out of this INR1,800 crores, which we have the floating -- I mean, the extra provision.

Question: Ashok Ajmera - - Analyst : Point well taken. Sir, I will come on treasury, we have given a very good handsome --

Question: Ashok Ajmera - - Analyst : I have been waiting for a long time. People have asked five, six questions.

Question: Ashok Ajmera - - Analyst : No apprehension, sir, it is just a few points of information, data. And sir, our treasury has performed very well. The profit from the sale of the investment is INR663 crores out of INR865 crores of profit in this quarter. Now our AFS book is also increased by around INR9,000 crores to INR10,000 crores even in this quarter also. So Mukherjee sahab, are you going forward, do this momentum in the treasury performance or income will continue in the coming quarters? Or do you see that rates also might be a little bit of softening may come by the RBI in the rates also?

Question: Ashok Ajmera - - Analyst : That's great. If you permit just last question in this round. If you refer to note number 13, sir, you have sold some NP accounts, 12 NP accounts of INR2,850 crores, that was the book value also and the outstanding also. So aggregate consideration received is INR916 crores whereas in the next same note in the note number 10, 13E, we are mentioning that the quantum of excess provision reversed in the P&L account from the sale of the stretch loan is INR371 crores. So the consideration received is INR916 crores. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:30AM, CNBK.NS - Q4 2024 Canara Bank Ltd Earnings Call

Question: Ashok Ajmera - - Analyst : We see only INR371 crores in the provision reversal. And what was the percentage of this overall, including 15% and 85% of the book outstanding? I mean how much realization percentage?

Question: Sushil Choksey - - Analyst : Congratulations for very stable number and stable outlook. Sir, entire world is searching CASA and specifically Canara Bank, if we compare with our peer banks at our size level, what are we doing to make sure that our CASA that's the difference within our balance sheet and their balance sheet where cost-to-income or other numbers are concerned, presuming the other two numbers are stable, which are yet to be announced. What are we enabling that our CASA from current 32% goes to 35% or 40% over a period of three, four years?

Question: Sushil Choksey - - Analyst : Sir, your city attracts the highest and the best talent and your state attracts the best talent on the service economy and new generation is concerned. The amount of digital spend, which we have done to migrate the bank from old Canara Bank to a new generation Canara Bank, when do you think this entire migration will reward the bank whether this year, next year or it will take some more time?

Question: Sushil Choksey - - Analyst : Sir, in the current year, we have already finished one month based on unavailed limits and what we have sanctioned and your credit guidance of 10%, 11% or you may do 12%. What is the limit available with people -- let's assume that the economy is on a very high trajectory after induction? What kind of limits can be availed, what are unavailed limits and drawn limits (multiple speakers)

Question: Sushil Choksey - - Analyst : Sir, my last question, this is around if time permits. Besides the two IPO, which you are proposing, any other asset monetization plan from Canara?

Question: Sushil Choksey - - Analyst : The last 24 to 30 months, you've outperformed most of the peers in terms of the balance sheet size of many other aspects and shareholders have been rewarded. And I hope that journey continues.

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : Sir, my first question is on the margins. So this quarter, we have seen almost like stable margins as such. Was there any interest on NPA recovery during the current quarter? And what is your guidance in terms of margins for FY25?

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : Sir, can you just talk about interest on NPA recovery during the current quarter, like fourth quarter, how much was it?

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : NPA recovery.

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : Fourth quarter, sir, I just want.

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : Got it. Sure. And sir, one thing, basically, if you can just talk about what is the overall project financing exposure that we have on our book as of now in terms of percentage? I just want a ballpark, 10%, 20%.

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : Sir, all we are asking is basically any project financing exposure?

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : You take it INR1 crore.