Canara Bank conducted a conference call on 08 May 2024 to discuss its financial results for the quarter ended March 2024. K. Satyanarayana Raju, MD&CEO of the bank addressed the call:

Highlights:

Global Business of the bank has increased 11.3% to Rs 22.73 lakh crore driven by 11% growth in advances to Rs 9.61 lakh crore and the deposits rising 11% to Rs 13.12 lakh crore end March 2024.

The bank was focused on liability with an intention to maintain incremental credit deposit ratio below 100% which bank has achieved helping to contain cost of the deposits.

The bank has achieved record high net profit of Rs 3757 crore in Q4FY2025.

Bank has improved return on asset by 20 bps to 1.01% in FY24.

The provision coverage ratio increased 179 bps yoy to 89.1% end March 2024.

The bank has contained credit cost below 1% at 0.96% in FY2024 showing and improvement of 21 bps.

The loan growth is driven by retail agriculture and MSME (RAM) loan book rising 13.5% to Rs 5.41 lakh crore. The retail loan book grew 11.68%, agriculture 18.69%, housing 10.81% and vehicle 14.03% end March 2024 over March 2023.

The bank has improved net interest margins to 3.05% in FY2024 from 2.95% in FY2023, while the NIM was higher at 3.07% in Q4FY24. The yield on advances increased by 11 bps and cost of deposit have increased by 8 bps in Q4FY2024, helping improvement in the margin.

The bank had Rs 60000-70000 crore of low yield corporate advances, which bank aims to redeploy towards high yield loans. The bank has reduced Rs 10000-12000 crore of this book helping banks to improve margin.

The bank is targeting the loan growth of 10% for FY24 on a conservative basis. However, the bank aims to exceed the loan growth target.

The bank targets to maintain net interest margin at 2.95-3%.

With regard to the draft guidelines on provisioning for the project loans, the bank does not see any major impact on its capital or bottom line.

With regard to the new investment guidelines implementation from 1st April 2024, the bank has witnessed accretion of Rs 1400 crore to its reserves.

The bank has created additional provisions of Rs 350 crore for employee pension benefit after actuarial calculations which have led to increase in the operating expenses of the bank.

The bank expects its employee cost at Rs 4000 to 4000 per quarter from next quarter onward.

The bank expects to maintain cost to Income ratio below 47% in FY2024.

The restructured loan book of the bank has reduced from Rs 24000 crore to Rs 17000 crore of which standard restructured loan book stands at Rs 12000 crore with provisions in line with regulatory requirements.

The technically written off loan book of the bank stands at Rs 68000-72000 crore, while the bank targets to achieve recoveries of Rs 4000-5000 crore every year from technically written off loan book.

The fresh slippages stood at Rs 3400 crore in Q4FY2024, of which Rs 1100 crore came from agriculture, Rs 1200 crore from MSME, Rs 400 crore from retail and Rs 400 crore from mid-corporate.

As per the bank, about 52% of the loan book of the bank is linked to MCLR and 38% to repo linked lending rate.

The bank aims to raise the CASA deposit ratio to 33% by 2025 and 37-38% in next 5 years.

The yield on corporate loan book has increased to 8.17% from 7.06% last year.

The cost of term deposit stands at 6.25 to 6.5%.