The global gross advances of Canara Bank stood at Rs 9,60,602 in the quarter ending March 2024 (Q4 FY24) registering a growth of 11.34 per cent on a year-on-year (YoY) basis in Q4 FY24. The Global Deposits of the bank are Rs 13,12,366 crore in Q4 FY24 registering a growth of 11.29 per cent. Net Profit stood at Rs 3,757 crore and grew by 18.33 per cent in Q4 FY24.
“Generally, whenever we give guidance related to these numbers, we give it in a very conservative manner. Earlier, we had given a guidance of deposit growth of 8 per cent and credit growth at 10 per cent but our deposit growth has been around 10.98 per cent and credit has been 11.06 per cent on a year-on-year (YoY) basis. We expect that our credit growth may be in and around 10 per cent and deposit growth may be in and around 9 per cent during this financial year,” says K Satyanarayana Raju, managing director (MD) and chief executive officer (CEO), of Canara Bank.
State-owned Canara Bank has fixed 15 May 2024 as the record date for determining shareholders' eligibility for the stock split. Canara Bank declared in a regulatory filing that its board had approved a share split in February. The existing shares with a face value of Rs 10 each will be split into five shares with a face value of Rs 2 each, fully paid up, and will rank pari-passu in all respects.
In an interaction with BW Businessworld, Raju said, “Our share price has already touched more than Rs 600, so we thought that we should make our share comfortable to the small retail investors. So earlier, if someone wanted to invest in the Canara Bank, he had to invest a higher amount with us, if we split the share to Rs 2 then it would be available to the market at a much lower price so that the small investors can be invited to invest in the Canara Bank.”
Draft Prudential norms on income recognition and asset classification
The Reserve Bank of India (RBI) in its recent draft circular has said that even if there is a deferment of the date of commencement of commercial operations (DCCO) within a period of two years, because there has been some deterioration in the project fundamentals, the standard asset provisioning should increase to 5 per cent.
Regarding the new draft circular Raju said, “We ourselves have already started internally from the last six months whenever there is some process to do the date of commencement extension, we will be going to charge an additional interest rate. We are already passing on this burden to the borrowers.”
He further added that though it’s already a draft guideline, they still do not see too much pressure either on capital or margins because parts of this will be passed on to the ultimate customers and also it is part of Tier-2 Capital.
“This is still the draft guidelines and we are seeking clarifications from the regulator like what is the bottom line for this like what is the minimum funding etc,” he further mentioned.
Provisioning of Gold Loan
The gross domestic deposit stood at Rs 10,94,746 crore in the quarter ending March 2023 while the gross domestic deposit stood at Rs 12,14,951 crore in the quarter ending March 2024, registering a growth of 10.98 per cent on a YoY basis in the fourth quarter of financial year 2023-24 (Q4 FY24).
The gross domestic advances have grown from Rs 8,17,762 crore in Q3 FY23 to Rs 9,08,182 crore in Q3 FY24, marking a growth of 11.06 per cent in Q4 FY24 on a YoY basis.
“We don’t have any concerns about the gold loan portfolio. Our NPA ratio is 0.006 per cent in this segment, so we don’t see any event which makes us so sensitive about these gold loans,” said Raju.
Regarding new gold loan guidelines, he further added, “We have a robust verification system for these kinds of loans. This review system has been implemented in our banks for many months now. We have already implemented that every gold loan appraised by one branch will be reappraised by another branch.”
Gross Non-performing Assets
The gross NPAs were Rs 46,160 crore in Q4 FY23 which has decreased to Rs 41,722 in Q4 FY24. The provision coverage ratio has also increased from 87.31 in Q4 FY23 to 89.10 in Q4 FY24. The slippage ratio has increased by 3 basis points to 0.34 per cent in Q4 FY24 as compared to Q3 FY24. The write-offs have decreased from Rs 3,936 crore to Rs Rs 3,068 in Q4 FY24 as compared to the previous quarter. The recoveries from written-off accounts have increased from Rs 1,804 crore to Rs 2,232 crore in Q4 FY24.
Additional Tier 1 and Tier 2 Capital
The board of Directors of Canara Bank has approved Rs 3,500 crore is Additional Tier-1 bonds whereas Rs 4,000 crore were Tier-2 bonds.
“We have raised almost 100 per cent of the approved AT-1 bonds of Rs 3,414 crores. Tier-2 bonds that are approved we are not raising it for the time being since the interest rates that will be offered on those will not be conducive,” said Raju.
He further added that they are in no hurry to raise the capital at a higher cost. “Our capital-to-risk adequacy ratio (CRAR) is already more than 16 per cent, that’s why there is no urgent need to do so” he mentioned.
Operational Expenditure and Capital Expenditure
The operating expenses of the company have risen from Rs 22,483 crore in FY23 to Rs 26,119 crore, reporting an increase of 16.17 per cent on YoY basis.
“For the last couple of years, we have budgeted almost Rs 1000 crore for IT development and this year also, our requirement of capital expenditure for IT is around Rs 800 crore. Due to this, there might be some impact on the operational expenditure. This year’s increase in the opex is mainly due to the Bipartite settlement requirements and we have completed 100 per cent of the provisions. We have made provisions of Rs 350 crores to complete it entirely,” Raju emphasised.
