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Canara Bank Ltd
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Good afternoon, ladies and gentlemen. Welcome to Canara Bank's 2Q earnings call hosted by Antique Stock Broking. The management is represented by L. V. Prabhakar, MD and CEO; Shri Debashish Mukherjee, ED, Shri K. Satyanarayana Raju, ED; and Shri Brij Mohan Sharma, ED.
After the initial comments from the management, we'll have a Q&A. Without any further delays, handing over the mic to MD sir.
Thanks a lot. Thank you very much. First of all, let me convey my gratitude and thanks to all the analysts for participating in this interactive session with the management. I would like to tell the highlights in brief because other things you have already seen from the presentation, which we have uploaded.
We had a decent business growth in Q2 FY '23, especially in credit size, it is about 20%, and deposits have grown by 9.82% both above the industry average, and business has grown by 13.89%. In the last 12 months, we have added about roughly INR 2.4 trillion balance sheet to the existing outstanding and now it stands at INR 19.5 trillion the balance sheet size.
Going forward, we are of the view that the growth momentum, which we are observing, will continue, and we'll be having a decent double-digit growth. Coming to the credit side, especially retail credit, RAM, which is about 55%, and corporate is 45% as we have given the guidance that our credit portfolio will be 55% RAM, 45% corporate, plus or minus 2%. So we maintained a RAM percentage of 55%. And the RAM has grown at 16.4%. Retail has grown 12.52%, Agriculture about 21%, MSME about 13%, and corporate at 25%. Overall growth is at 20%.
And regarding the recovery under the present quarter, we have seen a very good recovery. In the sense, our cash recovery was about INR 1,876 crores, plus a cash recovery of INR 1,205 crores in written off accounts. Getting recovery in written off accounts is one of the, I can say, a bit difficult task. However, my people have contacted the people, especially the written off accounts and the borrowers. And we could recover about INR 1,205 crores in the Q2 quarter FY '23.
Regarding the upgradation, again, this quarter, it was a bit attractive, and it is about INR 1,523 crores. Percentages wise, it was, I think, a reasonably good work has been done. The gross NPA has come down from 8.42% to 6.37%. And going forward, we are hopeful that, as we have given the guidance of 6%, we'll be achieving that. And net NPA has come down from 3.21% to 2.19%. And as we have given the guidance, the net NPA will be less than 2% in a shorter period.
We are very interested in increasing the provision coverage ratio, and it has increased from 82.44% to 85.36%. Credit costs were controlled at 1.31 and slippages were at 0.35%.
Now coming to the main parameters regarding the income and also the expenditure. There is a decent interest growth, especially 20% in interest received on advances, and NII, it has grown to 18.51%. And during the current quarter, it has grown by 9.57%. Expenditure, we have controlled, and we have invested a good amount this time in IT and also in infrastructure. And this will give, going forward, a good dividend.
And the operating profit, which was at INR 5,600 crores in September '21 has increased to INR 6,905 crores in September '22, showing a quarter-on-quarter growth of 4.5% and year-on-year growth of 23%. Net profit, we are happy to share that the Y-o-Y growth is about 89% and Q-on-Q, it is about 25%.
So what we observe is there is a decent business growth, a very good recovery. And also, the ratios are very attractive, and the capital has strengthened. The CRAR has increased from 14.37% to 16.51% and common equity from 10.9% it has increased to 11.14%.
With this capital and also the deposit base, we are future-ready to take a good credit growth, which will ultimately lead to good income. Some key ratios I would like to share with you. ROA for the quarter, it is 0.79%. Our projections were 0.70% for March '23. And the return on net worth we have touched 18.86%, and cost-to-income ratio, it is at 43.68%, which is one of the lowest we are having. And earnings per share, it is about INR 55.2. From INR 29.86 in September '21, now it is at INR 55.22. And then NIM from 2.77%, now it has been increased to 2.86%.
With all these good parameters, now our philosophy and aim is, whatever extra income and additional income we are earning, we want to pass on to our depositors because of which we have brought in a new deposit scheme that is 666, 6-6-6 by paying 7% interest and for retailers, it is 7.5%. In the last 12 days, there was a very good traction and more than 8 lakh fixed deposits were opened with a significant amount, which will help the Canara Bank in the current year -- current quarter and also the coming quarter to take care about the credit demand that is very much visible in Canara Bank.
With these few observations, now it is open to question and answers. Over to you, sir.
[Operator Instructions]
Yes, there is a call in user who has a question. please meet your question. Question is from the line of Ms. Mona Khetan.
Am I audible?
Yes, go ahead.
So the first query is on restructured book, where would the aggregate book stand today?
Ma'am regarding the restructured book, that is Resolution Framework 1 and Resolution Framework 2, which we have not given in this one because now it is the history. However, I will share the details with you. And resolution Framework 2, the slippages were 13%, 1-3 and remaining is performing.
Okay. Which is this quarter or cumulatively?
Cumulative, ma'am, it is cumulative.
Okay. And where does the book stand? If I have to include the MSME restructuring outside and then yes.
It is at INR 20,000 crores. Earlier, it was INR 24,000 crores. There is recovery of about INR 3,000 crores. Now it has come down to INR 20,000 crores.
Okay. Actually, last quarter, you had mentioned about INR 18,000 crores. So it was not reconciling with this INR 20,000 mentioned in the notes to accounts. So what exactly happened in between?
Ma'am, earlier, we have included all the sectors, and that was the figure. Now we are showing about the RF2, which I'm telling.
Okay. This is just Resolution Framework 2.
Yes.
But if we include all the factors where would the number stand?
Yes, eligible under RF2.
Okay. Okay, sir. And can we have the breakup of your slippages?
Yes. Slippage were INR 3,500 crores, out of which INR 1,200 crores is Agri, INR 1,300 crores is MSME, INR 600 crores is Retail, rest is miscellaneous, INR 400 crores is miscellaneous.
Okay. And just finally, with regard to intra NPA, it's declined by about INR 1,600 crores on a Q-on-Q basis. So is there some large recovery or what exactly has happened there?
Infra, the NPA, now, it has come down to 6.79%. The amount is because of a repayment in regular accounts as well as in NPA also, in various accounts.
Okay. Okay. Sure. And just finally, where would our ECLGS book lie?
As on date.
Yes.
GECL (sic) [ECLGS ] book? One minute, I will share with you. Ma'am, we have disbursed about INR 18,000 crores, and sanctions were about INR 19,000 crores. This is the amount which we have disbursed and sanctioned under ECLGS as on 30th September, '22.
Okay. And what sort of slippages have we seen from this portfolio, if any?
Out of this INR 669 crores is the slippages. Out of sanctions of INR 19,000 crores and disbursement of INR 18,500 crores, slippages INR 669 crores. That is around 3% to 4%. 3% to 4%.
[Operator Instructions]
The next question is from the line of Mr. Deepak.
Yes. Am I audible, sir?
Yes. Yes, sir. Please. Please, Deepak ji.
Sir, just I wanted to understand, in your opening remarks you mentioned about, I mean, the good credit growth demand visible, right? And just extra deposits that you are taking through fixed deposits will help you lead that credit growth demand. And as such, we are already at about 20% growth. So I just wanted to understand annually, we are still kind of looking at 8% growth. So there's a big disconnect. So -- between what we are achieving and what we are kind of suggesting. So any comments on that would be quite helpful.
Yes. Regarding the projections which we have given in the beginning of the year, 8% credit growth that is considering that there will be one COVID wave, or there will be a recession. All those factors taken into consideration, we have given 8%. However, such things have not happened and there's a very good climate for credit growth, so we could achieve 20%, and 20% is a very decent growth. We are confident that there will be a decent double-digit growth, which is more than 8%.
Now coming to the funds, which we are raising for the onward lending. As we said, our target is to maintain RAM 55%, corporate 45%. In RAM, you have already seen a growth of 16.4%, which includes Retail, Agri, MSME and others, except corporate. This growth we expect that, during the current quarter, will continue. So for that we require funds. And going forward, we are of the view that because of the liquidity situation in the market, the deposit rates are bound to rise. If you are first in the market, you get the advantage.
With the amount which we have mobilized that is more than 8 lakh FDRs, we are in a comfortable position to take care about the decent double-digit credit growth that is going to be there in the current quarter and the coming quarters.
Coming to the corporate, 45% of loan book. Corporate, nowadays, we are seeing a lot of inquiries and a lot of [ draws ] also we have seen, especially in infra, especially in NBFCs, in petroleum, coal products and also in chemical to some extent, iron and steel and also food processing. So we observed that, during the current quarter, there will be a good demand from corporates also. So our aim is always to be ready for the future and to have a strong balance sheet.
Fair enough. And sir, then just a follow-up. You mentioned decent double-digit credit growth of 15%, 20% is what the range that we are looking at?
See, I said decent double-digit growth. When I say 8%, we have achieved 20% growth. So when I say decent double-digit growth, you can understand.
Our next question is from the line of Mr. Ashok. Mr. Ashok, are you there? Okay. We'll move to the next question. Our next question is from the line of Mr. Prakash. Mr. Prakash?
Am I audible?
Yes.
First of all, like a very good congratulation for the hefty numbers, for the good numbers shown in this quarter.
Thank you, sir.
I have a few questions. One is that I remember last time, you mentioned that because of the RBI change of Repo rate, which you affected only from 7 July onwards. So there is going to be some additional interest in over INR 250 crores. So in this quarter, when I calculate the NII, simple NII, like interest received minus interest expended, in June quarter, it was INR 50 crores to INR 58 crores, and in September quarter it was [indiscernible] so with -- increase by about INR [ 428 ] crores.
So can I presume that out of INR 428 crores, INR 250-odd crores were because of the 50 basis point increase, which was given in the floating rate account from -- effective from 7th of July. So it means, in the next quarter, which is December quarter we won't see such increase of INR 428 crores in the NII?
Here, let me answer a different way. See, this time, the NII was at INR 7,434 crores. again, you all know that this is based on the cost of deposits and also yield and advances. INR 250 crores or INR 200 crores, which we received because of the Repo increase is factored in. And that INR 250 crores will continue this quarter also because it is already in-built.
Not only that, apart from that, in the hardening interest rates, we increased the spread also and also the interest income from other than RLLR also. For example, MCLR. MCLR, we have increased, MCLR is also contributing. Apart from that, in the normal course, Corporate advances also we have increased the rate. So the estimation that only INR 250 crores out of INR 400 crores is there, which will not be available, will not be true in the coming future. It may be a part of that, but there will be further resources and revenues because of which we are targeting to have a good NII.
Sir, like the second thing, our provision for NPA, it is hovering around INR 2,600 crores to INR 2,700 crores. Do you see it coming down in the coming quarter? Or it will hover around a similar range?
I will not comment about the figure, but I will share with you our principle. Our principle is if you have followed me in the last 2 years, I have always said that I want to have a healthy PCR and also my balance sheet should be ready for the future. In the sense, proactively, we have -- we want to make more provisions. As you know, in big accounts, where 15% provision is required, Canara Bank has made 100% provision. So basically, if you see the provision of INR 2,700 crores for this one, so there are accounts where we have aggressively made provision, and we continue to do that.
Good, sir. And, sir, like my last question, employee cost has come down by INR 300 crores as compared to previous quarter. So what is the reason for this? Or whether the number of INR 3,119 crores for this quarter will continue in the ensuing quarter also?
Sir, here, actually, there are 2, 3 points, which I would like to share with you. Canara Bank is one big bank, which is paying PLI to its employees in the last 2 years, 15 days, that is full PLI. And in the Q1, PLI amount is there, which will be paid again in the next -- Q1 of the next FY '24, whereas the PLI is not there during the current quarter. Because of which there is a difference in the staff cost.
Second point is seniors are retiring and their cost is being reduced and even if we recruit new people, the cost is very less.
Yes, sir. You are right.
So going forward, yes, sir. Going forward staff cost will be moderate, whereas, since Canara Bank is making good profits, we want to give maximum benefits to our staff. To that extent, the amount may be increased, but it will not be significant.
[Operator Instructions]
Next question is from the line of Mr. Bhavik Shah.
Sir, congrats on a very good set of numbers.
Thank you very much.
Sir, firstly, sir, I just wanted to understand how is the liquidity situation with the bank. What would be the excess liquidity in rupees crore? And how much would be the LCR as on date?
Let me share you the LCR number. LCR number is always an average number of 90 days. It is 122%. RBI requirement is 100%. So as far as liquidity is concerned, Canara Bank gives maintaining very well the liquidity position, neither surplus nor deficit. Because we want to deploy the funds effectively.
Now coming to the liquidity position. As on date, Canara Bank is not having any liquidity problem because, as you know, we have floated one deposit scheme, 666, where, more than 8 lakh deposits were opened, including 666, with huge amount. So for Canara Bank resources, our liquidity is not going to be a problem in the current quarter and the coming quarter.
Okay. Sir, taking that a little further. So given we are paying higher on fixed deposits compared to other SOE banks, sir, how do you -- what would be the outlook of margins in the next 3, 4 quarters? Because of repricing, can we expect a similar kind of delta over the next 2, 3 quarters?
See, our guidance regarding NIM is 2.90%. Today, we are at 2.86. So we'll be achieving 2.90%. Now, for example, if you see my interest earned, and OP, it has increased tremendously. Now as a management, I have 2 points to answer. One is, whether to continue with this abnormal OP without passing any benefit to my depositors, or to share some of this to my depositors. I have a depositor base of more than 10 crores, and my depositors are very loyal to Canara Bank.
So during the time of high inflation, we thought that we have to pass on some benefit to the depositors. This is the main reason because of which we are passing on 50 basis points more than the market to my depositors. But I am making good money in advances also because my interest income and advances is growing with 20% and I am getting noninterest income also at 13% to 14%.
Fee-based income, I am getting at 18%. It is INR 1,700 crores plus. So our aim is, pass on some benefit to the depositors. They will be with you for lifelong. That is the concept, along with maintaining the margin. This is the philosophy on which we are working and it is working well.
Understood, sir. Sir, lastly, only a couple of data keeping questions, sir. Sir, last quarter, our restructured book was INR 18,000 crores. On similar like-to-like basis, what would be this quarter?
Please, Majumdar ji?
Sir, for RF 1, our present liability is around INR 4,420 crores, for RF 2, it is INR 12,089 crores. So both put together is around INR 16,000 crores.
Okay. And MSME, would it get added to the...
Yes. MSME, we have another that is OTR of that old is another INR 2,300 crores.
So total would be INR 18,300 crores.
Exactly.
Sir, as it -- in this quarter-on-quarter?
No, no. It has only come down quarter-on-quarter.
So I think, sir, last quarter, I mean INR 18,000 crores was the number. So I'm not sure if INR 18,300 crores is comparable to INR 18,000 crores.
You must be, last we -- what you are comparing maybe last quarter, we told of RF 1, RF 2. This is not MSME OTR we spoke of. Last quarter, the figure that you have is of only RF 1 and RF 2, which has come down to INR 16,000 crores.
Clear, sir. And sir, what would be the slippages of restructured book this quarter?
RF 1, the slippages, if you take out the future that you...
I'll tell you. I'll tell you. Sir, RF 1, it is about 3%, excluding future. RF 2, it is 13% 1-3, 13%. And it is cumulative not during the quarter. It is a cumulative one.
Our next question is from the line of Mr. Pranav can go ahead.
Can you hear me?
Yes.
Yes. Sir, so INR 2,300 crore is MSME and there is INR 16,000 crore RF 1, and RF 2, so total is INR 18,000 crores around. And after this 3% is slipped from the number, RF 1 and 13% from RF 2, right?
Yes.
Yes, sir. SR -- which is security basically will be around INR 2,500 crores. Is that right?
Yes, sir.
Right. This INR 2,500 crores, is there any outstanding provision?
We have almost fully provided. And I think only a few hundred crores are left to be provided.
Right. Right. Okay, sir. Sir, can you just spend some time on actually giving some color on loan growth, what -- which sectors they are coming, is it Retail, Corporate, SME, MSME, and will it continue? Is it CapEx related? Is it consumption related? Is it working capital related? Any color will be really helpful.
Sure, sure. Sure. Our principle is we want to maintain a ratio of 55% under RAM, and 45% on the corporate, plus or minus 2%. So during the current quarter, our RAM is about 55%, which is growing at 16.4%. Now let me discuss regarding the RAM. We say RAM means Retail, Agriculture and MSME. Retail, it is growing at [ 12.5% ]. And within the Retail, housing is growing at 17%, and we are hopeful that the growth in housing will continue to be a decent double-digit growth.
Agriculture and allied activities are growing at 21%, and this will be around this percentage next quarter also. MSME is at 13%. Since MSME, we are seeing a lot of demand, so this 13% to 14% to 15%, we think it will be continuing. So put together, again, under RAM category, the growth will be about 16% to 17% to 18%, which will be a decent growth.
So 55% of our portfolio will be growing at a decent double-digit growth. Now coming to Corporate. In Corporate, we have seen traction and a very good growth in infrastructure, NBFCs, then iron and steel, then we have seen in petroleum, coal products and a bit in construction and also chemicals and chemical products. In the current quarter also, we are hoping that these sectors will be doing good and the growth momentum will be sustainable. So overall, the growth we see, it will be a decent double-digit growth for Canara Bank.
[Operator Instructions] Our next question is from the line of Mr. Anand Dama, lease and you to yourself and go ahead.
First question is on your overseas credit book. And that's where we are seeing a lot of growth across public sector banks and [ slow ] for us. So what are the key reasons why we're seeing this growth apart from my [indiscernible] that this is rupee depreciation?
Let me tell you, in the last 12 months, the credit book has grown by INR 1.4 lakh crores, bank as a whole. In overseas, it has grown by just INR 21,000 crores. Percentage wise it looks big, but amount wise, since the base is very small percentage appears to be 85%. However, in terms of real amount, it was only INR 21,000 crores. So in INR 1.4 lakh crores, INR 21,000 crores overseas, we feel it is a normal growth. And this growth is coming from, A, AA, AAA related accounts and also very good corporates who are in India and abroad.
So but then what made them borrow now or what made you lend them now, that's basically you were not doing a year back as such?
In this overseas borrowing, there are borrowing by the banks also, some foreign banks and also Indian Housing Finance Company also which is well-rated company.
From overseas branches?
Yes.
And why would they do that? So it's basically ECB funding that -- that should be?
Yes. Exactly, sir.
So how much will be ECB, and how much was the [ buyer's ] credit that of the overseas book, you would have grown?
Most of the portion is lending not [ buyer's ] credit.
Okay. Okay. sir, secondly, we have moved to the new tax regime during the current quarter. So, basically, how have we done the tax, I mean, DT adjustment. So we have knocked off the DTA from the asset book. But is there a net worth adjustment also that we need to do, one. And what is the tax rate that we should expect for the full year now going forward?
Whether it will be 25%, or it will be still less than 25%?
Yes, we will tell you. Yes, Mr. Majumdar, our CFO will be replying this question.
Sir, first question, your first question is how we have adjusted this that is funded these 2 DTA. That is around INR 2,451 crores which we have told, it is out of excess tax provision that we have made last year and first quarter of the present year. So it has been funded out of that. So it has not hit my present profit and loss account. It does not hit my profit at all.
But it would get knocked off from the net worth, right?
No. It has -- your DTA reduction means my capital base goes up, my CET1 goes up, my CRAR goes up, that has gone up by almost 40 basis points each.
That I agree, but from your net worth it should get adjusted right?
No, no. It will not get -- no, no, sir, it will only reduce my net worth, if it is a charge on my profit. It is a charge on my profit, which has been funded out of tax provision, additional tax provision more than requirement, which I had made last year and the first quarter of the present year, which has neutralized it.
I'll explain you, but if you want to know a bit more, last year, I had an unadjusted accumulated loss of around INR 18,000 crores. So technically, I need not pay any tax last year. But I made a tax provision of around INR 1,500 crore plus last year. And this year, when I started the year, I had a net accumulated loss of around INR 8,000 crores. So this year also, up to this September, I need not pay any tax.
But still in the first quarter, I made a provision of around INR 900 crores. So the -- which was adequate for me to fund this DTA. So that is the reason my profit and loss is not hit, which you said that my net worth would have been eroded by that, right, by that amount is not eroded which -- it was already funded.
Okay. So what's the tax rate that we should expect for the...
Here, let me add something...
We will move to 25% from 35%, 34.9%.
Let me add something, sir...
Yes, that's what -- the actual tax [indiscernible]...
This particular migration from higher tax to lower tax, we are working for the last 1.5 years. It is not that today, we have taken the decision. For this, in order to avoid the hit or the reduction in the net worth. We have made excess provision in the last year itself for the tax. And now since the first quarter of this financial year, knowing very well that this money will be required when we migrate to the lower tax regime. It is a well-calculated move, which is paying dividend today.
Sir, I understand the tax balance sheet adjustment, but how does that affects basically the accounting part of it. So you have knocked off from the assets the DTA, on the liability side also there should have been some adjustment to that amount. So whether it was [ similar ] to other liabilities, some provisions that you would have made...
No, no. That provision of tax of equal amount has been reversed.
Sir, I'll take it off-line. Thank you.
Yes, please.
Our next question is from the line of [ Mr. Saket Kapur ].
So I will just club a bunch of my questions in the [indiscernible] of time, sir. Firstly, sir, our EPS for H1 has been INR 27. And if correct me, sir, we were guided INR 40 for the full year. So can we expect an upward guidance since you are -- since the likelihood of breaching INR 40 should be by the next quarter itself, if barring unfortunate circumstances, my first point.
And secondly, sir, how has the [ hardening ] of the G-sec rates, the government securities, the 10-year on benchmark, have affected our treasury portfolio? And going ahead, sir, if you could give us the trajectory of how the NIMs are going to shape up? And then I have one more follow up?
Sir, regarding your first question, EPS. Today, we are already at INR 55.22. We have already crossed 40, which we have given the guidance. And we are hopeful that this will be improving further, going forward. So that 40 is now history.
Now regarding the NII, the momentum which we are observing will be maintained going forward because the way in which we are seeing the demand for the credit and also from the good corporates who are ready to afford a bit higher rate of interest. So NII, we are going to maintain. There will not be an issue regarding the NII.
Regarding the Treasury, yes. As you know, in Q1, we made good money in treasury because of the proactive actions taken [ by my ] Treasury. This quarter, we did not have much impact regarding the depreciation on our Treasury income. However, the Treasury income is a bit less because of the existing conditions.
Next quarter, we are hopeful that the situation will improve, and we'll be in a position to make some money from the Treasury also. However, we don't see any depreciation as far as the portfolio is concerned. At the most, there may be a depreciation of INR 200 crores to INR 300 crores, which is very negligible as far as my balance sheet is concerned.
Sir, on the EPS front, are you annualizing the first half number, sir?
There are -- I'll give the 2 EPS, one is quarter-wise, it is INR 55.22, And for cumulative for 6 months, it is INR 50.27.
Okay. Correct me here, sir, when I look at your reporting numbers, we find the EPS at consolidated for this first half at INR 27, INR 26.93. So where are we getting this INR 52 number, sir. I'm referring to Page #4 of the slide.
It is on -- we have given on Page #21, EPS annualized.
You are analyzing the first half number. That is what I'm asking, sir.
Yes.
Because of performance may vary also, sir. Is it going to be a granular number going ahead also, sir, can we look forward for that?
See, our only commitment is we want to do better than what we did earlier. That's the only target for us.
Correct. Last point is on the, sir, what portion of our portfolio, the loan book is on floating rate and how much is on the fixed part? So with the increase in the Repo rate, how is the incremental [ NIM ] -- incremental interest margin is going to be? And your guidance on the net interest margins are shipping ahead in percentage terms.
As on date, we don't have any advances on fixed rate. All are floating rate.
100% book is on floating?
Yes.
Okay. So -- sir please.
And I can only say that whatever ratios we have given this time, next time, we'll try to better those ratios.
Our next question is from the line of Mr. Ashok. Please go ahead.
Yes, I think you had given me this opportunity earlier also, but there was some technical glitch, sir could not hear me, and I could not hear him.
Please, go ahead.
Sir, a lot of the queries and questions have been answered by you very calmly and with a great reinsurance. I have just -- one the recent development with the -- by the RBI. On the rating agencies, you're not giving guidance them to rate the Corporate, especially the large accounts, with the names of the bank for which this limit is being rated. Sir, have you gone through that? And whether -- can I see some clarifications on that from you? And how is it going to be impacted?
See, we have come across this one. And still, we are also, I can say, studying because the time is there. And for further clarifications, I have my CGM risk, who handles the rating. He will be responding this, please Mr. Rao?
So sir, my question is basically that the most of the time when the loan is at the sanction stage. That time, the ratings have been called for I mean the previous rating or rating of the company. By that time, it is not clear that which bank is going to sanction the loan out of the various banks where the loans are applied.
So generally, the rating is for an amount that this is the amount which we are seeking. This is the amount which we are going to seek, say INR 1,000 crores, INR 2,000 crores. That time the names of the banks may or may not have been known, only the existing banks who have given their credit, their names can be given, but not the bank, which is assessing the proposal.
You are perfectly correct. That's why I say still there is time. So we are also working and discussing internally, and we'll be giving the feedback.
Okay. So we'll wait for the clarification from you, the bankers also and the RBI also. Sir, my second observation and some answers from you, that we have a very large number of subsidiaries and associates. I think we have 8 subsidiary and 5 associates. And a lot of money has been invested in those subsidiaries. And that there is -- when you see the operating profit, the consol profits, it's just INR 75 crores, INR 80 crores more than your stand-alone profit. And if you look at the net profit, it's again the same, like kind of -- so ultimately, at the end of the day, are we just banking on the valuations of these companies or their products and this thing, or do we want to bring in something in our profit and loss account in our balance sheet also?
Very good question. Let me tell you, for example, Can Fin Homes. They are doing very good profit, OP and NP and, going forward, we are confident that this particular subsidiary or associate is going to perform very well. Now coming to Canara HSBC. We are seeing a very good traction in Canara HSBC as far as the business is concerned. And going forward, the evaluations are going to be very good when they come out with an IPO. Canara Robeco is another best mutual fund in India, which is giving good returns and excellently managed. So these are all the jewels for Canara Bank.
Today, profit in terms of comparison to parent Canara Bank may be less. But going forward, these companies or subsidiaries are going to give huge returns. That is why we are not selling the stake in these companies.
And regarding grameena banks, I have 4. For example, Andhra Pradesh Grameena Bank, it started making INR 326 crores profit. And same way, I have other grameena banks like Kerala Grameena Bank, it is making INR 129 crores. So going forward, these things are going to give huge dividends to Canara Bank.
Our next question is from the line of please, Mahrukh.
Congratulations.
Thank you, ma'am.
Yes, sir, I had just a couple of questions. So firstly, I just wanted to -- firstly on your, you said that you would better all your parameters try to better all your parameters next quarter? How do you view your margins? Because you also said that you have to pass on something to depositors too so that they stay loyal to you. So how do you, view your margins going ahead? Do you think they peak here or there is scope for improvement given MCLR repricing? What's your view on margins in the next 1 to 2 quarters?
Ma'am, regarding margins going forward, the margins are going to increase. As we said, NIM, our guidance is 2.90%. Today, we are at 2.86%. So margins will increase. And the thing which I have said that we have to pass on some benefit to the depositors that will help the bank in the long run to improve the margins. See, there is a demand for the deposits in the market because we don't see the liquidity, which was available 4 months ago, 5 months ago, today.
Under this scenario, and also taking into consideration the present inflation which is there, it is justifiable and also required that you should pay interest, which will help the depositors to take care about the inflation and also to continue with Canara Bank.
And regarding the margins, now the lending is being done at a higher rate, and people are ready to take, well-rated companies. So for Canara Bank, margin will not be issued, the outcome will be, my depositors will be happy, they continue to bank with me and also deposit money in my back. It will ultimately lead to very good liquidity portion for Canara Bank, which I will be deploying in the credit, as you have seen during the current quarter, Y-o-Y growth is about 20%. To maintain a decent double-digit growth, you need resources deposits, and for that, you have to pay a bit more also.
Got it, sir, very well explained. And sir, I just have one more question, delving a bit more to what Anand Dama was asking. So this question on international loans and where they have been lent keeps coming up because what has happened is it's a coincidence that all PSU banks have started showing growth in international loans at the same time.
So there's no lead lag or any such thing so except Baroda, which was anyway strong in international loans, everyone has upped their lending just in the last 2 to 3 quarters. Part of it will be exchange depreciation, but if you could have a rough breakdown on how much has come through exchange, how much is through overseas banks that we talked about and how much is through overseas corporates and how much is through Indian corporates? So any such broad classification.
Ma'am, if you see the increase in figure in overseas, it is only INR 21,000 crores, which is not a big amount. And this INR 21,000 crores, INR 4,000 crore to INR 5,000 crores has gone to the banks, we have financed to the banks. And remaining is for well-reputed, high-rated corporates.
Got it. And these are international banks?
Yes. And one Indian Housing Finance Bank is also there.
Next question is from the line of [indiscernible].
Congratulations for the good numbers. Sir, considering the increase in deposit rates and the 666 scheme that has come up, what is the expected growth in deposits for next 4 -- 3 to 4 quarters?
I can say, next 2 quarters. Next 2 quarters, there will be a decent deposit growth of double digits.
Okay.
And the deposits, as I said, in the last 12 days, we have mobilized more than 8 lakh fixed deposits, which are going to stay with Canara Bank, and these are all retail deposits.
Hello? Sure.
[Technical Difficulty]
Apologies, there I think we have some technical glitch and we were disconnected. We're trying to resolve. Just hold on for a second.
Sir, please unmute yourself, MD sir?
Hello?
Yes, sir.
Ma'am, are you able to hear?
[ Vrushabh ]?
Yes. Yes, sir, we can hear you now.
Yes. Regarding the deposits, just I was explaining, it got disconnected. So we are going to see a decent double-digit growth in deposits also in the current quarter, that is Q3 FY '23 and also Q4 FY '23. Because we have already mobilized more than 8 lakh fixed deposits from various customers, which are all retail. So this money is going to stay with Canara Bank. So there will be a very decent deposit growth.
And this additional deposits that we are taking in, the cost of those deposits are typically less than the borrowings? Or is it higher? Just wanted to understand.
We are always conscious about the margin to be earned. So always, we lend at a rate taking into consideration our margins also. And the 7% is only for 666, whereas, for other deposits, it is 2.5%, 3.5%, 4%, 5%, different rates are there. So it's not that all the deposits are at 666. 666, actually, it has created a wave in the market that deposit money in Canara Bank.
Got it. Okay. And sir, lastly, wanted to understand as you mentioned, the entire advances book of Canara Bank is floating. So just wanted to confirm if even the commercial advances are floating or only the retail advances we were talking about?
No, all advances. Except FDR, fixed -- [indiscernible] to which fixed deposit we give all other are either any of the floating rates only no fixed rates we have given.
Our next question is from the line of Mr. Jai Mundhra.
Sir, A, our NIM's guidance of 2.9%, is it for FY '23? Or this is like exit quarter FY '23? I mean fourth quarter?
It is for March -- 31st March '23.
For the full year?
Full year.
Right. And sir, the capital number that we have shown, this includes the interim first half PAT number, right?
Yes. Yes. Excluding 20%.
Excluding 20%, right? Which is okay. And then the -- sir, if you can share the slippages breakup for this quarter of around 9...
Out of this INR 3,500 crores, INR 1,200 crores, under Agriculture, small ticket loans, INR 1,300 crores is under MSME, INR 600 crores is under retail and left over INR 400 crores is other accounts.
Right. And last question, sir, is there any one-off in the net interest income line item? Because while you have clearly shown a very huge loan growth, the interest on advances have also gone up significantly. So is there any one-off or any NPA recovery, which is also coming in interest advances line? Or this is like...
No, sir. This is all the growth in credit and also the increase in interest rates, which we have implemented in the last 3 months that has given this increase in interest income, which is about 20% Y-o-Y. No one-off incident.
Right, sir. And if you can, sir, we used to share the [ SME 1 and 2 ] at overall bank level. And the reason I'm asking, sir, if in this quarter also, large part of the slippages have come from below INR 5 crore accounts, right? So if you can help us with the SME 1 Plus 2.
We'll share with you, sir.
Thank you, sir. With the keeping in mind the time, we'd like -- this was the last question. We'll hand over the mic to MD sir for his last closing comments.
First of all, from Canara Bank's side and from the management side, we thank the investors and also the analysts who are very cooperative to Canara Bank and bringing out the actual position in the market.
Second one is as we committed that each and every staff in Canara Bank is committed to the bank and the growth momentum will continue in the coming quarters also. And the growth is not in 1 sector or in 1 region. It is spread over on Agriculture, MSME, Retail, Corporate, all those things. So we are of the strong opinion and confidence that the growth will continue in the current quarter also.
With these words, I thank one and all.
Thank you, sir. On behalf of Antique Stock Broking and Canara Bank, I thank all the participants for joining the call. Have a good evening, everyone. Bye.
Thank you very much.