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Canara Bank Ltd
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Good afternoon, everyone. On behalf of Antique Stockbroking, I welcome you to Canara Bank Third Quarter FY '23 Earnings Call. Firstly, I thank the management team of Canara Bank for providing us this opportunity to host the call.
Today, we have with us the senior management team from Canara Bank: Mr. Debashish Mukherjee, Executive Director; Mr. K. Satyanarayana Raju, Executive Director; and Mr. Ashok Chandra, who is Executive Director.
With this, I shall now hand over to the management of Canara Bank for opening remarks. Over to you, sir.
Good evening to all of you. On behalf of Canara Bank, we welcome you all for the -- this analyst meet, sir. For the quarter to review or to clarify whatever the questions you raised by us -- raised is on this, our quarter 3 -- Q3 performance.
We would like to share with you some highlights of this performance. Our global business has crossed INR 20 lakh crores, stood at 20.14 lakhs with a year-on-year growth rate of 13.63%. Similarly, our domestic business also has grown at 11.24%, stood at INR 18.8 lakh crores, sir.
Our gross global advances have grown at 16.65% and stood at INR 8.51 lakh crore. Now domestic advances also has grown at 14.11%. Our global deposits have grown at 11.51% and the domestics deposits have grown at 9.21%.
With this business growth, our operating profit has increased, year-on-year basis, 19.80% and stood at INR 6,952 crores, which was led by a net interest income growth of 23.81%, and the amount is INR 8,600 crores. Because of this steady increase in the operating profit, our net profit has increased 91.88% year-on-year, stood at INR 2,882 crores. This is an all-time high in last continuously several quarters. And our net NPA also has drastically -- gross NPA and net NPA also has shown a visible decline in that. And the gross NPA has declined 191 basis points and stood at 5.89%.
Our net NPA also has reduced 90 basis points and stood at 1.96%. And simultaneously, our PCR also has grown and it has crossed 86.32%, and almost 306 basis points year-on-year improvement is shown in that, sir. Further to this, our housing loan, retail growth and all continuing their steady growth, our retail growth has continued at 11.30%, and our housing loan is growing at 15.81%.
Our gold loan is continuing the growth in the industry, dominating the industry at 34.21%, and the portfolio stood at INR 1,15,286 crores. Our fee-based income has increased 13.02% and return on equity increased 630 basis points and stood at 18.38%. Our CRAR, even with the 16% -- more than 16% credit growth, we are able to maintain at a 16.72% which is comparatively even sequentially as well as year-on-year, there is a steady growth in CRAR, sir.
And our cost to income, we are maintaining well before the -- well below the 45%, and it is at 44.40% with an year-on-year improvement of 184 basis points. I'm sure that by this time, you all people might have gone through our presentation, which has been -- given the clarity on many issues, we just published in various parameters, the details. And I would like to welcome all the analysts for any of your queries or other clarifications. The top management, we are all ready to answer your questions here, sir. We welcome you for asking questions, sir.
Participants who wish to ask a question can kindly raise your hand. We have the first question from Mahrukh.
Can you hear me?
Yes, madam, we can hear you.
So my question -- my first question was -- first of all, congratulations on a very good set of numbers. Sir, my first question was in terms of corporate loan growth. So obviously, your corporate loans have grown faster than ramp and your international book has also grown very fast. Sir, what are the corporate sectors that have grown in the overseas loan...
I think, there is a...Can you hear us...
Yes, I can hear you. But it's not disturbing from my line, sir. Can you hear me now?
Yes, yes. I can hear you. Can you hear us?
Yes, I can, sir. Thank you.
Okay. So our loan growth so far as the corporate sector is concerned has been basing upon the growth in infrastructure sector, [Technical Difficulty] of course, is there. Then iron and steel is there. Some commercial real estate also has happened. So you can see that year-on-year and Q-o-Q growth has been growth [Technical Difficulty] growth, which has happened in the corporate book. And we propose to maintain this balance -- and we propose to maintain this balance.
So rapidly, just 21% in a single quarter. I know that the outlook is good, but in a single quarter...
We'd like to clarify to you, madam, actually, this is a corporate credit now it's a global corporate credit. Domestic corporate credit has grown year-on-year basis, it is a 14-point odd only, madam. But when it comes for that globally, globally, we have lent during this quarter some INR 15,000 crores on oil companies, which are all AAA rated and the sovereign companies. So because of that, this growth is showing reflecting that. It's one quarter, it has been so high. Otherwise, the normal growth is, it is year on...
INR 15,000 crores for oil companies, is it?
INR 15,000 crores into the oil companies in this quarter has reflected like that. But otherwise, our corporate growth is in line with the ramp growth only, around 14%.
And here, I would like to add another point with regard to our corporate loan book, 78% of our corporate loan book rated A and above. So the quality of assets are also -- we are maintaining that.
Got it. But sir, why has real estate grown 21% sequentially in a single quarter, any lumpy thing there? Or it's...
Because of the base, madam, because of the base low base.
Okay. And sir, any one-off in the interest income, either in investment income or interest on income tax refund? Any one-off in the third quarter of '23?
Not in this quarter.
Okay. So nothing like that, sir? And sir, what would be your outlook on loan growth and on margins for the fourth quarter and for FY '24?
Madam, so far for the first 9 months, we already declared you that the credit growth is shown around 14%. The same 14% will continue. At least that is -- we are confident that, that 14% to 15% growth will continue in the current quarter also, the credit growth.
Regarding the margins, the first -- we have given a guidance for the -- earlier when the April -- during the first quarter, that we will maintain the NIM at around 2.9%. We already now crossed the 2.93%. For the quarter, third quarter, we have crossed 3%. That is our NIM is around 3.05.
With this -- because of the last quarter, October onwards, we have started giving a higher rate of interest on the deposit. And with this, we are continuing with the same rate of interest, and we are sure that we will maintain that margins in and around of 3%.
Got it, sir. That helps, sir. Sir, and just one last question. How much have you provided towards the new wage agreement this quarter and the provisions will remain constant from your own?
Yes, madam. Last time, the industrial settlement was approximately around 15%. The same 15%, now for the last 2 months, we are providing it on an average.
So what is the exact amount, absolute amount? .
Per month, it is coming around INR 70 crores, madam.
Nilesh Jethani, you can unmute yourself and go ahead with the question, please.
My first question was on the deposit side. So I believe in one of the TV interviews, have we heard that Canara Bank was able to raise around INR 1 lakh crore on a gross level. But when I see on a net level, the number comes out to be around INR 29,000 crores, INR 30,000 crores only. So can you just help me understand what is happening at the deposit level? And what kind of growth do we see on a steady state growth from, say, next 3 to 4 quarters perspective?
So we'd like to clarify to you that industrial deposit growth is, industry-wise, it is overall around in and around of 9%, whereas we have grown at 11.25%. As you agreed that last time, we have declared that we have garnered more than INR 1 lakh crore during the special scheme. But I'm sure that you will agree with me saying that 90% of our term deposits, which are existing term deposits, are meant for the 1 year.
So generally, once the 1 year is over, there is a chance of either renewal or for losing of that deposit. So this INR 1 lakh crores, what we have claimed earlier is in that special scheme, we got new deposits of INR 1 lakh crore. Ultimately, when you finally arrived that netting is what you're already seen in that, it has given the reflection of 11.50% approximately, global deposits has grown at 11.51%.
So going ahead, since you also raised INR 1 lakh crore, and I believe some part of your existing customer would have renewed to term deposit, the savings guys, but going forward, what explanations will we carry as far as the deposit growth is concerned?
Since we are already performing better than the industry and recently also we have introduced one more scheme for 400 days at a much attractive rate of interest, the reason behind that offering a better rate of interest is not just that we have any liquidity issue. We are very much comfortable with our liquidity issue. Just we want to share whatever the benefits we are getting it when we are growing it.
So because the customers are our major contributors as stakeholders in our growth, we want to share some part of that towards the customer's benefit, depositor's benefit. That's why, periodically, we are reviewing our position and we are coming out with the new, new schemes. Recently, 1 week back, we have come out with a 400-days scheme. That is also as well received. Within 1 week only, we have received very much traction on that, and we will continue to do these things.
And another thing, this -- we don't have any liquidity issue. The reason is our CD ratio is still at 73%, whereas the industry is at 75% to 78%. We have that comfort in that. So we want to -- though we continue that 14% or 15% credit growth, and with 11% to 12% deposit growth, we are able to maintain that without any difficulty in the liquidity.
Got it, sir. That was really helpful. My second question was on the corporate loan side. So 2-piece to it. Out of total loans, which we have given on the corporate on an incremental basis, ex the oil and gas international company, can you help me understand what portion would be towards greenfield CapEx or private CapEx? And what would be the working capital?
And point two, also, can you help me understand competition in the sector since one of the large private banks recently announced that they left INR 30,000 crores, INR 40,000 crores kind of a corporate loan because of increased competition? So these 2 points, if you are able to elaborate on the same.
You see, our loan book to corporate sector is mostly divided into 2 parts: working capital and term loan. Term loan is predominantly more. But then so far as the so-called corporate loan is concerned, what we understand as corporate loan, our loan book is not that high. So we avoid -- we go for project-specific loans only. And working capital, of course, is there. So that is how we actually go about in our corporate book.
Yes. So out of the breakup, say, if you get increment of INR 100 of corporate loans, what portion would be working capital? What portion would be project specific in the last 9 months?
It will be roughly 65% to 70% is term loan only. Balance 35% roughly is around working capital. .
Got it. And sir, competition...
65-35 is the best proportion. .
Okay. Got it. And sir, competition in the sector? Any competition. Are you guys also facing or seeing intense competition?
You see, we are growing at 14% to 15% rate. And it is not only this quarter, the previous quarter also, we were growing in the same pace. So competition, of course, is there and competition should be there also, but we are maintaining our space. We are growing at a decent pace. So I don't feel any problem with regard to growth in corporate credit. Of course, our emphasis is more on RAM where we have about on and around 55%, and here, it is around 45%. So same proportion we propose to maintain. And growth rate, of course, is very decent in both the sectors, RAM as well as corporate.
Ms. Mona Khetan, you can unmute yourself and go ahead with your question, please. .
So firstly, on the credit cost front. So if I look at the credit cost for this quarter, which is total provisions, if I look at -- total provisions to loans would be around 150 bps. So going forward, where do you think it will settle at, say, in FY '24?
Yes, madam, you see that the credit cost is coming down slowly. The reason behind that is our corporate goal is always our recovery should be more than our slippages. There, we are working very hard on that, both on the side of the underwriting standards as well as on the followup. You look at that sequentially, even if you see that our year-on-year-wise, if you look at both the sides, our slippages are coming down drastically and continuously.
Now our slippages is only INR 3,040 crores, whereas our recovery and upgradation together is more than INR 4,000 crores. So that's where actually the credit cost is gradually is coming down. The second one is our risk-weighted assets. Our risk-weighted assets and our -- the risk-weighted assets are gradually improving quarter-on-quarter, now we have stood at 65%.
These 2 things, majority already, our colleague has shared with you that our corporate book, 78% is from only year and above rated. And so only the remaining 22% out of that 12% is BBB and 10% is BB. There is a reduction in the BB rated corporates. These are all the measures what we are taking. It is giving a benefit for us, both sides as well as -- stress riser side as well as in underwriting standards also that is helping us in maintaining this 1.21%. The 1.21% is much, much less than what we have given the guidance to the market. And we are confident that we can maintain this.
Okay. So 1.21% would be the NPA loss provisions to the...
In and around, the same level, madam, 10 basis points here and there, anytime, it can be less than that or it can be -- but our guidance, we have given 1.5%, but we are maintaining at 1.4%, but we are maintaining at 1.2%, 1.25%. That is the range. As on date, it is 1.21%.
But just trying to double check. So when you give this guidance, is it related to the total provisions or just the loan loss provisions?
No total provisions, madam, everything is taken into account there. You look at that, our PCR also is increasing steadily.
Sure. Got it. And secondly, if you could share the mix of EBLR, MCLR in your loan book? .
Yes, madam, 49% of our advances are MCLR related, and 38% is around RLLR. The remaining is staff loans, loans against deposits, such type of loans.
And this -- the repo linked loans are immediately repriced?
38%, madam, that is. And actually, even the last time in December when the 35 basis points have been increased in the repo rate, we have not immediately passed it on to the customers. We have passed it on only in January. Whereas all other, our peer banks have passed it on in the December itself. We always are considerate towards the customers, madam, because they are our stakeholders.
Okay. So the recent period as such is immediate, but then you choose to pass on depending on the...
Naturally, RLLR, always, it is -- whenever there is -- ALCO committee is there -- post announcement from the regulator, whenever that ALCO committee meets, then they will pass it on to the customer. But MCLR, it is resetting depending on the period they opt for that.
But as such, the RLLR is immediate repricing, right?
Naturally, madam, that is actually the inbuilt of RLLR, madam. Repo rate -- it is directly linked to the repo rate, madam.
Okay. No, what I was trying to understand is the reset period differs between banks. So some banks have immediate repricing, some have 3 months repricing reset date. So what is it in your case?
No, we are entitled for passing on, on the same day, next day. But generally, we look at that -- it's a business call. If you want to grow something, we want to, certain areas, we will pass it on the next month or we will pass it on the same immediately. Generally, it will be decided in the ALCO committee, madam.
And what you are referring to, Mona ji, is basically the MCLR reset dates. MCLR reset date falls on various days depending on when it was applicable. So that we keep on changing accordingly.
Sure. Got it. And on the slippages front, if you could share the breakup of your slippages within the various segments.
Yes, around INR 1,050 crores is from agriculture, madam; INR 1,150 crores is from MSME; around INR 750 crores from retail, madam. We don't have any corporate side slippage in this quarter.
Okay. INR 1,150 crores from MSME?
Yes, madam.
Okay. And if you could also share the slippages from restructured book so far?
Actually, there is an RF1 and RF2. RF1, the slippages is around 2.8%, madam. RF2, it is related to the MSME and retail, it is around 14%, madam.
Okay. If you could share the total quantum and also the total restructured book, if I have to include the MSME and both RF1, RF2 and exclude the...
I'm sharing with you the outstandings, whatever it is there as on December 31, madam. So RF1, our outstanding is INR 2,800 crores. RF2 is around INR 11,500 crores, madam.
Okay. And the slippage from INR 2,800 is 2.8%?
Yes, madam.
And the second one, INR 11,500 crores?
It is 14%.
14%, okay. And the MSME book?
So RF2 is an MSME, part of that -- the MSMEs, originally, it is there. There also, it is the slippage is around 12% to 13%, madam. There, the outstanding is INR 2,200 crores.
Okay. So if I have to look at the total restructured book, it will be around...
16,000 odd, madam.
16,000 odd there, okay. Got it. And how much is...
Mona, kindly request you to join the queue as there are several participants. Mr. Ashok, you can unmute yourself and go ahead with the question, please?
And congratulations to you, Mr. Raju, for taking over the MD and CEO-ship of such a large bank, Canara Bank. And we are, I think, meeting you for the first time in this analyst meet of Canara Bank, and all the best to you with that.
Sir, I would also like to complement the bank, the entire top management and the people of the bank for giving another -- of course, I see Ashok Chandraji also. Sir, welcome to you, and seeing in Canara Bank, on a lighter note. Sir, compliments to you for yet another set of good numbers.
Sir, I would like to -- I joined a little late because I was in the other bank's conference. I don't know whether this point is covered or not. So my first, sir, question or rather some information point is on the technology front. On the IT front, where do we stand? Because I remember Canara Bank, long back, years back, was the least IT bank, I mean, it started very late on the IT. But now, of course, it has caught up very well. So what are our present position? What are the budgets? Are we going end-to-end solution for the entire bank? Or how are you making it as a digi bank? Some views on that, sir, and the budget.
Definitely, sir. I would like to share with you that Miti generally assesses all the Indian banks, whether it is a private sector or a public sector based on certain journeys of they have undertaken, and it is reflected the transactions in those journeys. According to those journeys like a semi-urban, rural, northeastern states and all, everything will be taken into account.
Based on those things, 2021-'22 financial year, previous year, Miti has ranked Canara Bank as #1 in India among 47 public sector and private sector banks together. That shows the way that we are adopting the technology, how fast we are reacting to that. That steps what we are taking is resulting in the number of transactions, how it is improving quantum-wise.
Just 2 years back, we were at INR 192 crores transactions. Then last year, it has gone up to the INR 258 crores. And this year, already we crossed INR 330 crores, and we are left with 3 more months. And we are sure that we are going to cross 400 crores. The major contribution what we are getting is the initiation of what we have taken in upgradation version of our mobile app, ai1. It has been introduced in July -- June, July last year. Within 6 months, we got a 4.2 to 4.3 public rating on the public -- on the Play Store, sir.
And this is -- the people generally, whoever is using that, they felt it very customer-friendly with an innovative versions like whenever you feel some discomfort or some suspected transactions in any of the mode, we have given a liberty to the customers that they can block in and block out. This feature has been introduced by us that has been attracted by the customers very well. And in just 1 year, our onboarding the customers and active customers have increased from 77 lakhs to 155 lakhs.
And simultaneously, we realized that our penetration in the rural and semi-urban, our concentration is very high because 60% of our branches are in rural and semi urban. We thought that popularizing a QR code will be another area so that you can bring our rural and semi-urban customers into the digital front. That's why we initiated the QR code population in addition to the Beam QR code. This QR code will be generated by not at the center level, each branch they can generate and give it to the customers.
And last 12 months, we have distributed more than 21 lakh QR codes, and this is the highest among the public sector banks. The QR codes, also in addition to that, to make them more comfortable, these digital fronts, whatever we are taking, we are taking in the local language, vernacular languages, 11 languages, we are introducing it. And another one, what we are doing is we created a QR code app, that is like a pass book.
So generally, when you find a mobile app, you will have a passbook. But one vendor, if suppose he is having 4 QR codes or 4 pass machines with the different, different outlets, he should be able to readily verify the QR code wise reconciliation. To make that more comfortable, we created this app, and this has been given to all the people. It is also ai1 Merchant App. That is also well received, so that reconciliation will not be a problem.
And for any transaction, they need not go through their passbook. They can look at only for this app and the pass machine-wise or QR code-wise, they can reconciliate.
The third one is in India, first bank who has introduced the audio system in confirming that transaction success in the QR code. And it has been first experimented in Bangalore and it is well received by the people. So far, only India, only private operators only is providing that audio, the QR code box. Whereas now in the banks, we are the first bank, we are enhancing to entire country by this month end. And definitely, that will have a game-changer.
Another initiative is we are also participating in the UAT stage that CBDC and definitely, we will come out immediately whenever that everything, infrastructure is -- infrastructure is ready. Once the UAT is over, we also will come out with the CBDC. Then we are going for that digital lending platform comprehensively end-to-end so that our majority of the ramp, we want to route through the digital front, that we are going to achieve it by next 6 months. So we are working very hard on that.
And in addition to that, we want to provide API banking to our corporates. That is another game-changer for our CASA. We know that we have to work hard on our CASA. We are taking several initiatives on the CASA. This is one of the that -- we are dealing with the corporates, but we are unable to encash it because of lack of the technology platform. But we are coming out with that API banking within this month, the next week with the 15 features.
And several such, even in the cloud, even in the many such areas, we are working on that. Many initiatives have been taken. And just 2 years back, we invested INR 700 crores. Last year, we invested INR 1,000 crores. This year, we have budgeted for INR 1,400 crores. And next year, we'll continue for higher implementation of the technology, sir.
Thank you very much, sir, for taking us such a long journey of your IT journey. And it's good to know many of these things were not known basically. But yes, thanks a lot for -- and such a -- with a great speed, you have taken us to the entire journey. Point well taken, sir, and we give credit to you for the same.
Sir, I have got a couple of other some questions and some data points. One is that in that point number 17 SR of INR 533 crores, the provision figure is not given. I believe it must have been provided 100%.
Yes, sir.
Okay. It's INR 533 crores is fully provided for. And sir, can you just run through note number 20, sir, where the taxation DTA and P&L INR 2,490 crores, and we have taken the provision, which was earlier provided in '21-'22 of INR 1,578 crores, reduced from that, that is reversed, and INR 443 crores annually because of the new tax regime. So can somebody like we have this year, the tax provision of INR 949 crores... .
Our CFO will clarify to you, sir, exactly that regarding on that tax benefit and dollar. Mr. Majumdar is our CFO. He is clarifying to you.
Sir, your query is that why we have provided higher tax? Or what exactly is the query?
No, I just want to know number one, we have come in the new tax regime now. So what is the DTA figure now left because here INR 2,490 crores would have been into the profit and loss account in this quarter, but the excess provision of '21, '22 of INR 1,578 crores has been reversed. So going forward, where do we stand? What will be the picture on 31st March 2023?
Sir, our DTA presently remains -- is at around INR 6,600 crores. As -- so if you know that -- as far as DTA is concerned, that up to 10% of my capital, it is allowable. So I am only maybe INR 200 crores, INR 300 crores more than that. With this quarter profit , say, for the March quarter profit, I will be coming to a DTA level which is just about 10% of CET1. So which I did not provide any additional for that, so that is one part of it. That is when I talk about what is DTA and provide it.
Another question is maybe that when you are -- when I have moved into a lower tax regime, that how my tax -- like my provision, I have a provision of around INR 900 crores, which we have provided. Sir, whatever accumulated losses I had at the beginning of the year, that was around INR 7,300 crores, INR 7,400 crores. That entire amount has been completely wiped off now until -- by December. So I do not have any accumulated losses.
My slippages are coming down, that way, my provisions are coming down, my realizations are going up. So my provisions are getting reversed. So my taxable income, that way is going up. That is how that this is a bit higher. You may feel that in spite of my reduction, there is INR 900 crores. That is mainly due to that I no longer have any accumulated losses with me. And my deductions, taxable deductions in the form of provisions, more NPAs and provisions are coming down. So I have to now provide more for tax because taxable income is growing.
Yes. So now whatever profit we have now in the March quarter, we will have to provide additionally to that extent, bearing some set of small amount. So that gives a little indication and it will give a clear picture. Sir, my last question in this round, sir, Raju, sir? On the credit growth, our domestic credit growth this quarter was 2.67% and overall 3.26%. I might have missed some initial comments of yours. But just in order to -- for myself to be a little comfortable, what kind of like figure we look for March quarter, number one.
And now going forward, '23-'24, when overall credit scenario is improving, and you are a large bank, I understand, so where do we stand on the credit growth front? And you are already, I think C-D is around 73.5% something. So going forward, will you also be compatible up to 79%, 80% going forward with such kind of profitability?
Sir, actually, for current 9 months period, the domestic gross advances growth is around 14%. And our RAM also is growing around 13.81%, more or less 14%. So this 14%, whatever we have first 9 months, we have grown. We are confident that this current quarter also, we will grow at least to minimum that 14%. That is a guidance for what we are going to give to the analysts, sir.
Regarding next year, we feel that the same tempo will continue, unless otherwise any unexpected things happens. But otherwise, we are more or less in the 14% to 15% growth rate will be there.
Another question, what you asked about C-D ratio. C-D ratio, actually, earlier, we have started our journey just 2 years back, we were at 67%. Now we have come up to -- came up to that 73.51%. Suddenly, we don't want to jump into that to 79%, but we are aiming for 75%, 1% or 2% in and around. That is our, actually, the guidance we are looking at, and we will work on that, sir. But presently, we are at 73.5%, and we may look at 75%, 1% or 2% here and there.
Am I permitted to ask one more? Moderator?
No, sir. Sorry. Mr. Deepak, you can unmute yourself and go ahead with the question.
I have 2 questions. Number one is I just wanted to understand our provision coverage ratio currently at 87% around has been on an increasing trend. So what is the optimum or steady-state level we are looking at in terms of our PCR ratio?
And my second question is in terms of ROA. I mean what sort of ROA vision we would have maybe for the next year on [Technical Difficulty]
Sir, first, the provision coverage ratio. Provision coverage ratio, we have not kept a target that's something we have to achieve it like that. But we want to make our balance sheet is a future ready as we were telling for last 2 years. We want to continue that. Whenever we have the sufficient profits in that, we want to strengthen our balance sheet by seeing that as much as possible to provide for our stressed assets.
So our continue -- whatever last 1 year, we have increased almost 300 basis points. The same tempo will continue in the future also. So the provision coverage ratio will gradually increase, show a steady growth on that. The second question, sir, what you asked?
ROA.
Return on assets, this is actually the -- we have achieved 0.76%, sir. And what we have given last time, your guidance is 0.70%. So whatever the guidance we have given it, for March, it is 0.70%, we already achieved at 0.76%. So definitely, the same tempo will continue in the future also, sir.
I mean, is there any thought process to target at least 1% ROA next year?
So that's what I'm telling, quarter-on-quarter, there will be a steady growth. We may aim for the 1%. We may come 5 basis points here and there.
Okay. Yes, that's fair enough. I mean even we are targeting maybe 90 to 100 basis point kind of ROA...
No, because next year -- so whatever the budget says, is to be discussed in the Board, and then we will come out with the guidance to the public. But generally, with the same tempo, what we are showing for the last 4, 5 quarters, I'm sure that we will be nearer to the 1% with the 5 basis points here and there.
Right. And in terms of PCR, just to follow up on that. So 90%, 95% is the level that we want to achieve even at this level. Or that is 85% is the optimum PCR level that you would like to achieve?
No, sir, if it is 85% is optimum, then we wouldn't have showed 86.3%. We already shown that PCR is 86.3%. So we are aiming that every quarter, let us show some 1% additional comfort in the form of additional PCR. We are trying to do that.
Mr. Jai Mundhra, you can unmute yourself and go ahead with your question.
Sir, my question is on incremental margins, right? So if I look at 444 schemes, and there, the bank is giving a deposit rate, very lucrative deposit rate of 7.1% plus, and then our current NIMs are 3%, almost. So this 7.1% depositor scheme, right, this is clearly NIMs dilutive, right? Or you have some loan products which are yielding you more than 10%. So I wanted to understand...
Yes, sir. See, always your credit portfolio will be a combination of those things, sir. Whatever the pricing we have shown to the people or whatever it is, it is ranging from [Technical Difficulty] medium risk, moderate risk and all. So moderate risk, people may be paying a higher rate of interest. That's the reason you look at that even last quarter, entire quarter, we have offered 7.5%, 7%, plus 0.5% for seniors citizens on 666 deposit. That has been launched on October 6.
Throughout the quarter, we paid that 7.5% on the deposits. We have almost more than INR 1 lakh crore, we garnered in that scheme. But even then we could manage that cost of deposit is 4 point -- it has increased it from 4.09% to 4.19%. Whereas yield and advances, you look at that, we have increased almost 20 basis points. So with that comfort, we are sure that we can manage this whatever the -- we have shown that 3% margin can be easily manageable. And let me correct to you that our deposit is 400 days. Based on our comfort only, we are offering those periods.
And it is basically a weighted average cost. It is not that the whole portfolio of deposits will consist of this 400 days deposits. So it is better depicted in cost of deposits and yield on advances. So there, I think we will be able to get better NIMs.
I agree, sir, that this is on weighted average one should see, but I was asking from incremental perspective. Of course, there are a lot of tailwinds, right? You have had -- EBLR portfolio has been repriced by 225 basis points, give or take, right? And hence, we have had NIMs which are 3% multi-quarters, multi-years higher. But if on incremental yields are such that if this deposit schemes of 400 days is actually NIMs dilutive, on an incremental basis, then NIMs will come off mathematically, right? So I want to check...
We will do some course correction and balancing, of course. It is not that once we have introduced a scheme, it will continue for a long time. If the interest rate scenario changes drastically, which we don't foresee right now, then, of course, we also have to do some corrections in the liability space so far as the rates are concerned.
So as on today, we've thought that this is the optimal balancing what we are having today, NIM of around 3%. As on today, we expect that to continue. That is what we want to see.
And another, Mundhraji, this offering of special deposits is not an unlimited period, sir. These schemes always will be a limited period to the extent of our appetite. Whenever we feel that our appetite is completed, we will withdraw the schemes.
No, of course, sir. What I wanted to check is, is there any product on the lending side which is yielding you, let's say, 10%?
Many such products will be there, sir. Many such products will be there. We have a Canara-budget scheme. That will attract -- it's 11.5%. There is almost INR 19,000 crores portfolio. Like that, several schemes are there. We have ample schemes. Bucket-wise, if you compare, no, it is easily manageable. That it's not a big issue.
Sure, sure. Okay. And sir, on your gold loan, if you can bifurcate of your INR 1 lakh crore plus gold loan, how much is agri backed and how much is retail gold? And if you have a specific strategy to sort of grow the retail gold loan book?
As on date, our 96% -- 95% to 96% is agriculture only, sir, in the gold loan. Because our major gold loan contribution has come from South India, where our branches are located mostly in the rural and semi-urban branches. But the retail products also is there. There, the traction is there. But we look at that keeping on our commercials, whether retail -- retail, we may not be able to offer the competitive rate. So -- but retail, there is a product, there is a traction, but the portfolio is around INR 5,000 crores.
Understood. And sir, if I were to see your PSL income, right, so usually, it will have some seasonal -- seasonality around it. Third quarter, I think the PSL income is very, very minuscule at around INR 70 crores. The fourth quarter, I mean, [Technical Difficulty] the seasonality, should it be like similar to 3 quarter or third quarter? Or it can rise substantially? Or it will only rise going into next financial year, first quarter, second quarter?
Normally, fourth quarter would also -- we are expecting it to be equally muted, and it all depends on the other bank's appetite. It's a marketplace. We are ready with surplus PSLCs to issue. But we don't foresee much of a traction in that in the fourth quarter.
And lastly, 2 questions, sir. One is, what would be your NPA recovery expectations in fourth quarter? Because there are a lot of assets which are nearing resolution. Some of them are large, some of them are medium-sized. So what would be your best guess for recovery, including NCLT and everything in fourth quarter?
Sir, we would keep it like this, that on a quarter-to-quarter basis, our recoveries have been -- our reduction has been more than our slippages. That trend will continue, sir.
With regard to the specific numbers, it is premature. Yes, you are right, in many such bigger cases, we are nearing the resolution stage. But unless the money comes, we have seen this happening previous quarters also, that money was supposed to come, it didn't come. So there was a spillover. So we want to keep it like that, sir, in this interaction that yes, we will maintain that trend of more recovery than the slippages.
So there are last 2 clarifications, sir. One is our capital number that is shown, that includes the interim 9 months PAT, right? That's first clarification.
Yes, yes, yes, that is there. That is a part of that.
The interim PAT is included, right? That is...
Yes, sir.
Sure. And second clarification, sir, I just missed that, that INR 15,000 crores of oil and petroleum disbursements in this quarter, they're in overseas book or -- because overseas book...
Overseas book, sir. Overseas book.
Because, sir, that quantum is not that Q-o-Q increase if I see is not to that extent, right? So...
No, it is there, sir. From INR 33,000 crores, it has increased to INR 50,000 crores. Out of that, INR 15,000 crores is from oil companies in the overseas.
Mr. Anand, you can unmute yourself and go ahead with the question.
First and foremost, your OpEx seems to be far, far lower. Is it that basically you are undercutting on the OpEx front, not adding as much of franchise your people on the ground because in the current scenario, you will need lot of deposits. Basically, you're trying to mobilize deposits largely through offering higher rates rather than expanding branches as much that you need to? Any comments over there, sir?
So you're -- regarding the operating expenses, your question is, so operating expenses, we are the one bank among these amalgamated banks, as best to use their synergy benefit. You can look at, you can compare among all these 5, 6 banks, which are subjected for the amalgamation. We are able to maintain that operating expenses very controllable -- under control. The reason behind that is we are using our resources very optimally. And while closing down the outlets or while redeploying our units, we are looking at only the area where it is a potential.
And wherever certain leakages were there, that we could plug in very well. That is the reason when our operating expenses are very efficient. Especially when there is an amalgamation, we got an opportunity to renegotiate with all our 10,000 landlords, 10,000 plus 14,000 ATM landlords. On the rental values. There, we could save a lot of money due to Corona or whatever it is there, competition is there in the market. Almost every year, we are saving a near to INR 160 crores what we are paying. We have saved money.
So if you look at the 10 years, next 10 years, it works around more than INR 2,000 crores. The same thing when our volumes became a double, we could renegotiate with all our vendors in the technology. And in -- we have saved in 1 year almost more than INR 500 crores. It is not that we are compromising with our network or anything. Even now, you can compare that our branch network is much, much bigger than all our peer banks.
We are not too keen on closing all the branches wherever it is unremunerative and all. We have a responsibility towards rural and semi-urban. We will continue to continue those branches. But at the same time, enhancement when you go for the -- instead of going for an ATM, we are looking at with the same transaction, same type of services we can extend through BC point. We are focusing more on extending the BC point.
That you can easily make out that September, our BC points are 8,900. Now we are already -- actually, the -- now recently, we have crossed almost to 14,000. We have recruited almost 6,000 BCs in these last 1 or 2 months.
So we want to expand our outlets. So we want to expand our services, but at a better operating -- with a minimal operating expenses. That is the reason it is showing that our OpEx is under control.
Hope so. But then basically, sir, if you look at your CASA ratios and all, even during doing the best of the times were not as good as one would have expected it to be after the [indiscernible] and now you are facing a lot of challenges on the deposit front. That's the reason the kind of schemes that you're offering could hurt margins going forward?
No, here, sir, let me come in, our OpEx expenditure, what you are saying, operating expenditure, it is not that we are reducing our expenditure for garnering of deposits, no. Our branch network is there. We are having enhanced BC network. From there, we can garner CASA. So it is not our intention to do wholesale banking from the liability side. No.
We still intend to go deeper and from our own customer as well as bringing in fresh customers, we want to increase our CASA. So that will be our endeavor for the coming quarters as well.
That is the reason we are investing heavily on the technology, sir, to garner this CASA. We know that we are -- our CASA is low historically, but we want to correct that. And you will see in the next coming quarters that a clear change in that CASA, sir. That's why we are coming out with heavily investing on the technology to attract more younger generation as well as various sectors.
Sir, secondly, on the ECL provision norms, which have just come out, any impact that you can talk about that you have calculated? Because I believe that parallelly you also submit your accounts based on IFRS to RBI. So at least there, you would have some...
That is just an exercise which we do because RBI, as you all know, have not yet come out with any guidelines with regard to Ind AS for the banks. So that is an exercise which we'll continue to do. No impact so far as our bank is concerned because we are not following Ind AS. So I want to keep it at that only.
So -- but if you have to, then any rough estimate that you have...
One thing we can say that the GAAP, that capital GAAP that will arise, we are at par with all our peers. In fact, we may be a bit better off. This much only we can say that from the capital point of view, the extra provisions that goes into that, what the GAAP that exists, we are no less. This much we can say at this point.
We are not more than...
We are not more than that. We are at par with all our peers.
Mr. Pranav, you can unmute yourselves and go ahead with your question.
Sir, congratulations on the great set of numbers. Sir, I have just one question. When -- so you took a number of price hikes in loans and also hikes in deposit rates. I just wanted to understand that what percent of book has been -- in loan book, actually out of price X, how much of it is coming -- yet to come, time weighted? So for example, say, you have taken 35 basis point hikes, then how much of the book is still remaining because of the time difference because some of the loans will get reset on, say, X amount of debt, X number of debt?
And how much of same thing for deposit rate. So basically, incremental spread on existing rates, weighted average, what is that? So is it about current NIM or below current NIM?
Sir, it is related to the repo linked rates. We already clarified to the people that about 38% of portfolio is RLLR linked. There, it is already affected. The remaining 49% of MCLR is 1 month, 3 months, 6 months and 1 year MCLR, that is the resetting dates. We have started growing these things for the last 2 -- October or August something is there. And now December -- we have affected in the January.
So January, we affected that well, you will get where our majority of the -- even 80% of our loans are 1-year resetting loans. So because in those 1-year resetting loans, you will get it benefit only after up to the December, whatever it has happened only that you are entitled for recovery until the 1 year is over. So that will have an impact on that as and when it has come for the resetting.
So I don't think it will have an impact on our NIM at any cost. Because you look at the market, even now today, our MCLR is less than all the big peer banks. There is -- we are not passing whatever exactly other banks are passing on to the borrowers.
Right, sir. On the deposit side, you have taken whatever hikes you have given. Are they completely in the base? Or still, there will be some increase in deposit rates going forward? Like I'm saying about the existing rates, not...
The rate of interest on deposit defines depending on our liquidity comfort, sir. As on date, we are comfortable to match what we projected in the credit growth. So I don't foresee any big change in that deposit rates near future.
Sir, I'm not asking about new hikes. So if -- suppose repo gets above some certain level, you will get...
Look at that, sir. That scheme when you are given our, we have a term deposits of INR 6.5 lakh crores. So that scheme, what we introduced, yes we got it around 80,000 to 90,000. That means remaining are with the normal rate no. It's not that when we have offered a special scheme, all deposits will convert into that special scheme.
No, no, no, I'm not saying that. I'm saying that is 3 months of rate hikes of deposits is in interest expense of this month. That's it. I'm not saying anything other than that.
So last quarts, when we enhanced it to -- from October 6 onwards, that means entire quarter has been already passed it on.
Perfect. Perfect. So that means that in the short term, that is Q4, Q1, if everything remains same, then our NIM is in the same narrow range. Is that right?
We are confident -- we are confident, sir, that our...
Sir, we have one question from the chat box. So Q-on-Q jump in interest income was quite high at 11%. Is there any one-off?
No, madam.
Okay. And sir, any plans in capital raising?
No. Actually, as it is, we are already growing quarter-on-quarter. Our CRAR is improving comfortably. We are comfortably above 16%. Still, our Board has approved last -- during the last -- first quarter, that's almost INR 9,000 crores. Out of that, we are already raised INR 6,000 crores. There is a gap of INR 3,000 crores. Depending on our cost and the requirement only, we will look into that under appropriate time, whether to go for the INR 3,000 crores or not.
Sir, we'll take that as the last question. Participants, so thank you for participating in the conference call. And thank you, sir. I'll hand over to the management for the opening -- for the closing remarks. Over to you, sir.
Thank you. Thank you so much, all the analysts who have participated and taken so much pain to participate in this, sir. We can assure you from the top management that whatever the performance we are showing consistently for the last several quarters, it will continue in the future also with much more aggression in the technology side. We are actually thinking of focusing more on reconnecting the customers through a better technology. We assure -- we can assure you that this performance will continue.
Thank you so much, sir.
Thank you once again.
With this, I shall now end the meeting. Thank you.
Thank you.