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Canara Bank Ltd
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Good evening, everyone. We welcome you all 4Q FY '23 earnings web call of Canara Bank. Thank you so for giving us this opportunity to host the call. Today we have with us Mr. Satyanarayana Raju, MD and CEO; Mr. Debashish Mukherjee, Executive; and Mr. Ashok Chandra, Executive Director; Mr. Hardeep Singh Ahluwalia, Executive Director; along with senior members of the team.Without further ado, I hand over the call to MD sir for his opening remarks, post which we can open the floor for Q&A.
Good evening to all of you. Good evening to all our well-wishers who have attended this interaction session, sir. I wish to present a few highlights of that our Canara Bank's performance for the financial year '22-23 to all of you. I know that you might have gone through the presentation already, but I would like to share some of the few highlights once again.Our global business has stood at INR 2.41 lakh crore with a growth rate of 11.72%. Our gross advances, global advances have grown at 16.41% and stood at INR 8.62 lakh crores. Our domestic advances also has grown more than 15%, 15.01%. Our RAM credit has grown at 13.23% and stood at INR 4.77 lakh crore. With this improvement in the business has resulted to an excellent growth in the operating profit.This current quarter also, we have recorded a Y-o-Y record growth rate of 16.94% and an operating profit of INR 7,252 crores. The year-on-year, if you look at that, sequentially for the whole financial year, our operating profit growth has increased from INR 23,090 crores to INR 27,715 crores with a growth rate of more than 20%. This resulted us in a quarterly growth -- year-on-year growth of 90.63% in our net profit, and that has -- we stood at the net profit of this quarter, March quarter, is INR 3,175 crore.Here I would like to share with you that the first time Canara Bank in the history of its Canara Bank, it has crossed the 5-digit figure for a financial year in the net profit. With the whole financial year, our net profit together has grossed INR 10,604 crores as against previous year of INR 5,600 crores odd.Our net interest -- this net profit or operating profit, whatever the growth we have shown, it was led by net interest income with a growth rate of 23.01% and the current quarter, it stood at INR 8,617 crores. With these good numbers in the profit bottom line, our gross NPA has reduced considerably to the extent of 5.35%, the present level is, with an Y-o-Y decline of 216 basis points. Our net NPA also has considerably shown a declining trend with a 92 basis points Y-o-Y in decline and stood at 1.73% as against a commitment of the Canara Bank at 2%.And again, we continued our strengthening the balance sheet, future-ready balance sheet. We -- this quarter also we have tried to provide as much as possible. That has resulted in an improvement in our PCR at 87.31% with a Y-o-Y increase of 314 basis points.Further to add this are some more -- actually the key parameters we would like -- I would like to share with you is our housing loan portfolio has a trust area in our retail lending portfolio, and that has grown at 14.27% and stood at INR 84,364 crores. Our gold loan portfolio is continuing our trend, whatever the last 2, 3 years, we are showing the growth rate. And this year, also, we could record the same growth rate, and the growth rate is around 33.82% year-on-year and stood at that, the portfolio is INR 1,23,185. Our retail credit has shown a growth rate with the support of housing loan with a double-digit growth at 10.91%.and our overall outstanding balance stood at INR 140,000 crores.With all these things, I would like to share that the Board has recommended for a dividend of 120% of the total paid up capital as against the 65%, which we announced over the last year. For every INR 10 share price, now we are recommended for a dividend of INR 12 as against earlier last year recommended amount of INR 6.5. With all of these initiatives and our return on equity has -- stood at 19.49%, one of the -- among the public sector banks, one of the best figures we can show to the -- we can reflect in this balance sheet with a jump of almost 667 basis points.Our CRAR is 16.68%. We are continuing above the 16%, though that we have shown the credit growth rate at more than 16.4%. Still we are able to show the CRAR at above 16% because of our internal accruals. Our return on assets also, we achieved at 0.95% year-on-year with a basis points of 38 basis points improvement. Our cost-to-income ratio, this is sequentially for whole financial year, we could maintain a below 45%, the 44.79% with 137 basis points improvement.Our net interest margin, as we have promised to that -- committed to the investment community or stakeholders that we will manage the above the 2.9%. As against 2.9%, the last 2 quarters, we are reflecting our NIM of more than 3% and the just concluded March quarter also, we could able to show that the 3.07% NIM with a Y-o-Y improvement of 14 basis points. If you look at the complete financial year, our NIM is now stood at 2.95% as against our guidance of 2.90%.These are all the few highlights, sir. Now it's open for the dais, that's the people -- the investors, our well-wishers, we are ready. My -- all the whole time Director, Executive Director, Shri Mukherjee sir, Shri Brij Mohanji, Shri Ashokji, Shri Hardeepji along with me and our CFO and all our top management people, we are ready to take any of your clarification and to clarify you, sir. Over to you, sir.
Thank you, sir, for your brief opening remark. We'll start with Q&A. [Operator Instructions]We'll take our first question from Gaurav Kochar.
Sir, I have a few questions. Sir, firstly, can you clarify what is this INR 720 crores, which is there in the other provisions? What does this pertain to?
Sir, this is the INR 720 crores is just to strengthen the balance sheet for future ready. Whatever we feel that there is some stress in some areas, even if it is in the news or something, to take care of that future shocks or any sudden things, to strengthen that balance sheets, these INR 720 crores have been additionally provided, sir. Not the specific. These are all additional cushion what we have in the balance sheetm, sir.
Sir, what would be the total quantum of these additional provisions today on the balance sheet other than PCR?
Actually for against the mandate ratio requirements, we have quite comfortable additional surplus is there, sir. That's our PCR itself is reflecting that we are at now 87%. Every quarter, we feel -- we strongly committed that at least 100 basis points, the additional cushion has to be brought to this, whatever the NPAs are there. And the same journey is continuing. And this quarter also, we have strengthened our PCR from 86% to 87%, more than 87%. That itself reflects the cushion, whatever it is available in that system, sir.
One is PCR. If there is over and above PCR, like you have provided INR 720 crores. I just wanted to understand what is the total that you have already provided.
See, if you look at that, sir, actually, our absolute numbers in the gross NPA is around INR 46,000. Whereas when it comes for that net NPA, it is only INR 14,349. That means that the remaining entire amount is under the provision available. So that much cushion is there. Of course, yes, as per regulatory requirement, we are supposed to provide certain amount. But we always go beyond that regulatory requirements and provide the additional -- the provision. Ultimately our aim is to see that our net NPA should come below 1% at the earliest. That is the motto, we are moving on that.
Sir, the next year's credit cost at 120 bps is assuming the PCI to increase further and in net NPA going below 1%. Is that the way we should look at it?
Actually our efforts will continue further, sir, but we have given that commitment to -- our commitment figures in the last PPT of the last page that we are committed for the 1.2% in the credit cost. Of course, we are a little conservatively, we are giving that. But we are confident that we will be much better than that. And even net NPA, we have given a guidance that 1.2%, but we are definitely confident of 1%.
And sir, moving to margins. Currently your full year margin was 2.95 for fiscal year '23. Next year, you are guiding for 3.05, which is 10 basis points higher. So I just wanted to understand what will drive that expansion? Will it be the MCLR loans that will come up for repricing? Or will it be more of a mix change towards the RAM book?
See, entire thing -- actually the -- initially also last 2, 3 years, we are communicating to the -- our stakeholders that our composition of RAM and corporate will continue at 55% and 45%, 2% here and there depending on the opportunities available. Suppose if we have a bigger opportunity in the corporate, we grow 2% more in that. Or if we look at that higher returns at RAM, we divert it to that RAM. But ultimately our composition is that's the 45%, 55%, we may move to 43, 57 or some, that's the range we may look at that for -- because keeping in the margins are in our [Foreign Language] intact. That's the focus on the margins.The second one, what you are asking about MCLR and all, external benchmarking rates. Our 49% of total asset book is under MCLR. This MCLR, even now we have 40% to 45% of the portfolio is still to be repriced because most of these MCLR-linked accounts will be reset annual basis. So that's the better -- comfort the bank is having in our hands, that remaining 40% of the portfolio still had to be repriced. That will be repriced in the days to come, whenever the respective account, loan account is completed 1 year, and that gives the additional income.
And sir, on the same question on the liability side, what percentage of your term deposits are already repriced? And what percentage will come up to repricing in the next 6 to 12 months?
Actually whatever the 1-year period, what we have taken that, that's the entire thing repricing is going on, and we are now repricing -- we are able to reprice at a lower rate of interest. Whereas in the last 2, second quarter, third quarter and fourth quarter, especially second and third quarter, what we have taken in the form of CDs are bulk deposits. We [indiscernible] at a little higher side, but that we have now because in the first quarter, there is no much traction from other banks. We want to encash that and we are able to encash it. We are repricing that in the downward trend.But at the same time, our focus more on the CASA deposits this time. Under the interest rate -- increasing last 1 year because of the high rate of interest regime. We, along with the other industry players, we also have suffered in the CASA front. That has been little bit stagnant in the first 2, 3 quarters. But in the fourth quarter, we have seen some traction. So quarter-on-quarter, in the CASA itself, we have grown 4.26%. We want to continue that trend. That trend we want to continue in this all, the quarters of this current financial year, that will address a majority of my repricing whatever it is to be done.
Just last question, sir…
Gaurav, can you please rejoin the queue?
Just last question, if I can squeeze in.
Okay. Please go ahead.
Yes, sure, thanks. Sir, the growth that you're guiding for fiscal year '24 is around 10.5%. And if I look at the ROE of the bank is well ahead of 19%, 20%. So in that context, do you foresee any capital requirement? Or you think that the internal accrual will be enough to meet the growth targets in the near term?
Sir, we have given a guidance of a credit growth at 10.5%. [Foreign Language] And the present CRAR in -- for the Canara Bank is 16.68%. I think we are one among the top -- the highest CRAR banks among the peer banks in the public sector front. Comfortable in a common equity, we are comfortable in Tier 1 and Tier 2. This 16.68%, we could achieve it for the last 1 year, though the last year credit growth is more than 16%. Even if regulator introduced [indiscernible] accounting system and the loan loss provisioning is to be required, it is the time available is 5 years. And every year we need actually the INR 8,000 crores. We assessed our requirement that in the 5 years, our total requirement is INR 42,000 crores. Out of this INR 42,000 crores, every year we are on approximately we need INR 8,000 crores to INR 8,500 crores. And our net profit first time, we have crossed INR 10,600 crores. I'm sure with that even after announcing the dividend 20% of my net profit. My existing accruals itself is required to -- enough to meet the additional requirement, whatever the regulator expects from us.If you maintain -- even maintain at the double-digit growth in the credit for the next 2 to 3 years or CRAR without going to the mark, we can easily manage above 14%. But at the same time, in the next Board meeting, again, we are going to the Board only to replenish of our AT1 bonds are Tier 2 bonds which are maturing or which are at a higher rate of interest when the market is in our favor. We don't mind doing that. To that extent only we go to the Board and get a permission in the next Board meeting. But we are not in plans for any common equity in the next 1 or 2 years because we are comfortable in that.
Sure. Sir, just to clarify, you mentioned INR 8,000 crores of provisions required for ATS. Can you explain a bit…
No, sir, ATS [Foreign Language]. This is not ATS. If -- so far it has not been implemented in India. See, India is, that is the loan loss provisioning, credit loss provisioning. If at all, even regulator comes for that, implements that, we are very active on that. So that demands a higher provisioning. That provisioning also, we can meet from our internal accruals. But as it is, we are so comfortable at 16.68%, and it is the highest among the peers, public sector peer banks, 16.68%. And we don't require any additional capital at this moment.
[Operator Instructions] We'll take the next question from Anand Dama.
Sir, first, if you can just help with like the broad breakup of slippages because what we've observed is then for your -- for you basically the slippage [indiscernible] for other slippages have been on a higher side. So if you can just spell out what's the aggregate slippage is during the current quarter and how it compares with last quarter and [indiscernible].
So your question, I understand that that its regarding the slippages, sir, because your voice is breaking, but I understood that you asked about the slippages. I'll explain to you that slippages, sir. Just you look at that, the slippages, our focus is very much on the slippages as well as on the recovery, both the fronts. If you study that, the last entire financial year, that the quarter-on-quarter the slippage is coming down. The March '22, our slippages were INR 4,736 crores. It has come down to the December '22, the slippages were INR 3,210 crores. But whereas now the current quarter, March quarter, our slippages are further down, and now the current quarter was only INR 2,973 crores. As against that, the cash recovery in the current quarter was the INR 4,349 crores. As against that slippage of INR 2,973 crores, our cash recovery itself is INR 4,349 crores. There is a INR 1,400 crores more than what we allowed the slippages.Here I would like to share with you that, sir, our [ SMU ] position, if you look at that, our SMU position also has been drastically has come down. Sir, last March '22, our SMU, if you look at that INR 5 crore and above 1.53%, which it has come down to the 0.76%, even 50% almost it has come down. That's the way we are working on that in both the fronts together to address this NPA position, sir. That's the reason actually we could reflect, we could brought down the gross NPAs to the -- what the percentages we announced in the gross NPA and net NPA percentages that we could show that 5.35% and 1.73%.
Sir, my question was about the broad breakup of slippages during the current quarter, in terms of agri, corporate, and MSME.
Broad slippage bifurcation you want, sir?
Breakup of slippages, yes, yes.
INR 2,973 crores. Actually there are no account has slipped from the corporate, sir. This entire INR 2,973 crores from the RAM sector, INR 1,450 crores to INR 1,500 crores is from the MSME sector, INR 980 crores to INR 1,000 crores is from agriculture, approximately INR 500 crores is from retail.
And sir, secondly, you have a recovery from return of accounts of almost about INR 2,000 crores in the other income. What is the broad breakup of that where -- from this recovery is…
No, recoveries in return of account is continuing whatever we are doing it in the regularly for every quarter. But this quarter, March quarter, we got a good amount because we got some recoveries from ILFS Group companies and some LCLT resolutions. Otherwise in the small ticket size, whatever we are able to do it for the, continuously for the last 3, 4 quarters. This quarter also has been yielded the good results. That's the reason we are able to show good results in the bottom line, both in the operating profit and net profit. It has contributed to us almost INR 2,150 crores, sir.
Yes, sir, how much was from ILFS?
Sir, 2 accounts, we got some resolution, sir. The amount is around INR 600 crores, INR 600 crores to INR 650 crores.
Any further resolution is expected, sir, in first quarter?
Definitely, sir, that's the action is going on. But exactly, we cannot say that this quarter or next quarter. We are expecting in this financial year also some resolutions on that through NCLT or whatever the process is there?
Anand, can you, please, rejoin the queue. We'll take the next question from Mr. Ashok.
Sir, good to see you as the MD and CEO of such a large bank, sir. Having said that, the compliment to you for the fantastic performance of the bank. As you yourself said going forward, I mean, you have already crossed INR 10,000 crores of the net profit. Even in this quarter also, the performance is very good overall, even the profitability front also [indiscernible]. I have a couple of questions and some observations, sir. On the treasury front, because of the existing pressures, which were there in last about 6 month or 8 months' time. Even in this last quarter [indiscernible] perform so well, rather treasury income and the profits have gone down. So when the things are a little bit easing down, the rates are coming -- I mean, it has taken a pause, where do you see treasury contributing to our profitability in the coming quarters, sir? This is one.And on the credit growth, sir, though the overall growth for the year has been good. but in the last quarter, I think our growth was muted in the [indiscernible] if you take this, only 1.39%. And you have given every conservative target also of [indiscernible]. But going forward then, how do you [indiscernible] this quarter? What is the development profile in 1 month? Are we going to achieve this credit growth of about 3.5% or 5% and from where it will come? Whether the corporate also will contribute to this?On the technology front also, sir, the bank is very fairly placed. But we would like to know what else is going on the digital journey of the bank and what kind of budgets are allocated? And end-to-end solution for the entire operation of the bank, is there any plan and when those plans will be fulfilled, sir? So these are the couple of questions and one on agri loan acquisition. We have acquired the loan of INR 1,322 crores. What is the nature of these loans? You stated that most of it AA, AAA, but what kind of agricultural load where the security is nil as per the table given. These are the few questions and observations, sir.
Sir, treasury-related, our ED, Debashish Mukherjee sir will answer you. First I will answer the other questions, whatever it is there on that. First you have spoken about the credit growth, what we have projected 10%, what we have recorded in the front of the March quarter credit growth. Sir, March quarter also, RAM actually, even in absolute numbers, we have grown considerably the INR 15,000 crores in the RAM credit itself. But the corporate also, we have grown INR 6,000 crores. Generally, when you look at in a year, it is INR 25,000 crores absolute numbers. If you grow it, it reflects in the 3% point growth in the quarter-on-quarter basis. But actually the overseas, you look at that, our exposures were a little higher in the oil companies, which we were lent earlier to the extent of INR 15,000 crores to the Indian oil companies on a short-term basis.The domestic corporate credit still continued that to grow that. The only thing that there are repayments in the overseas corporates of oil companies, not in any other companies. It's only on the oil company, these are all Indian government oil companies only. That the short-term people are there. Again, they may avail it in the June quarter. It's not that they will not avail. It's a short-term purpose. We have met that requirement, and it has -- payment has come down. But the domestic corporate credit, there is a continuation of credit is there. Even in absolute numbers also, there is almost INR 6,000 crores growth is there. But the way we've gone a little slow is to address the bottom line, whatever the stress on the margins, margins like NII. NII, we don't want to compromise on that because you are all very much aware that the last previous 2 quarters, we have resource mobilization, we are dependent more on the term deposits. That gives us some pressure on our NIM to address that in the AAA rated advances, we have started repricing of certain loans. That's where actually the growth you look at that, it is a little slow, but the absolute numbers, we were doing that, that the good growth -- there are good sanctions on hand. We already have more than INR 20,000 crores, INR 22,000 crores of sanctions even now. Last in 1 month also, we have considerable sanctions we have made. Every quarter, there is a board [ CAC ] is sanctioning the new proposals to address the TAT, we don't want to keep anything beyond 7 days.So sanctions are there. Disbursements are expected to happen in those sanctions. And we look at that the credit growth in the corporate, whatever we are seeing in the last 2, 3 quarters, that will continue in the domestic front. The -- because the overseas front, that whatever the INR 15,000 crores, we have given it short-term loans, that will be repayable. So partly it has been repaid in the March, partly now also it has been repaid. To that extent only, it looks that it is a little low. But it's nothing to do with that our domestic credit growth.RAM, we have given an emphasis on the RAM. We want to grow much bigger in the RAM side because we want to improve our ratios a little further in that. Last quarter, you see that from 54% to 55%, we have improved. This time, again, we want to improve from 55% to 56% or 57% depending on the opportunities available, where we see that the higher returns will be there and the lower risk will be there. That's where the -- actually the restudying of our portfolio, so it's nothing, but that's the reason initially also we announced that our standard is the 45% to 50%, but always keep a cushion of 2% growth anywhere, whether it is in RAM or whether it's a corporate, depending on that respective quarter or the financial year, depending on the availability of the opportunities. Our opportunity look at that higher return, sir. We focus on quality, at the same time higher returns. These 2, while keeping in that, this is actually the thing. But otherwise, literally, there is no question on it. June, we are expecting the quarter-on-quarter growth of 2.5% to 3%, and we are confident of doing that. So the 10.5% whatever we have given the guidance to the market, that will be quite comfortably achievable. It's not because whatever the trend we are maintaining 8% we have projected and we have achieved a double digit. This year, also, our tendency will continue. Only while growing that, we are keeping margins in our mind. We are not compromising that margin. Except that, nothing, there is no change in our approach or anything.The second one, the technology front, what you asked is we are taking last continuously. This is the third year. We got our Board approved budgetary reallocation for even the capital CapEx investment in the IT exclusively, that's more than INR 1,200 crores. That INR 1,200 crores will continue. Every last 3 years, we are investing in the IT more than INR 1,000 crores. Though a little bit, it impacts on my operating expenses when I'm investing heavily. But in the -- keeping in view of technologically transforming so that I can reach the younger generation. That's ultimately where the wealth is there. You cannot neglect that younger generation. We are coming out with so many new initiatives. On April 1st week itself, we have kept our house ready for with the transfers and all those things. We have announced several new products, both in the technology as well as to attract the CASA also. You might have seen many advertisements also is coming. We are very aggressive in meeting the people and all. We have come out with premium payroll package to attract the salaries of big corporates, simultaneously to make the corporates comfortable to deal with us, we have come out, we have launched the API banking in the first time with 50 more features, 50-plus features. And we want to upgrade that features this year with another 150 more features. So that this year, we want to introduce that 200 features, and no corporate need to come to the bank for operating it. That's the one act we are considering it.On the cross-border, transaction, to tap the NRIs and all, Bharat Bill Payment, whatever, it is the first Indian public sector bank who has had a tie-up with the Bharat Bill Payment in the -- from Oman country. So those NRIs, whoever is there, they can make all the payments directly by using that, and the tendency will continue. And we are directly working with RBI, the research wing at Bangaluru. And we are in regular touch with that. Recently also we launched form number 15G, 15H, submission of the form number 15G, 15H through our website through only Aadhaar OTP, nothing else, no paper, nothing is there. You need not visit anything. That has been first introduced by us only. That has been again another initiative. The one more initiative is UPI, whatever the credit card on UPI. Public sector bank, we are the first initial banker to come on that. And our CBDC, the Central Bank Digital Currency, we are already live, sir, in that. And they have permitted us in 13 cities. We are working on onboarding both the customers as well as the merchant establishments also. So we are working on that.Like that, we are initiating many new initiatives. Ultimately our aim is to meet the requirements of the younger generation and tech-savvy people so that we want to make ultimately the branch banking in their mobile. So for any purposes, they need not come. And we are about to finalize our digital lending end-to-end platform. I think it commences its operations from June month end. And business analytics, already it is very active. Among the East, we are the highest earning banker for business analytics. To strengthen further for big data analytics, we have taken a project. We are working on that big data analytics. And many more initiatives, sir, here afterwards any technological initiative. You will see that Canara Bank is a forefront -- forerunner in that, that every initiative, you will -- we would love to see our Canada Bank in that. These are actually initiatives -- some initiatives, sir. So many are there. Because of time constraint, I'm not explaining all of those things. But we are moving in the right direction to attract the younger generation.And I request our Mukherjee sir to address your third question, that's regarding the treasury and all.
So thank you very much, sir. Mr. Ajmera, to response -- to respond to your question with regard to treasury, how we are looking forward with regard to income and profits in the quarters to come. Let me tell you that because of this change in yields, yields going up and then coming down slightly, we have not been able to do well that much what we had expected in the previous quarter. Now with the yields coming down, there is an opportunity because we have a very high HTM holding. That has helped us, that has come in good state during our previous quarters where -- which has increased our portfolio yields from 6.28% to 6.63%, which is one of the best among our peers so far as our HTM portfolio, this thing is concerned, holding yield is concerned. So we want to capitalize on that because we have a high HTM holding, now that the yields are coming down, but they are not coming down to that extent where we can get so much of profit. But yes, we will definitely try to leverage this situation of lowering of yields and try to maintain a profit, which will not be extraordinarily high, but which will be there in this quarter at least. Then we will see the market and then see how it happens.
What is the duration?
Our treasury portfolio duration, average duration, minimum duration is 4.26. Out of that, AFS duration is around 2. So that also is very much under control.
Sir, my one question was on the agri loan acquisition -- loan book. On agricultural loan acquisition of INR 1,322 crores. I just wanted what kind of loan book has been acquired by the bank during the quarter?
No, it's not that agitation, sir. You might have seen that, that the growth rate, whatever it is there in that. There is no -- it's a routine way of doing that agriculture banking, whatever we are doing for the last. See, the percentage of -- if you look at that the previous December '22, it was a 24% agriculture, now in that 25% agriculture. But it is supporting by the gold loan as well as for the regular self-help groups and food processing [indiscernible] where you are seeing that -- the acquisition actually.
No, note #17, sir, the accounts acquired, note #17…
Ajmeraji, please rejoin the queue as there are several participants are waiting for…
Note #17…
We'll come back to you, sir, just…
Acquisition of loans under note #17, the…
We'll take the next question from [ Mayank Bulbulia ].
My question is related to like the previous participant where you shared like [ ACL ] provisioning requirement could be INR 42,000 crores and translate to INR 8,000 crores to INR 8,500 crores. So INR 42,000 crores will be incremental DCL requirement on top of whatever we are holding right now, what I understand. Is my understanding right?
The question clarity is not there, sir. Why -- sir -- sir, can you repeat that question, sir?
Yes. So ACL requirement is INR 42,000 crores that we have are [indiscernible].
Expected loss -- credit loss provisioning.
Yes.
Expected credit loss provisioning?
Yes. That translates into…
So what is the question on that?
Yes. So that translate to almost 5% of loan book. So that seems to be on relatively higher sale. So what is driving such like high requirement on ACL, whether it's any particular segment or is it higher [ relatively SMA2 book ]?
No, nothing, sir. It's overall it's not that the entire thing is only expected credit loss provisioning. This assessment of INR 42,000 crores is for that entire index, whatever that's various regulations, because of that regulations, whatever the extra provisioning, it is expected from the system. We are well prepared to face that. That's what actually our communication is because our internal accruals. Our internal accruals are so strong that we need not go to the market for depending -- to meet that regulatory requirements. That's actually the communication what we are communicating to you. Always rising from the market is one source that is available to the Canara Bank. We can any time we can rise without any hesitation, and there is so many customers, the investors are there to invest in this. But at this moment, since our CRAR is already more than 16%, it is the highest among the peer banks. We don't look at to see anything that hurry, that we have to go to the market for bringing that. Then again, I'm telling you, it's not the expected credit loss only. It's the remaining, there are so many features, it is total together requirement is 42% as per that in index. That is for 5 years, not in 1 year. The 1-year requirement is only 20% of that. That comes around 8,000. But the quality of the credit, that it is not because there is a quality is less and all of those things. You can look at that our risk-weighted assets is the lowest among the peer banks. Our risk-weighted assets is only at 65%, whereas all the peer banks risk-weighted assets is 74% and above. There is a gap of 9% cushion to the Canara Bank.What we told the other banks requirement will be much, much higher. Our bank requirement is, we have quantified and we are well prepared to face that. That's what actually our communication.
We'll take the next question from Jai Mundhra.As there's no response, we'll take the next question from Mona Khetan.
I have 2 questions. So firstly, the MCLR loan, you mentioned that about 40% to 45% is yet to be repriced. This is as a percentage of advances, right, the 40%, 45%?
Yes, madam. Let me say that it's not that 40% to 45% of total advances [Foreign Language] but what is actually total portfolio of INR 8,62,000 crores, 49% is under the MCLR regimen. That means 50%, let us say that INR 4,00,000 crores, INR 4,30,000 crores. Out of that, 40% is still to be repriced. That means around INR 1,60,000 crores.
And this is likely to be repriced largely in H1 of this fiscal year?
100%, madam, it's actually the -- generally, all these loans, the resetting -- interest resetting will happen annually. As and when it happens, the first quarter, whatever last year happens, that will be repriced now. The second quarter, this second quarter, that's the way it moves on.
My second question…
Mona, can you please rejoin the queue. There is several participants waiting.We'll take the next question from [ Ankur Gupta ].
Sir, the first couple, congratulations for the great set of numbers. Sir, we have achieved all the parameters as guided for the FY '23 except CASA. Sir, regarding CASA, I would like to understand what is the reason behind the such low CASA? Because if we compare to our peer banks like SBI, BOB, PNB, all are having CASA of about approximately 45%, and we are having CASA at around 33.47%. So just want to understand your view on CASA.Sir, and one more, sir. Further what are the steps we are taking to improve the same?
Definitely, sir. I'll split this question into 2 parts. One is why the last year it was stagnated or it is low. That is the last year is, of course, it's the industry level experience. When the high interest regime is there and there is a competition in the market and every bank is for sourcing that resources to meet their resources requirement, then they're offering at 8% for the retail term deposits. It will be tempting for everybody to the keep the part of their savings into the term deposits. That's the major impact. Otherwise nothing that's a serious impact on that. It's a bigger interest rate-driven impact on the CASA for the last year muted growth, which we -- even we could not achieve the target what we have set for that. That's the industry level experience.Then historically, this bank is 117 years old bank, sir, in this. It's basically south-based bank. Even during the amalgamation, again, one more south-based bank has been merged with this. These south-based banks historically it's an experience that they are -- since the beginning, 100 years together, that's their CASA ratio is very, very low. The reason maybe the tendency of majority of their exposure is in the South India, their more branches are located in South India, where actually the branch, the CASA producing states are, there these bank's presence is less, comparatively that. That might be the one reason that -- otherwise there is no other reason to say that the why it is low. It is in all the south-based banks, if study it, you will realize it that the CASA is historically is low. But in Canara Bank, we were also in the last 3 years, post-amalgamation, we started our journey at 39%. Last year, we went up to the 35%, from 29%. But the last -- this previous year. But the last year, you know that the market conditions, the rate of interest is in the higher side, and there is a rate war in the industry for grabbing the resources. That has yielded every bank, not the Canara Bank, that their CASA has been to that extent it ended.So -- but otherwise there is no such special things. To address this, what we have taken the initiatives is, we want to be very active in the first week of April itself. We kept our house ready. We have completed our process of internal promotions and transfers in the first week itself. And we made the people in their respective positions, especially in the key positions, and within 7 days. And we launched on the 3rd of April, almost in addressing the CASA only, more than 5 initiatives. In that initiatives, the major thrust we have given it to the salaries account. The salaried accounts -- the product we have brought it is the salary premium payment package, that is the salary product, we brought it. In that first time we covered a term life insurance for the salaries, based around their fitment into that, whether it is a silver product or a gold product or a diamond product. And there are 4 products are there. Depending on that, we cover their life coverage from INR 1 lakh crores to INR 6 lakh crores. That's the first time in India. No other bank has come forward, and we are looking at the overwhelming response from all big corporates because we realized that this salary package has to be driven from employer, not from the employee. So our target is on that, and we are moving in the right direction.But simultaneously, when you want to attract a higher quality corporates, the big corporates, they need a technological front support to strengthen their requirements, same day we have launched API banking so that these corporates need not come to the branch for meeting their -- any of the day-to-day requirements of the banking needs. We have started our APA banking with 50-plus features. We are upgrading it in every quarter with 50-odd new features on that. Then again, non-salaried class also, we have come out with one more product as they select in the rural, semi-urban and urban and metropolitan. That will take care of the requirements of the non-salaried class. And we kept in mind in the super-seniors where they're 75 years and above, where we have little courtesy towards them because these are all the loyal customers for the Canara Bank for decades together. We want to give an additional incentive so that we need not make them to wait in the branch for their meeting their requirements in wherever the doorstep banking is available in 200 places, so around 20,000 towns it is available as on date and across all the banks, through outsourcing model, that whatever the 14 services are available for meeting their requirements. So far it is being paid by the customers. But here, based on the average income and all, monthly 3 services, we ourselves want to absorb the expenses. That gives more comfort with those super-seniors.And we are also working for 2 more new products for women-centric as well as a professional students-centric, which we will launch it very soon. And we also launched the current account product. That is also going well, and we are modifying it for the requirements of that. And we have launched a one single number for contact -- our contact center, that is 1030. If you -- anybody can do that 1030, they can get 35 services in 12 vernacular languages. These are all the initiatives of small -- a few initiatives we have taken, sir. We are taking much, much -- many more such initiatives to address this CASA.
One last question, sir.
We'll take the next question from Jai Mundhra.
Sir, you mentioned that on the loan repricing side, INR 1.6 trillion worth of loans will be -- will come for repricing and hence we will have yield benefit. But if I look at your term deposit side, right, so on an absolute number, the term deposit itself is some INR 8 lakh crores, right, which will also reprice. So how are you then expecting a margin increase for full year?
Sir, actually, term deposits, they need not wait for 1 year to reprice their deposit. The depositors are at liberty to reprice their deposits whenever there is a higher rate of interest, they can switch over to the higher rate of interest within just 1 day. So most of that, whatever the -- actually the 1-year period, whatever the deposits, what we have taken, almost in more than 90% deposits have been repriced and kept in that 666 scheme or 400 day scheme or even 444 scheme, whatever it's going on now. So that repricing has been happened already, sir. Now our -- the deposit side, whatever we are looking at the repricing is on the bulk side, we want to reduce that rate of interest because in the first quarter, there is a less traction from other banks. We are trying to reprice at a downward trend. But the customer side, their repricing is more than 90% is already completed because there is no bar that they have to wait for completing that contract period.
So you are saying, sir, cost of deposit should fall for Canara Bank. That does not seem…
I'm telling you, sir, that will be maintained at a present level. I don't say that it will reduce, sir, but that depends on how my CASA grows in the next 3 months. If my CASA grows as we expected, if our efforts comes to the reality and we get good results on that, then definitely there will be a downward. But otherwise, we look at that, that the cost of funds will be already what we have incurred, our interest expenses. That will be more or less in the same level, sir.
Sure, sir. And last, sir, what is the…
Can you please rejoin the queue as there's several participants.We'll take the next question from Sushil Choksey.
Congratulation to Canara Bank team, the excellent performance and all the milestone achieved. What is your outlook on treasury as margins -- the lending rates have peaked? Treasury is indicating that it's -- one market is clearly indicating of piercing 7 and maybe 6.75 and some of the peer bank calls are indicated for the year-end. And second is the outlook on subsidiaries, what is the roadmap because you're taking a lot of initiative in -- what's going to be in the subsidy?
Choksey saab, subsidiaries, first, I will address it. Afterwards, our Mukherjee sir, already, of course, we explained about that treasury, but once again he will reiterate that what he has told. Regarding subsidiaries, you look at that, sir, we have submitted our roadmap even for the regulator also. And all our subsidiaries and associates, they are earning good profits now. As on that, the value of these subsidiaries for us is around more than INR 12,500 crores. We have given a roadmap to all these associates and subsidiaries that this value should be at least 100% growth, that is to match with the INR 25,000 crores, to improve from INR 12,500 crores to INR 25,000 crores, the value of, the Canara Bank value. It's not that the subsidiaries value. Canara Bank value, to the extent of whatever their shareholding, that has to be multiplied to the double that, to the -- from INR 12,500 crores to INR 25,000 crores.In addition to that, we also given a go ahead with Canara Robeco asset management company and Canara HSBC life insurance to initiate steps to go for the listing. These 2 will come for the listing, they're -- generally the expected timeline is around 15 months to 18 months. Once they complete all these formalities from the regulators, but from Board level, from the Canara Bank level, we already has given a go ahead with these 2 companies for listing up those things. As stakeholders also, we have taken other stakeholders into confidence, when we communicate to these respective Boards. And the Can Fin Homes' MD has reported, he has taken a full control of that, and the results have come down -- declared already. And that also has shown INR 621 crores profit. And I'm sure that with the present, current MD is an experienced guy. And this Can Fin homes also will do extremely well.The remaining the computer -- Canara Bank computer services, we want to strengthen it. There is a scope for the further strengthening. And Can Bank venture capital, we are strengthening that also because there is a lot of scope and tractions in that. And the only thing that the Canara Tanzania Limited, we may likely to go further closer of that. We are already in the process with this, valuation is going on that. Just for the name sake, we don't want to have any subsidiaries. It should give some value to the bank. So that's why Can Fin, the Canada Bank Financial Services and Can Bank -- the Canara Bank financial services is already defunct because some litigations are there. Once that litigations have been addressed, that company also will be closed, sir. These are all the -- actually our roadmap in the short term and long term.
Congratulation on the -- person at Can Fin Homes.
Yes, sir. Thank you so much. And now your treasury-related question, Mukherjee sir will address you.
Thank you, sir. Good evening, Mr. Choksey. You see, your question was with regard to what will happen to our treasury income in the coming quarter. So there as I have told the previous person, that now the yields are coming down, but very slightly. So we have actively built up our HTM book during the previous regime when the yields were moving up. So now we want to capitalize that. And we want to use that and convert it into AFS and then go to the market for earning profits. It won't be a very spectacular profit, but we will continue that trajectory of profit making in the -- this quarter also. After that, it depends on the market situation, we will see. And then we will evaluate and see how it pans out, and then we will move. Profitability will be there, but at a lower pace.
I want to clarify to you, under even that last 2 quarters, the toughness, among peer banks, we are the better performer. So that will continue.
Participants, due to time constraint, we'll take that as the last question. I will now hand over the call to [indiscernible].
Yes. Good evening. Thanks, everyone, for joining in. Sir, due to time constraint, we'll end this call now, here? And probably if you have any closing remarks, kindly share with us. And sir, congratulations for a great set of numbers and best of luck.
So I request all the participants, if still any questions are there, they can send to our MD secretary mail. That will be addressed immediately, sir, so that your questions can be addressed immediately. Thank you, sir. Thank you so much.
Thank you, sir. And with this, we end the call of Canara Bank 4Q FY '23 earnings. Thanks a lot, everyone, for joining us. Thank you, sir.