Canara Bank is keen on listing its two subsidiaries ― Canara Robeco AMC and Canara HSBC Life Insurance ― in FY25, MD and CEO K Satyanarayana Raju tells Piyush Shukla in an interaction. While the board has already approved the IPO proposal for Canara Robeco, it will meet in a month or two to give the final approval for the public issue of the life insurance subsidiary. Excerpts:
When are the IPOs of Canara Robeco AMC and Canara HSBC Life Insurance expected?
Our board has approved the IPO for Canara Robeco, and the proposal of Canara HSBC IPO is coming to the board in a month or two. Both these IPOs are likely to happen in FY25. We will continue maintaining a majority stake in each of the two companies after the IPO.
What is the update on hiving off Canbank Computer Services into the credit card subsidiary?
We have had preliminary discussions with the regulator and came to know what they expect from us. With that feedback, we are applying for the Reserve Bank of India (RBI) clearance. Most likely in the first quarter (Q1FY25), we will get the regulatory approval.
Bank of Baroda and DBS Bank, who have 24% combined stake in the company, have agreed to sell their entire holding, whereas Karur Vysya Bank wants to retain its 6% stake due to dividends. We already own 70% stake in the company.
Deposit mobilisation is becoming a challenge across lenders. What is your outlook on growth?
At the beginning of FY24, we had given a deposit growth guidance of 8.5%. As on December 31, our year-on-year (YoY) growth is 8.55%, above the guidance. But now we have decided that we want to grow deposits on par with advances. Within deposits too, we want to maintain the same CASA ratio as of now, we do not want to grow with bulk deposits, because it will indirectly impact our net interest margin (NIM).
You mentioned deposit rates will not be hiked from hereon. Accordingly, by when do you expect moderation in rates?
Up to June, interest rates will continue where they are. From first week of June, some moderation may happen. Elections are also a factor, but from June onwards, there may be slight moderation.
Will retail, agriculture and MSME (RAM) loans continue dominating overall credit growth in Q4?
The growth in RAM sectors will be higher due to higher yields than corporate. It does not mean corporate will not grow, but RAM has been growing at 14.6% and corporate is growing at less than 9% and we want to maintain that difference. It is not difficult to achieve 12% overall credit growth in the current quarter also (Q4), but since we have planned equal growth in credit and deposits, we will focus equally on deposits as well.
What are the corporate loan sanctions in pipeline?
More than Rs 40,000 crore of corporate loans are undisbursed, more than Rs 20,000 crore of sanctions are yet to be done, but how much disbursements were done in the current quarter have to be seen. However, reaching 10% credit growth target for full year is already in our hands.
What is the outlook on asset quality for Q4?
We will broadly sustain the current levels of GNPA at 4.39% and the net NPA of 1.32%.
When do you see treasury income normalising?
When liquidity increases in markets, bond yields will come down and treasury income will increase. Again, I expect this to happen only in second or last month of the June quarter (Q1FY25).