The top priority of Canara Bank in the coming quarters is to increase the provision coverage ratio (PCR) by four percentage points to 95%, something its peers have already achieved, its MD and CEO K Satyanarayana Raju said. In an interview with Anupreksha Jain, he said the bank is more than prepared for the much-anticipated guidelines on liquidity coverage ratio (LCR), expected credit loss (ECL), and project finance, and will rewrite its strategy to be insulated from any kind of impact. Excerpts:
Q) Canara Bank’s net profit for Q3FY25 was up by just 12%. What were the factors behind this flat growth rate?
Our main focus is to strengthen the balance sheet because all our peer banks have crossed 95% in their PCR (a measurement of a bank’s ability to offset losses from non-performing assets) whereas we are still at 91%. That’s why we are providing enough provisions, even if it is not required. As a result, our net profit has been flat. Our target is to reach 95% in the coming quarters. Moreover, our focus is on growing operating profit, which is rising adequately.
Q) Are there chances of further moderation in profit in the coming quarters?
I feel that the net profit will continue to grow at 10-15%, not substantially higher or lower.
Q) The gap between credit and deposit rates has come down sharply. Have rates peaked already? With the RBI expected to cut rates sooner than later, how do you see these rates getting impacted?
The RBI’s rate cut may help in credit growth but the deposit rate will be decided by liquidity in the system. Yesterday (Monday), after taking feedback from banks, the regulator proposed to inject funds into the system. We are hoping that these initiatives will ease the liquidity situation. Once liquidity softens in the system, deposit rates will come down. But, we have to wait and see.
Q) How will the expected guidelines on liquidity coverage ratio, expected credit loss, and project finance impact the bank’s balance sheet?
We are very well prepared for these guidelines. Whenever the RBI comes up with these guidelines, we will rewrite our strategy in order to be insulated from any kind of impact.
Q) With increasing currency volatility and some hardening of domestic yields, how did the treasury income perform? How do you see things changing if there is a rate cut?
We are focusing more on core business so that our income will be insulated from any such shock on the treasury front. Although we have enough cushion in our figures, we expect that whenever such a problem happens in the market, the regulator will intervene and ensure that the market is stabilised.
Q) Do you have any fundraising plans?
We don’t have any plans to raise funds offshore but as far as the domestic market is concerned, we have permission to raise Rs 4,500 crore via additional tier-1 bonds. Out of which, we have already raised Rs 3,000 crore. Depending on the market conditions, we may raise the remaining Rs 1,500 crore.
Q) What’s your target for RAM (retail, agriculture, and MSMEs) and corporate book by the end of March?
For the current quarter, it will be around 10-11%. In FY26, we have to review the position in these two months, and see how the liquidity situation evolves. Most likely, we are hoping, it may be around the current levels only. We have given the guidance of 10%.
Q) When can we expect the listing of Canara Robeco (mutual fund)?
It may happen by the second quarter of FY26. At present, the process of appointing merchant bankers is on.