Public sector major Canara Bank could list its two flagship subsidiaries — Canara Robeco Asset Management and Canara HSBC Life Insurance — in the next 15-18 months. Separately, the bank has identified Canbank Computer Services for housing its credit card portfolio and will look to acquire 100% stake in the company from 67.14% as of March end, managing director & CEO K Satyanarayana Raju tells Piyush Shukla in an interaction. Edited excerpts:
Are there any monetisation plans from any of your subsidiaries in FY24?
Our immediate interest is to improve the value of existing subsidiaries. In the next three years, we want to see the value of these subsidiaries double. We have already taken certain actions. We have our flagships subsidiaries like Canara Robeco Asset Management and Canara HSBC Life Insurance; for these two, we have already initiated efforts for listing.
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For both these subsidiaries, we have taken other stakeholders into confidence and have advised respective managements, through respective boards, that steps have to be taken to list the companies. It may take 15-18 months to complete listing formalities and once it is completed, we are interested in moving towards the market, so that we realise the actual strength of these companies.
Are you planning for stake sale in Can Fin Homes?
With regard to Can Fin Homes, now that the new MD has taken charge, you can see that in the last one month even the shares have moved up and there are good numbers. Just one year back, the per-share price was more than Rs 750 (of Can Fin Homes). So, we want to see that the share price goes up, the value of the 30% shareholding goes up, and when we are comfortable, we may think about disinvestment. As of date, however, we are not thinking about it.
What are the bank’s plans to launch a credit card subsidiary?
That is on the cards but we have an internal subsidiary (Canbank Computer Services) that we are thinking of shifting (towards becoming a credit card arm). But for that, there is a need to modify the article of association and we may need RBI approval; before that, we wanted to clean our credit card portfolio, which we have complete. When we give portfolio to that new company, it should be able to take off immediately without struggling.
For the subsidiary that we have identified, a partial stake is with other stakeholders, which we have proposed in a recent board meeting to acquire 100%, so we can shift our assets to the company. So now we have to look at how other stakeholders react to that.
Your advances grew over 16% YoY in Q4FY23 but the guidance for FY24 is at 10.5% growth. Is credit demand moderating?
The credit growth guidance that we gave for FY23 was 8%; as against that, we have grown more than 15% (YoY) domestically. It was a double-digit growth, because whenever we get the opportunity, we would like to encash that opportunity and convert it into bottomline. Historically, whenever we give guidance to stakeholders, we give this guidance as a minimum guidance. It does not mean that we are expecting moderation in credit growth at all. We are expecting that with current trends, credit growth should be between 12% and 15% (in FY24).
Will the retail, agriculture and MSME (RAM) loan segments continue to drive credit growth in FY24?
At this juncture, we are at exactly 55:45 (RAM to corporate loan book ratio) and during the current year, we will look at equal growth, both in corporate and RAM. RAM grew a little over 13% last year, and corporate loans grew domestically around 16%-16.5%, so we wish to grow at least 14%-15% in both RAM and corporate loans.
How many branches are you planning to open in FY24?
The board of the bank has approved to conduct rationalisation of branches post amalgamation (of Syndicate Bank with Canara Bank), as there is still scope for that. At the same time, we are also permitting circles to open new branches. We are going to open approximately 250 new branches this year, but as against that, rationalisation of 500 branches will also happen. The new 250 branches will open where CASA potential is present, in upcoming towns and government-stipulated unbanked areas.
