Canara Bank Ltd (NSE: CANBK) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
K. Satyanarayana Raju — Managing Director & Chief Executive Officer
S K Majumdar — Chief Financial Officer
Debasish Mukherjee — Executive Director
Analysts:
Mona Khetan — Analyst
Jay Mundra — Analyst
Pritesh — Analyst
Pranav — Analyst
Ashlesh Sonja — Analyst
Sushil Choksi — Analyst
Devrag Mota — Analyst
Manish Shukla — Analyst
Ashok Ajmera — Analyst
Presentation:
Operator
Good evening, everyone. We welcome you all to the 2Q FY ’25 Earnings Web Call of Canada Bank. Thank you for giving us this opportunity to host the call today. Today with us we have Mr. Satyanarayana Raju, sir, MD and CEO sir; Mr. Debasish Mukherjee, Executive Director; Mr. Ashok Chandra, Executive Director; Mr. Hardeep Singh Ahluwalia, Executive Director; and Mr. Bhavendra Kumar, Executive Director along with other senior members of the team.
Without any further ado, I hand over the call to for his opening remarks, post which we’ll open the floor for question-and-answers.
K. Satyanarayana Raju — Managing Director & Chief Executive Officer
Good evening to all of you, sir. First of all, I wish you a Happy Dhanteras for all the people participating in this interaction. I am presenting the September quarter results. Again, one more consistent quarterly results we are putting for before you. Our global business has grown at 9.42% and stood at INR23.59 lakh crores. Global deposit growth at 9.34% and stood at INR13.47 lakhs. Our global advances also has grown at 9.53% and stood at INR10.11 crores. Our net profit has increased 11.31% year-on-year and first time it has crossed a quarterly net profit of INR4,000 crores, stood at INR4,014 crores.
Our CRER has reached an all-time high of 16.57% with an year-on-year increase of 37 basis points. Our PCR first time we have crossed 90% and stood at 90.89% with the year-on-year increase of 216 basis points. Our gross NPA has come down below 4% that is June quarter it was 4.14%. Now it has come down to 3.73% with a year-on-year decline of 103 basis points. Our net NPA also has come down below 1% from the June level of 1.24%. It has come down to 0.99% with a year-on-year decline of more than 42 basis points. This credit growth is led by the RAM sector and our RAM credit has grown at 11.54%. If you see the sequentially, our RAM credit growth in the current quarter itself is 4.5% and contributed by the retail credit grown at 31.27% and stood at INR1.94 lakh crores.
Our housing loan growing at 12.29% stood at INR99,452 crores, but as on date, we have already crossed INR1 lakh crore in this housing loan portfolio. Our vehicle loan is also is growing at a good growth at 15.49% and stood at INR18,607 crore. Our earning per share now this is against the INR2 face value of the share. Our earning per share stood at INR17.41 with a year-on-year growth rate of 10.57%. Our fee based income has shown the growth rate of year-on-year at 17.68% and stood at INR2,436. The first time we could touch that the slippage ratio at the bottom at 1% with an improvement of year-on-year 32 basis points. These are all the some highlights of this.
Just I want to compare our latest performance with the guidance given in the first quarter for this whole financial year. The whole financial year, we have given a guidance of business growth at 10% as against that the 9.42% we have grown up to September 30. That’s the reason the main was the first quarter, of course, we shed our low-yielding advances in the corporate sector of INR30,000 crores, INR35,000 crores. That’s why the first quarter growth was only around 1%, but the second quarter growth we have almost — advances has grown at near to 4% and the deposits also has grown at near to 3%. That has contributed this growth rate of business growth at 9.42%. Advances growth at 9.53% and deposit growth at 9.34% as against the guidance of 9%.
The first time last three quarters, the CASA has shown an uptick that’s the growth compared to the sequentially the quarter-on-quarter. June quarter, it was only — June quarter to now it has improved almost 28 basis points. That’s a 30.98% was there. Now it is 31.27%. And in absolute numbers also quarter-on-quarter we improved CASA of INR8,000 crores. Our NIM slightly has come down compared to the peer banks that it has come down from 2.9% to 2.88%, though there is a lot of pressure on the cost of deposit, but we could manage this because of our efficient management of our resources, alternative resources and efficiently lending at a little higher cost lending. These two we could manage efficiently. The other peer banks, their NIMs have been impacted from 7 to 10 to 11 basis points. We could manage with only 2 basis points reduction in the NIM.
Our gross NPA has come down from 4.14% to 3.73% as against our March — next March level of guidance of 3.5%. Our net NPA next March level guidance, we have given 1.10%, but already we are at below 1%, that is 0.99%. Our slippage ratio we have given a guidance of 90% at the next March level, but we are already touching the 91% at 90.89%. Slippage ratio also we have given a guidance of 1.3% for the March, but we already could successfully control that slippages and we have touched that 1% slippage ratio. And our credit cost slightly increased from quarter-on-quarter from 0.9% to 0.97%, but still it’s much below that the guidance what we have given at 1.10%. This increase in the credit cost is from 0.9% to 0.97% is not because of any of the quality.
We have provided additional more than INR500 crores in existing NPA accounts to strengthen our PCR coverage ratio. That was the reason that the credit cost has shown a little higher side at the point compared to the previous quarter, but it is well below the guidelines what we have given in the initial financial year. Our return-on-equity also is maintained well-above that guidance of 18% at 20.44% and our earning per share what we have given the guidance is INR16.40 and as against that INR17.41 we could achieve it. Return on average assets, the guidance was the 1%, but we are able to maintain at the 1.05%. It’s sequentially last quarter also at 1.05%. Now also it is 1.05%. But these are the basic important parameters I want to share it with you, sir.
Now it’s open for all of you to raise any queries or clarifications. So along with me, all the EDs, four EDs are available, our CFO is there, all the top brass is available here. Now it’s open for you to ask any clarifications from our side, sir.
Questions and Answers:
Operator
Thank you, MD, sir. I will wait a couple of minute seconds for the question queue to arrange. If you wish to ask a question please raise your hand. We have a first question from the line of Mona Khetan. Please go ahead, ma’am. You’ve been unmuted.
Mona Khetan
Yeah, hi, sir. Good evening and congratulations on a good quarter. Sir, firstly…
K. Satyanarayana Raju
Thank you.
Mona Khetan
Yeah. Firstly, on the growth bit. So if I look at the sequential growth, the retail book grew by about 12% Q-on-Q. So just wanted to understand where is this growth coming from? Because if I look at both home loan and vehicle portfolios which are bigger parts, they have only grown by 3% and larger part has come from other PL book as per Slide 29. So yeah, where is this growth coming from?
K. Satyanarayana Raju
Yes, madam, actually we — last time also I shared with you that in the current year, we have introduced a new product in the gold loan for metropolitan cities. Earlier in the metropolitan cities, our people who used to lend for the agriculture purpose for gold loans that we stopped that. In metropolitan, we are not lending for any agriculture purpose. We are lending only for that commercial purposes only with a little higher rate of interest. And we have introduced a customer-friendly product, tailor made product for lending under the — against the gold in the metropolitan cities. That has attracted a wide — from all the metropolitan cities. It has contributed very good growth in that. That is helping in our retail growth much better.
Mona Khetan
So where does this gold book stand as on September?
K. Satyanarayana Raju
Yes, madam, actually as on date whole entire bank, our gold portfolio was INR1,65,000 crores. This retail growth what with the product that we launched is around INR28,000 crores.
Mona Khetan
Okay. And this was about INR19,000 crores last quarter, if I’m correct.
K. Satyanarayana Raju
Yes, madam.
Mona Khetan
Okay. And this other PL also includes education loan, if I’m correct. So how…
K. Satyanarayana Raju
Yes, educational loan also is there. Mortgage loans are also is there.
Mona Khetan
So how large are these books, education and mortgage loan, if you could share?
K. Satyanarayana Raju
No, educational loan is almost it is INR16,000 crores, madam. That is also growing at a double-digit growth.
Mona Khetan
Okay. Got it. And so mainly the growth is coming from this gold product introduced in metro cities?
K. Satyanarayana Raju
No, it’s not that mainly, madam. Actually that’s a contribution. On an average, it is the RAM sector is growing at the retail other than the gold is growing at 3.5% because it is showing the 10% growth is — that is because the excess whatever it is there, it is because of the gold loan product.
Mona Khetan
Got it. And what would be the yield in this particular product, which is introduced in metro cities?
K. Satyanarayana Raju
It’s one year MCLR, madam, above one year MCLR. 10 basis points above the one year MCLR. That’s on an average, we are getting 9.15% yield.
Mona Khetan
Okay. Got it. Secondly, if I look at…
Operator
Ma’am you come back in the queue. We have other participants also. Thank you. We have a next question from the line of Mr. Rakesh Kumar. Sir, please go ahead. Mr. Rakesh Kumar? We have a next question from the line of Mr. Nitesh. Sir, please go ahead. Mr. Nitesh? The next question is from the line of Mr. Jay Mundra. Sir please go ahead. You’ve been unmuted.
Jay Mundra
Sir, hi, good evening. Sir, just wanted to check on the SMA 2 number that has spied. Last time you had mentioned that there is one central government steel exposure. Anything about — I mean anything…
K. Satyanarayana Raju
Carry on, you asked that question. Complete that question.
Jay Mundra
No. So that is it, sir, what is — apart from the steel exposure, is there anything which is contributing to the rise in SMA 2?
K. Satyanarayana Raju
Just may be one more — actually one more account is there some one state government account, but it appears sometimes in SMA 2 and again it comes back to that SMA 0. That account this sales in September as reflected in the SMA 2. There the exposure also is little comparatively high. These two have contributed 60% of that SMA 2.
Jay Mundra
Right. And what is the provisions that you hold on to the steel central government exposures?
K. Satyanarayana Raju
We are already — earlier also I shared with you 15%, we already provided around INR560 crores.
Jay Mundra
Right. Okay. And the additional provision that you provided INR500 crores only on NPA, right? So that has increased the PCR.
K. Satyanarayana Raju
That is only on existing NPA, sir. That’s INR500 crores we have provided on existing NPA accounts.
Jay Mundra
Correct. And sir, lastly, if you can also share the loan book by benchmark, how much is EBLR, how much is MCLR and how much is fixed rate?
K. Satyanarayana Raju
Sir, our EBLR is 41%, our MCLR is 48%. The rest is staff loans and fixed rates.
Jay Mundra
So sir, agri also, agri, you have a decent chunk of agri and agri gold. That is also floating rate book, yeah.
K. Satyanarayana Raju
No, actually floating rate, but it’s a linked to the MCLR. Retail and MSME is EBLR. Remaining all portfolios are MCLR.
Jay Mundra
Yeah, right. And last thing, sir, on your margins, so we have a decent contribution coming from — apart from loan — interest on loans and interest on investment, there is a decent proportion coming from the balance with RBI and forex transaction. How do you look at that going ahead and the overall NIM? Thank you.
K. Satyanarayana Raju
So that’s the last continuously five quarters if you look at that. So more or less, we are able to manage around INR1,500 crores in that, INR1,500 crores to INR1,600 crores every quarter. The same tempo will continue because we have a 8% excess SLR. By pledging that, we can draw some money from the RBI 6.5%, which we can lend it to that effectively overnight or any short-term durations. That is giving some benefit to us.
Jay Mundra
Okay. Thank you, sir. I’m done.
K. Satyanarayana Raju
Thank you, Jay. Can you hear me?
Operator
Yeah. We have a next question from the line of Pritesh from DAM Capital.
Pritesh
Hi, sir. Good evening.
K. Satyanarayana Raju
Hi, Pritesh.
Pritesh
Sir, one question on margins and yields. So we have been shedding the earlier loans I think about INR2 lakh crores, INR3 lakh crores worth of loans which we were shedding which were lower interest rate and that is reflecting yields, but that is not reflecting in margins. So can you just give a little bit color on that? How will the margins move from here and how can it go beyond 3%?
K. Satyanarayana Raju
See, beyond 3% at this moment because you should understand first that our CASA ratio is 31%. When your CASA ratio is 31%, your cost of deposit compared to other peer banks will be a little higher side. Our cost of deposit is stabilized at 5.7%. And when your cost of deposit is that much, yield and advances earlier I told you that it’s around INR60,000 crores was with the low-yielding advances. Out of that INR35,000 crores to INR40,000 crores, we already shed — we withdrawn that sanctions and we are taken it back that money. That has helped us in improving the June quarter to September quarter. If you see that the yield on advances, it has increased from 8.66% to 8.77%. That means 11 basis points. This INR35,000 crores what we have withdrawn from low-yielding advances and again deployed in higher yielding advances that is reflected in our yield and advances. If you see that the only quarterly.
June quarter to September quarter cost of deposit is maintained at 5.7%. There is no deterioration there, but there is an improvement in the yield on advances from 8.66% to 8.77%. So that’s what actually the earlier just three quarters back, our yield on advances especially on the corporate sector used to be 7.12%. Now it has increased it to 8.48%. That juggling what we are supposed to do, we completed that. But it is not as you are expecting that it is INR2 lakh crores to INR3 lakh crores, it is a INR60,000 crores. Out of that INR40,000 crores to INR45,000 crores, we have done already. The remaining is well within our appetite. And under the present — one more thing I want to clarify this, under the present conditions of tough high rate of interest for deposits, the cost of deposits, controlling the cost of deposit is little tough for the bankers. Under such circumstances, expecting a crossing of the NIM for 3% in the near quarters, one, two quarters may, it may not be possible.
Pritesh
Sir, just a follow-up on that. Basically, our CD ratio is also in favor. We are at about overall 70% and we are growing faster loan growth than deposit growth, but that is not reflecting in the margins. So where is the pressure coming from? I understand there will be pricing pressure in terms of the loan book side or the corporate loan book side, but we are also growing our retail book quite fast. So it does not seem to be that it is reflecting in the margins, right? So just wanted to check.
K. Satyanarayana Raju
No, I hope if you have gone through that all the banks which have published their results, if you see in their NIMs, every bank has lost their NIMs from minimum 7 basis point to almost 12 to 13 basis point. But in our bank, if you see that we lost only 2 basis point that itself is a reflection that our [Foreign Speech] whatever the RAM is growing in, that is contributing to us. But again and the set let me clarify once again that our cost of deposits is comparatively higher than the other peer banks. The reason behind is our CASA is at 31%. That’s why our focus more on the CASA. We have initiated — we have almost launched more than 10 section focused targets in the products. We have launched for last 20 months and it has attracted very well from various sections of the society and that has garnered almost INR17,000 crores to INR18,000 crores in the SV individuals. That’s where our focus main and we are also using alternative resources like infrastructure bonds are rising the window available with the RBI by pledging the excess SLRs. These things we are also using it for keeping our cost of funds under control.
Pritesh
Got it, sir. Thank you so much. Thank you for the answer.
K. Satyanarayana Raju
Thank you, sir.
Operator
So we have next question from the chat box. MR. Jay Mundra has asked the question, how much is unsecured personal loan and GNPA in rupees crore and slippages during the quarter and recovery target for H2 FY ’25.
K. Satyanarayana Raju
See, in our bank, the unsecured loans in the RAM sector especially retail sector is only approximately INR18,000 crores. So out of that, it’s pensioners and salaried class where they get their salary or the pension through our bank, only those people will get the unsecured loans. Other than that, we don’t give any unsecured loans to any non-customer or other than salaried class customer. That’s why we don’t see any stress in that and it’s only INR12,000 crores. The remaining INR6,000 crores is in unsecured loans under the educational loan. So that’s anyhow that we are under control. So whatever it is there under the slippages — in current slippages, if you look at that our entire retail, the NPA percentage is only just above the 1%. Our other personal loans if you look at that, the percentage is only 0.52% NPA. And total overall current year — [Foreign Speech] entire the slippages, our retail portfolio is INR1,94,000 crores. Out of that slippages is only INR440 crores.
Operator
Thank you sir. We have a next question from the line of Omkar. Omkar, please unmute your self and go ahead. We have our next question from the chat box again. We have a question from Mona Khetan. What is the outstanding standard provisions on your balance sheet? How much of it is towards restructured book?
K. Satyanarayana Raju
No. Restructured book, I can tell that the provision — by standard provisions, my CFO will tell that. Our restructured book RF1, RF2 and all together now it is INR14,000 crores. Out of that INR4,500 crores under NPA and INR9,500 crores is under standard asset. The standard asset the — against the standard asset, the provisioning, this particular September, May that we have provided INR134 crores, but total outstanding, I’ll ask my CFO to share with you whether we have the figure.
S K Majumdar
Standard asset provision is around INR2,000 crore for us. And anything else you require? That’s all.
Operator
[Operator Instructions] We have our next question from the line of Pranav. Pranav?
Pranav
Hi, sir. Thanks a lot for the opportunity.
K. Satyanarayana Raju
Hi, Pranav.
Pranav
Hi, sir. Thanks a lot for the opportunity. Sir, credit growth has slowed down. Any outlook into the future will this come back and credit growth will come because of this?
K. Satyanarayana Raju
See, we initial years maybe we have given a credit growth of 10% guidance, but when I’m interacting with all of you, I told that it is a minimum credit growth and we will do more than that maybe 11% or 12%. In the first quarter because of our stress on that margins and all, we have taken a call to withdraw that some sanctions at low-yielding advances that we have done some INR35,000 crores to INR40,000 crores, which has impacted the current year growth, but still the current latest concluded September quarter if you see that the growth is almost — credit growth is almost touching a 4%. 3.78% was the — growth was there, this 4%. The remaining two quarters also we see the same type of growth because the September quarter comparatively is a slack season. But the December quarter and March quarter will be a peak season for credit growth and we’ll see definitely a near to the 4% growth in these two quarters. So overall, definitely what we committed that we may reach to that 11%, definitely it may happen even after shedding that INR35,000 crores low-yielding advances.
Pranav
Right, sir. Just one more question. In the SMA increase totally happened because of the two accounts that you mentioned. That is one. And second, in your NII, what is the impact of the P&L interest being classified as other income?
K. Satyanarayana Raju
No, it’s hardly — see, every quarter it will be around — actually the — you are asking about the interest recovered in the NPA accounts, every year — every quarter…
Pranav
No sir. I’m saying that your NII has slightly down. So that impact is totally due to the…
K. Satyanarayana Raju
NII is slightly increased INR9,100 crores to INR9,300 crores. It’s not come down. Compared to June, June it is NII is INR9,166 crores. September it is INR9,315 crores. So there is a INR150 crores increase is there in the NII.
Operator
Thank you, sir. We have a next question from the line of Ashlesh Sonja. Go ahead. You’ve been unmuted.
Ashlesh Sonja
Hi, sir, good afternoon.
K. Satyanarayana Raju
Good afternoon.
Ashlesh Sonja
Sir, firstly, can you give a breakup of slippages across segments?
K. Satyanarayana Raju
Slippage breakup is say total INR2,300 crores. Out of that INR1,000 crores is from MSME, INR800 crores from agriculture, INR500 crores from retail.
Ashlesh Sonja
Understood. Sir, second question, housing loan NPA has gone up by 20 basis points in this quarter. Anything to highlight over here?
K. Satyanarayana Raju
No, actually, there is no such threat. Actually, earlier days [Foreign Speech] there was — when one account is slipped joint in some joint accounts, the top first name only, the accounts linked to the first name was — system has allowed to slip into the NPA. But the second name [Foreign Speech] accounts was not slipped to NPA, which it has been pointed out in the audit that we have rectified it one time [Foreign Speech]. We are allowed those such type of things all into the NPA. That’s why there’s a slight increase it is showing that. Otherwise there is no serious concern on that.
Ashlesh Sonja
Sorry, sir, I don’t understand. What do you — what is the…
K. Satyanarayana Raju
[Speech Overlap] If any joint borrower is there, when any joint borrower is there, so if any joint borrower is there that I account slipped to NPA, both the borrowers names, whatever the accounts are already other accounts are there, all those accounts are also to be slipped to NPA. But in our system somewhere that it is slip to only first name related accounts. Second name related accounts were not slipped. That has been pointed out by the auditor and it has been a one-time [Foreign Speech] we have allowed that slippages and now we are recovering that.
Ashlesh Sonja
Understood, sir. Makes sense. Sir, the SMA 2 account, the other account apart from the steel exposure which you have. That other account seems to be about INR2,000 odd crores. Can you just confirm that number and also give us some more detail about sector…
K. Satyanarayana Raju
Another account also is around INR3,000 crores, but there is a state government guarantee is there. We don’t see any — too much concern on that account. And it has come down to SMA 1 as on date. It moves from various SMA 0 to 1, 2 like that.
Ashlesh Sonja
Understood, sir. And just lastly, what is the status of discussions on the steel exposure account, steel SMA 2 account?
K. Satyanarayana Raju
What is that? IRNL, that’s a steel exposure account. That’s steel — that resolution work is going on. And as on date, this is a growing concern. All banks are already consortium is formed. Earlier this was under the multiple banking. Now to bring uniform rules and regulations, consortium is formed and we are all working together and management is also supporting us in bringing a resolution.
Ashlesh Sonja
Understood, sir. Thanks a lot for answering my questions. I’ll come back if I have more questions. Thank you.
K. Satyanarayana Raju
Thank you.
Operator
Thank you. If anyone else wishes to ask the question, please raise your hands. Sir, we have a next question from the — Mr. Rakesh Kumar. What is the LCR now and what is the reason for provision write-backs and others in the provision line?
K. Satyanarayana Raju
NPA, the NPA, there is a reduction from sequentially if you look at that, our total NPI is around INR5,900 crores and the last June, it was around INR6,000 odd crores. It has come down slightly and there is no further slippages in the NPA. The write-back is INR72 crores.
Operator
And sir, what is the LCR now?
K. Satyanarayana Raju
Our LCR is 130.55% that is a 131%. Even the RBI new guidelines, if you implement it, it may impact around 10 to 11 basis points. So we will be comfortable around 120%.
Operator
Sir, we have a next question from the line of Omkar. Corporate loan growth has been strong for PSE Bank during this quarter. So when will Canada Bank start picking-up in this segment and which segment?
K. Satyanarayana Raju
No, this quarter actually the corporate credit growth has shown a 3% growth, 3% in a quarterly is almost annualized. If you do it, it’s a 12% growth, which is above our guidance. So already in our bank, it is picked up. The first quarter also, we did that several sanctions and disbursement, but when we have shared that INR35,000 crores of low-yielding advances, it has not reflected in the outstandings. But otherwise, credit growth is on an average 3% every quarter, it is happening. And we are confident that next two quarters also, it will happen at 3%.
Operator
We have our next question from the line of Mr. Shashtri. Any update on the indicative timeline for IP of Robeco, AMC and other subsidiaries?
K. Satyanarayana Raju
As on date, it is scheduled in the fourth quarter, sir. Still we believe that it may happen in the fourth quarter only.
Operator
The next question is from the line of Mr. Rakesh Kumar. How does the economies of pledging SLR with RBI work considering its impact on LCR and lower funding cost at 5.26%?
K. Satyanarayana Raju
So CFO will tell. You tell. See, in respect of this impact of SLR related changes which RBI is contemplating, those who are borrowing heavily on a daily basis will not have much impact because they’ll be having the benefit of arbitrage. So others who are holding it only will be having an impact as far as LCR is concerned. Yeah, our position is better because as sir said, the changes has been brought in the new LCR guidelines for which the impact will be maximum 11% — 11 basis points. Hope it is clarified.
Operator
Okay, sir. Thank you, sir. We have a next question from Ashlesh Sonja. What is the outlook on recovery from bad loans in 2H FY ’25? Any large resolutions expected?
K. Satyanarayana Raju
Large recovery, see, nowadays the first two — six months, our recoveries mostly we are getting it from small ticket size. NCLT resolutions are this quarter total together, we got it around INR569 crores. Out of that, some accounts are from liquidation, but these are all not more than INR100 crores each. It may be a INR50 crores, INR60 crores. That is the range we are getting in each account. We are not getting like a INR400 crores, INR500 crores from one account. These are all from different accounts only. 50% of our recovery is coming from small ticket size. The remaining 50% only is these big tickets. But these big tickets also is not from single account, various accounts, various resolutions are in different stages. During that process, some are in the OT, some are in the liquidation, some are in the resolution approvals. These stages we are receiving the money.
Operator
Thank you, sir. If anyone wishes to ask any questions, please raise your hand. We have a next question from the line of Mr. Ashlesh Sonja. Please go ahead, sir.
Ashlesh Sonja
Sir, just one last question. A few other banks have reported recoveries from the Reliance Capital account in this quarter. Any exposure which you had and what was the recovery amount from that?
S K Majumdar
No, we don’t have anything. We got the money from another Reliance infra account, not from that other account.
Ashlesh Sonja
Understood, sir. Thank you.
Operator
We have our next question from the line of Mr. Sushil Choksi. Sir, please go ahead.
Sushil Choksi
Congratulations to Team Canara for excellent result in stable environment.
K. Satyanarayana Raju
Thank you, sir.
Sushil Choksi
Sir, my first question is, what is your outlook on the second half balance between treasury and corporate and retail credit as market is indicating that the treasury has peaked and MCLR rates also would have peaked. So do you anticipate that a lot of profit taking would happen where treasury is concerned and lot of credit growth because the yields are peaked and the demand on infra is going to be high?
K. Satyanarayana Raju
So credit side, I’ll speak. The treasury said, I’ll ask my ED sir to speak to you. But actually credit side, there is a good growth is there, sir. We are seeing a traction also. Just to concluded quarter, almost near to the 4% we could grow in the credit. In absolute number, domestic advances have grown INR35,000 crores in one quarter. There is the range of growth what we are seeing it. And it is the same thing is continuing in the current quarter also. And we believe that in the current quarter also, we may end up around 3.5% to 4% growth rate in the credit. So in the March quarter also, it may be likely to. So with that, we believe that though the first quarter we lost something because of shedding that low-yielding advances, but still overall, we believe that our credit growth may be around 11%. So that’s the — and corporate this 11%, but since the management has taken a call to reach that RAM sector at 58% and corporate it is at 42%. So our credit growth focus will be more on the RAM sector. Even as on today also credit, our total credit growth is 9.53%, but the RAM sector is 11.54%. So RAM sector may grow a little faster than the corporate sector. Corporate may grow around 9% to 10%, but the RAM sector may continue to grow around 12%. And regarding the treasury, I’ll ask Mukherjee sir to explain to you.
Debasish Mukherjee
Actually, our portfolio yield remains at 6.95% and we expect it to continue. Now one opportunity which we will get is that 5% HTM sale. That 5% HTM sale we have not yet done. So that we have kept because yields are softening. So we would like to use that opportunity, which many of the banks have done it so far. So that will give us a lot of opportunity for profit making. So that way, we hope that our profits — treasury profits will be maintained.
K. Satyanarayana Raju
That — we are keeping it for the better pricing. Once we feel that softening of the yields may happen, then we may get a better pricing in this. That’s why we have kept it pending that 5% HTM sale that we may exercise whenever the opportunity is good.
Sushil Choksi
It sounds prudent to what you’re indicating on the treasury side. Sir, besides treasury, on the retail growth, do you anticipate with so much of technology spend and digitization, Southern economy led by technology, a lot of manufacturing coming to your side of — part of the country. Do you think the consumer demand at our end will be much higher than what is anticipated?
K. Satyanarayana Raju
No, definitely. I’ve seen a good traction in the even MSME, sir, a smaller manufacturing area also, we have seen that in absolute numbers. We have grown in the first six months more than INR6,000 crores to INR7,000 crores. And even now, the current to 20 days also, we have seen that almost to INR2,000 crores to INR2,500 crores more growth we are seeing that. So MSME also, we are expecting that the growth may be touching the near to that 9% to 10% this year. The last year, we were grown at 6.5%. Previous year, we have grown at only 2%. But this year we are expecting that it may touch 9% to 10%. And the retail growth will be definitely a down — is a dominating contributor in RAM credit that will continue to grow around 14% — 13% to 14%.
Sushil Choksi
So seeing your — taking advantage on city loans where gold is concerned and many other things, any aspirational targets the bank is setting up to garner this loan market?
K. Satyanarayana Raju
No. Actually when the — as a prudent banking, when we have stopped lending for agriculture purposes in a metropolitan branches, we don’t want to lose that business opportunity. That’s why we have created a product suitable to the metropolitan citizens with a little higher margins, higher yields and that has attracted very well in the field and we have done the entire because in a daily — on a day to-day basis, almost 40,000 to 60,000 number of accounts will open in the entire country, including agriculture or the retail number of gold loans. That we have digitized. From October — the September — middle of the September onwards, we have digitized this entire process end-to-end. So that has helped us in meeting the customer requirements in very faster mode. Nowadays, now we are giving the loans within the 10 to 15 minutes because entire process is digitized. Many things we can take control from a back-end also like LTV ratio. Instead of depending on the branches, now we are centralized, we have minimized that, we are trying to mitigate that risk whatever associated with the gold loan. With all these steps we are already existing, we are growing at 15% to 16% and we look at that the growth will be around 16% to 17% this year.
Sushil Choksi
Thank you and congratulations to team Canara for the current year and Happy Dhanteras and Happy Diwali.
K. Satyanarayana Raju
Thank you, sir. Thank you. Same to you, sir.
Operator
Thank you, sir. We have our next question from the line of Mr. Devrag Mota. Sir, please go ahead.
Devrag Mota
Hi, sir. Congratulations on a good set of results. I just had one question for the last two or three years, you all have consistently had recoveries greater than incremental slippages. But given that now we’re entering a period where a lot of the large recoveries are behind us, do you think this will still continue or you think we go to a more normalized environment where slippages are higher than recoveries?
K. Satyanarayana Raju
No, I believe that it will continue because the reason is to clean the balance sheet, one is our underwriting standards have been improved and that is helping in controlling the slippages. That is one side. The other side recoveries is to have a cleaner balance sheet. Every quarter we do some technical written-off also that is adding to my kitty and whatever we are recovering, that is again adding back to that kitty in the form of a technical written-off. That will continue to support us. I believe that whatever we have shown in the last one year or two years, the same type of — we are expecting that every year the recovery and technical written-off is around 4,000 to 5,000. That’s what actually last time also I shared with you and that will continue to support our balance sheet.
Devrag Mota
Got it, very helpful. Thank you so much.
K. Satyanarayana Raju
Pardon.
Devrag Mota
No. Thank you so much. Those were the questions I had. Thank you.
K. Satyanarayana Raju
Thank you.
Operator
If there is anyone who wants us to ask the question, please raise your hand. We have our next question from the line of Mr. Rakesh Kumar. Sir, you’ve been unmuted. Please go ahead. We have our next question from the line of Mr. Manish Shukla.
Manish Shukla
The new gold loan product that you’re talking about, what is the nature of the customer — what is the customer profile of the borrowers for taking these loans?
Debasish Mukherjee
What loan, sir?
K. Satyanarayana Raju
Gold loans, any individual who is having a repaying capacity, if they are having a gold with them, jewelry, that’s gold means we pledge only the jewelry. If somebody is there that is the only criteria and their CIBIL should be acceptable and they should have a clear credit report. And they should have account with us. For us, it’s mandatory. We don’t disburse anything in the cash. All our gold loans are disbursed through only account. So he must be our customer. These are the basic requirements.
Manish Shukla
And the earlier product that you have discontinued, you have said that it was agri gold loan in metro area.
K. Satyanarayana Raju
Yes, sir, metro area because the agriculture gold loans were that to be in line with the regulator that’s a proof of land records and all is required. So we don’t want to take any risk there. So that’s why we discontinued that. We are confining that product only in the rural, semi-urban and urban areas where there is a possibility of proof of holding the land and all we can obtain easily for lending. Metropolitan that may not be possible. That’s why we discontinued, but we didn’t lose any business there. So whatever we are — earlier it was land under the agriculture. Entire thing has been converted into this retail and rather we are growing much faster than that.
Manish Shukla
And is there overlap in terms of customers who borrowed under the older product versus new product?
K. Satyanarayana Raju
That also may be there. Some overlapping will be there. Those customers because since we have stopped with that funding under that, so they are forced to — if they are eligible for that, they may have to raise that loans in this product.
Manish Shukla
Last question on this, are you seeing lot of balance transfer on this product? Because your rates might be very competitive in terms of lending rates for the gold loan?
K. Satyanarayana Raju
No, I don’t see that, but actually our — we are almost out of 9,500, 7,000 branches are lending this gold loan. We are very much established it in South India and pan-India also. If someone wants to raise the gold loan, they know that the Canara Bank is a better option because gold loan generally anybody will raise only on emergencies. Otherwise, no household will be interested to raise the loan against gold. Their sentiments will be there in the South India. Only in emergencies, they raise it. When they come to the bank on emergencies, how fast the bank lends that money that gives you comfort. There we already streamlined the processes and we established it. All these things, we don’t do any separate campaigns and all, it’s a walk-in clients only will be there.
Manish Shukla
Okay. A last question and sorry if you already answered it. What’s the credit cost guidance for this year, full year ’25?
K. Satyanarayana Raju
See, actually, we have given guidance of 1.10% and we are now as against that 0.97% we achieved. I think we will be below 1%.
Manish Shukla
And does that assume any further provision on the government accounts?
K. Satyanarayana Raju
That’s what wherever it is required, we are providing that additional — by taking that only this is. Otherwise, we would have been around 0.9% because we want to strengthen our balance sheet, we want to provide additionally to improve our provision coverage ratio. That’s why I’m telling you that we will be below 1%.
Manish Shukla
Understood, sir. Thank you. Those are my questions.
K. Satyanarayana Raju
Thank you, sir.
Operator
We have our next question from the line of Mr. Ashok Ajmera. Please go ahead.
Ashok Ajmera
Good evening, sir. Sorry for joining the meeting little late. I’m at the airport basically and I thought I may not catch, but I’m fortunate to have got the line with you. Sir…
K. Satyanarayana Raju
Without hearing your question, we will never close the investors call, sir.
Ashok Ajmera
Yeah. Sir, I just wanted to have your views on the corporate loan book when the — there is a overall slowdown on the total credit side and also of course, the deposit side also. What are your views on strengthening or increasing the corporate book? Are you getting some inquiries? And are there some projects in the pipeline in the sanctions so that we can grow our overall credit book little faster? And secondly, you have always been of the view that you want to — you are interested in a direct lending and not through the co-lending that’s been your stand in the past. Are you changing that stand and going for some co-lending tie-ups so as to increase the book?
K. Satyanarayana Raju
So first, let me speak on the corporate credit growth, sir. Actually, corporate growth is actual in terms of it is happening at double-digit only in all banks also, in our bank also. Because of cost of funds is very high, no bank wants to continue to lend at a cheaper rate, which they are lending it quite long time. So every bank is withdrawing that type of sanctions. So only when they are withdrawing that, it is not reflecting that. It is reflecting finally that the slow growth is there. But actually I didn’t see that any slow-growth in demand or the disbursement in the corporate sector, sir. On an average, every quarter 3% can be achievable that. And we see that traction. Since the low yielding advances, every bank is cautious about their NIMs.
Every bank is cautious about their margins. They are not lending to this low-cost, low-yielding advances to institutes or central PSUs, whatever you call it as. That’s why it is looking that. Otherwise private investment and all whatever we have seen that the tractions are there, infrastructure maybe there is a good traction is there. Manufacturing sector in certain infrastructure-related manufacturing sectors, there is a good traction is there. Data center creation good traction is there. In our bank also, we have almost sanctioned but pending for disbursement is more than INR20,000 crores is there. We already as on date from October — September 30 to now, we have grown more than absolute number by INR5,000 crores that itself is reflecting that there is a good demand is there on that.
The second one, you have spoken on co-lending model. Sir, co-lending model since beginning initially we were very slow in the co-lending model because unless otherwise we have a end-to-end digital platform, we don’t want to lend on the co-lending because we don’t want to make it a mesh by maintaining the manual lead. Now we have onboarded that co-lending platform. We are the one of the initial banks that we onboarded excellent platform on the digitally. But only thing we have almost to tie-up with the eight to 10 such NBFCs to co-lend. But the problem is they expect us to dilute from our credit policy and match with their sanctioning policies, which we are not so keen to dilute our policy. If any NBFC comes forward and refer to that through any portfolio which matches with our existing credit policy underwriting standards, we don’t mind to do that. Otherwise, we want to confine ourselves to our policy. We don’t want to deviate from our policy, sir.
Ashok Ajmera
What is the book size on that, sir?
K. Satyanarayana Raju
Very miniscule, sir. It is only a INR320 crores.
Ashok Ajmera
Yeah, that’s what I thought. But going forward, you see some flip in that.
K. Satyanarayana Raju
Again, it’s the same thing. I want to repeat it that we are ready with the platform, but the only thing that we don’t want to compromise on our underwriting standards. If any NBFC can match with that, we are ready to coordinate with them.
Ashok Ajmera
Yes, sir, my last question in this round, sir, is on the treasury side, sir. Now with the indication of rates getting softening here in India also, how do we — I mean, what is the composition of our treasury book and how ready we are to book some good profits in the FS book and though this will go to the reserve, but on the trading profit side also, how our treasury is performing? And what is the view going forward in the remaining two quarters of the FY ’25, sir.
K. Satyanarayana Raju
Our ED Mukherjee sir will reply that, sir.
Ashok Ajmera
Yes, sir.
Debasish Mukherjee
Actually, our HTM portfolio is around 80%. So we have kept it at that and our portfolio yield right now is 6.90%. We are maintaining that over last two quarters. Now like unlike other banks, we have not shed 5% of our HTM, which we are entitled to. So we will use that amount for our profits because yields are softening. So over the — this quarter or the next, wherever we find opportune time, we will sell that and then we will maintain our treasury profits in the same line as it was in this quarter.
Ashok Ajmera
Okay, thank you very much, sir. Thank you for answering my questions. All the best to you and Happy Diwali. Thank you.
K. Satyanarayana Raju
Thank you, sir. Thank you. Same to you.
Operator
We will take that as a last question. Thank you Canada Bank for giving this opportunity. We hand over the call to MD sir for his closing remarks. Over to you, sir.
K. Satyanarayana Raju
Thank you. Thank you, one and all, sir. Once again, I wish you a Happy Dhanteras and Dipawali for all the investors and all the participants. Thank you once again.
Operator
[Operator Closing Remarks]