Analyst Meet / AGM - Analyst Meet

14-May-2019, 11:19
Canara Bank conducted an analyst meet on 13 May 2019 to discuss the financial results for the quarter ended March 2019 and prospects of the bank. R A Sankara Narayanan, MD&CEO of the bank addressed the call:

Highlights:

• The bank is targeting business growth of 15% in FY2020. The banks expects to substantially improve its profitability with target of net profit at Rs 3000 crore and RoA of 0.5% for FY2019.
• The bank is targeting net interest margin of minimum 3% by end March 2020.
• The GNPA as well as NNPA ratio is expected to improve substantially in absolute as well as percentage terms in FY2020.
• The company proposes to improve its capital adequacy ratio in FY2019, while it expects to raise capital at appropriate time. The bank did not receive any capital infusion from government in FY2019. The bank has enough capital for business growth in FY2020.
• The bank has sharply increased its provision coverage ratio to 68% end March 2019 from 58% end March 2018, while the bank aims to further improve provision coverage ratio to 75% by end March 2020.
• The credit cost of the bank stood at 2.9% in FY2019, while the bank expects credit cost to decline to 2.5% in FY2020.
• The priority sector lending of the bank stood at 48% end March 2019.
• The bank has made additional provisions for steel accounts under NCLT in Q4FY2019, while resolution of these accounts in current financial year is expected to positively contribute to the profits by Rs 2500 crore.
• Bank has exposure to 12 accounts under NCLT 1 with outstanding balance of Rs 8900 crore and 16 accounts under NCLT list 2 with outstanding balance of Rs 4800 crore. The provision coverage on overall NCLT exposure stands at 80% end March 2019.
• On liabilities front, the bank is a focusing strongly on retail term deposits and CASA deposits. On asset front, the bank is also focusing on strong retail assets growth.
• The SMA 1 and 2 category loan book of the bank stands at Rs 6400 crore, which is 2.7 % of the total advances end March 2019.
• The bank has made a provision for bad debt of Rs 5121 crore, standard assets Rs 309 crore and investment provisions were at Rs 420 crore in Q4FY2019.
• The interest on income tax refund stood at Rs 375 crore in Q4FY2019.
• The bank expects slippages of loans to be below Rs 7000 crore in FY2029. The bank has recorded recoveries of Rs 9000 crore, while expects the strong recoveries performance for FY2020. Thus, the bank expects to reduce NPAs in absolute as well as percentage terms in FY2020.
• The bank has exposure to telecom sector at 4.1 % of which 3.3 % has been already classified as sub-standard.
• On subsidiaries front, all 10 subsidiaries of the bank has reported profits for FY2019. CanFact has reported net profit of Rs 1 crore, securities business has reported net profit of Rs 10 crore, finserv business has reported net profit of Rs 2.15 crore etc. Insurance business has exhibited strong growth in business, while its expected to start on a clean slate going forward.
• The bank has not taken any decision on stake sale in any of its subsidiaries as of now.

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