State-owned Canara Bank expects advance growth of 8-10% as well as a healthy double-digit increase in the business loan book in the current fiscal year, its chief executive and chief executive said on Monday. CEO, LV Prabhakar.
During the year ended March 31, 2022, the lender’s gross advances increased by 9.77%.
“Last year (FY22) we targeted loan growth of 7.5% and closed the year at 9.77%. For FY23, we announced a minimum growth of 8%. However, following the current trend, we expect 10% growth,” Prabhakar told PTI during an interaction.
“Overall, we are aiming that by March 2023, the size of our balance sheet will be over Rs 20 lakh crore compared to Rs 18.27 lakh crore today,” he said.
The bank’s Retail, Agriculture and MSME (RAM) segment, which accounts for 57% of its total loan portfolio, grew by 10.94% in the prior fiscal year. Within RAM, retail increased by 9.51%, agriculture by 12.75% and MSMEs by 9.87%.
The business loan portfolio, which grew 8.27% in FY22, is expected to grow 10%. The bank is seeing good traction in the corporate loan portfolio and has a pipeline of Rs 65,000-70,000 crore.
”We receive a lot of inquiries regarding the infrastructure, renewable energy and manufacturing sectors. At least we have about Rs 65,000-70,000 crore of business loan proposals with us for evaluation.
“We have already underwritten Hybrid Annuity Mode (HAM) projects worth Rs 35,000 crore which will be disbursed in the current year,” he said.
Regarding the capital raising plan, Prabhakar said that with a reduction in risk-weighted assets to 72% from 78% previously and a capital to risk-weighted assets ratio (CRAR) above 14.90% , the capital requirement has also decreased.
“Right now we don’t need any capital, but to be ready for the future we will increase at an appropriate time taking returns into account,” he said, adding that the bank will seek to raise Rs 9,000 crore through issuance of additional Tier I and Tier II bonds in the latter part of the financial year.
In the quarter ended March 31, 2022, the bank’s profit after tax (PAT) jumped 64.9% to Rs 1,666 crore from Rs 1,010 crore a year ago. Net interest income (NII) increased by 24.84% to Rs 7,005 crore. The NIM went from 2.76% to 2.82%.
The bank saw its asset quality improve with a gross non-performing asset ratio (GNPA) down to 7.51% from 8.93%. The net NPA ratio was 2.65% versus 3.82%.
“In FY23, our net NPAs will be below 2% and gross NPAs below 6%,” Prabhakar said.
The slippage rate will be less than 1.75% in FY23 and the bank expects recoveries of over Rs 15,000 crore in FY23.
The lender’s exposure to Future Retail is Rs 1,400 crore and it has already recovered Rs 227 crore from the loan account, Prabhakar said. The bank has already made a provision of 60% for the account.
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