Earning Conference Call – Transcript FY2026-Q2

Good evening, everyone. Welcome to Canara Bank Q2 FY26 Earnings Conference Call hosted by Antique Stock Broking. I would like to thank Canara Bank's management team for giving us the opportunity to hold this call.

From the management side, we have with us -

• Shri. Satyanarayana Raju, MD and CEO.

• Shri. Bhavendra Kumar, Executive Director.

• Shri. S.K. Majumdar, Executive Director.

I handover the call to MD Sir for his opening remarks. Thank you and over to you, Sir.

Good evening all the Investor community. We are presenting before you the September quarter results.

• Our Global business has year-on-year growth as recorded at 13.55% and stood at

  ₹26,78,963 crores.

• Our Global Deposits also have grown at 13.4% year-on-year, stood at ₹15.27 lakh crore.

• Our Global Advances have grown at 13.74% year-on-year and stood at ₹11.51 lakhs crore.

• Our Operating Profit has increased year-on-year at 12.20% at ₹8,588 crore, all-time high of Operating Profit.

• And the Net Profit also has increased at 18.93% year-on-year, stood at ₹4,774 crore.

• Our Return on Asset has increased 7 basis points from year-on-year and stood at 1.12%.

• Our PCR further improved year-on-year at 270 basis points and stood at 93.59%.

• Our Credit Cost has further come down at 0.68% with year-on-year decrease of 29 basis points

• Our Gross NPA has come down to 2.35%, year-on-year decline is 138 basis points.

• Our Net NPA also has come down at 0.54%, year-on-year decline of 45 basis points.

• This entire business has grown at 13% is led by our RAM credit at almost 17% and stood at ₹6.71 lakh crore

• Among this RAM credit, Retail credit has grown at 29.11%, stood at ₹2.51 lakh crore. And within the retail, the Housing Loan has grown at 15.25% and stood at ₹1.14 lakh crore. Vehicle Loan grown at 25.58% year-on-year and stood at ₹23,367 crore.

• First time during the last 5-6 years our MSME has grown more than 12%, almost 13%, and year-on-year growth of 12.70% and stood at ₹1.54 lakh crore.

• Our Earning Per Share continues to be above 20, that's at 21.01% with a 20.68% year-on-year growth.

• And our Slippage Ratio has furthered down to almost 24 basis points year-on-year and stood at 0.76%.

These are all the few of the highlights we have given. In the year starting we have given some 13 parameters or guidance for this financial year. Out of those 13, 11 parameters we already achieved and 2 parameters, CASA and NIM, we are working hard to see that it is also achieved. Of course, NIM we are finding it little difficulty. But CASA, there is a positive growth from June quarter to this. We are at now 30.69% as against a guidance of 32% for March. And in CASA it is the first time that there is a year-on-year growth more than 10%.

These are all the few highlights of the presentation, Sir. Now, we are open for any of your questions or the queries so that we can answer you and satisfy you. Over to you, Sir.

Thank you, Sir. This will commence the question and answer session. Participants who wish to ask questions are requested to raise hands.

The first question that we have is from Mr. Maru.

Hello, Sir.

Hello.

Good evening and congratulations, Sir.

Thank you very much, Madam.

Sir, I have a couple of questions. Firstly, on your margins, it has panned out exactly the way you had put it, right. Like last time you had said that 'I don't see more than 5 basis points' and that is exactly how it has turned out. So, from now on do we expect margins to stay stable or improve if there are no further cuts?

So, one more quarter it may continue to be stable, Madam. There afterwards, you can say there is some improvement may happen.

Oh! Okay. And, Sir, what is your outlook on CASA now? I know that traditionally your bank's CASA has been low but the system environment for CASA, how do you view it and how do you view your own CASA in that context?

See, when the total balance sheet is growing at 14%, near to 14%, it is a big challenge for us to grow even CASA to match with that, to maintain that percentage, Madam. But, however, whatever the initiatives we have taken by introducing the new products, new initiatives, introducing the Customer Relationship Manager concept, feedback mechanism, so many initiatives we have taken Business Around App, several initiatives we have taken. Because of these several initiatives first time we are seeing almost above 10% growth in the CASA. And especially as we individuals, in year-on-year absolute numbers we have increased. There is an incremental growth of ₹20,000 crores. And our Retail Term Deposits also in just half year we have grown more than ₹30,000 crores. Actually, for last several years it is a record growth in the last maybe 7-8 years.

So, it is giving the results but, again, I am telling you that we have given a guidance of 32%, we work hard to see that we achieve our guidance, 32%. But definitely when we are growing this guidance we are giving 32% keeping in mind that our business grows at 10.5%. But now we are growing at 14%, so we have to work harder to maintain that 32%, Madam.

Got it, Sir. Sir, my other question is on the new ECL guidelines. So, once they are implemented, what do you see as your run rate of Credit Cost? Will it be higher than what it is now? How does it work?

No, see, I do not think that it will have impact so much on that Credit Cost, Madam. That much I can tell that that is internally something we have assessed but already we are working for last 2 years, wherever the scope is there we are additionally providing. Even standard assets itself when the SMAs are there, so in all big accounts we are providing in the standard assets provisioning itself.

So, that itself is nothing but that itself is actually the expected Credit loss, whatever the ultimate the meaning of that. Only the small, small accounts anything is there, if you see that our SMA position at ₹5 crore and above, there is a ₹7,500 crore. Out of this, ₹5,000 crores already we have provided, the left out is only ₹2500 crores. So, I do not think that will have so much impact on our either CRAR or on our Credit Cost. Because Credit Cost if you see, that quarter-on-quarter there is a reduction. For implementation, it is effective from 1stMarch'2027, that means still we have 15 months' time. This 15 months' time, Credit Cost may come down maybe around 5.50 or point below 5.50. So, I do not think that, again, it may go beyond 1% and all. It will be well within less than 1% only.

Okay. Got it, Sir. Because there will be many accounts below ₹5 crores, right, and that is the problem, that is where you will have to make Stage 2 provisions because below ₹5 crore accounts usually have early delinquency.

No, let me tell you, Madam, earlier even entire below ₹5 crore and above ₹5 crore entire combined entity we used to have around 5% of SMA. Now, it has come down below 3%, Now, only less than 3% is there, the total SMA position. And in SMA 0 there is no such issue, only 1 and 2. 1 and 2 drastically has come down.

Okay. Got it, Sir.

And you should look at that our profits also know. Our profits are growing very comfortably and even current quarter we have grown more than 18% year-on-year growth in the Net Profit. This year we are expecting that our Net Profits may cross

₹20,000 crores. Last year we were at ₹17,027 crores. So, these additional profits whatever we are earning, all these things will give us a comfort.

Got it, Sir. Got it. And, Sir, I just have one last question. In terms of growth, your growth has been good. Going ahead do you see it accelerating? I mean, are there any green shoots in October which makes you more confident about growth, say corporate growth or even SME growth?

And, actually, MSME we are expecting that definitely by the end of the year we may end up at above 15% growth. As on date it is 12.70% growth. Corporate already we are growing at 10%, we want to grow around the 10%-11% only, we do not want to compromise on our bottom lines. The green shoots whatever is there, just 2 days back our Board meeting, the Credit Sanction Committee has cleared ₹26,000 crores worth of loans only in one meeting. That gives you an idea that how the proposals are there in our bank.

But, again, let me say that our RAM sector will grow much faster than our corporate sector because it is a strategy that we should reach our RAM sector to 60% and corporate sector to 40%. 60-40, that is the ratio we want to reach in the next 1-1.5-year time. So, our thrust will continue to be in the RAM sector to grow faster than the corporate credit.

Got it, Sir. Thank you so much, thanks a lot.

Thank you. Thank you, Madam.

The next question we have is from Mr. Ashok Ajmera. Sir, please unmute yourself.

Good evening, Sir. How are you? Hope all is well.

Yes, Sir. Yes, Sir. Good evening, Sir.