Canara Bank reported subdued loan growth in the third quarter ended December, 2019, coming in at a 12-quarter low. However, the profit after tax (PAT) was higher than estimates due to lower provisions despite elevated slippages.

Discussing the numbers in detail, RA Sankara Narayanan, MD and CEO, Canara Bank said they are 3 percent net interest margins going forward. "The NIMs for Q3 came in around 2.24 percent but they are confident of maintaining them around 2.5 percent by March and beyond. We are confident we will definitely show positive growth going forward," he added.

On slippages, he said, “There is definitely a reduction in slippages of around Rs 4,000 crore Year-on-Year (YoY), and Rs 2,000 crore Quarter-on-Quarter (QoQ). However, there were fresh slippages of Rs 4,600 crore, which includes one major account that is DHFL.”

Talking about DHFL that slipped into NPA he said, “We had a total exposure of around Rs 2,500 crore to the DHFL Group both under loans, as well as investments. In percentage terms, even after taking into account slippages, which is almost equivalent to the recoveries that we made in Essar account, the net amount both on gross and net NPA, we have reduced to Rs 3,6000 crore that is a reduction of Rs 2,000 crore net, and in net NPA there is a reduction of Rs 1,000 crore.”

With regards to NCLT recoveries, he said, “Cash recoveries were around Rs 4,600. NCLT accounts as on date, we have one account which is due for resolution. All the banks are expecting it. There is a Supreme Court references and that is expected to get resolved in the next quarter, which is amounting to around Rs 2,000 crore for Canara Bank.”

Speaking about stake sale in Can Fin Homes he said, “Price is the function of market demand and supply. But we are very confident that Can Fin Homes has value and Canara Bank has no urgency at all to sell it off, either for make profits or for achieving capital adequacy."

"We got decent bids, but our expectation was higher than what the bids that came to us and that is precisely the reason, the management, board, decided not to go for sale at current situation. Definitely, if market improves and if the price is acceptable to the management and the board, a decision will be taken at appropriate time. As of now, we are absolutely in no urgency to exit any of our subsidiaries.”

Talking about the merger with Union Bank of India and Punjab National Bank, Sankara said, “Merger is going pretty well and we are waiting for the government notification as far as the scheme of amalgamation is concerned. Once we get approval from the government, we will finalise the swap ratio with the approvals from both the boards, and we will go ahead with the timeline. As of now, we are planning for April 1 but it all depends on when the government approval comes as far as scheme of amalgamation is concerned.”