Canara Bank, the third largest public sector bank by market captilisation after SBI and BoB, reported a good set of numbers in the fourth quarter, with net profit zooming 90 per cent. In order to consolidate its strengths, the bank has taken several steps, including additional investments in strengthening its digital footprint. MD & CEO, K Satyanarayana Raju, spoke with businessline on the same. Edited Excerpts:

The bank has reported excellent numbers. How sustainable is this growth trajectory?

We have done reasonably good. Over the last three years we have tried to streamline risk, and create verticals so that the top management can focus on that risk, instead of exposing the entire 10,000 outlets. This has helped improve underwriting standards.

One-and-a-half years back, we were the first public sector bank to create dump data analytics, a tool to monitor deficiencies on a proactive basis. That has helped make our existing legacy data reliable. It helps identify and address weaknesses by investing heavily on technology. Over the last three years, we have spent a lot of money on new technology initiatives. The spend this year alone is put at more than Rs 1,200 crore.

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We want all our RAM (Retail, Agriculture and MSME) transactions to go digital from end-to-end. By March 2024, 90 per cent of our RAM portfolio will be on a digital platform, which will take care of onboarding quality and underwriting standards, because these are based on credit policy. Besides, these digital platforms are in-built, with more than 80 validations; till recently this exercise was done manually. This will be applicable across our 8,000-plus branches.

Our aim is to be the best retail bank in the the public sector space, so that we can attract the younger generation. These digital journeys are meant for that.

Our mobile app - with more than 300 features - is designed in-house. We have a good rating of 4.3 on PlayStore. We are creating new products to target those between 21 to 40. We are cross-selling and upselling products and services.  

What are the initiatives undertaken to serve your existing customer base

Based on their CASA base, we have identified 5,000 branches and mapped their relationship managers. These branches will provide individual clients a 360 degree service. For super seniors, those above 75 years, doorstep banking will be available through the outsourcing model in 200 cities, where 14 services will be provided free of cost.

Your lower CASA (current account, savings account) base is seen as a weakness ...

Historically, South Indian banks have run with a lower CASA. We can’t change the composition overnight. For the current year, the goal is (increasing) CASA with retail growth.

The Government is concerned about the health of the MSME sector which is an important job creator.

I agree. The MSME sector yields higher returns and is more profitable. There is a huge 100 to 150 basis points difference in the yield or advances given to MSME and corporate. Besides, corporate lending may not generate ancillary business, unlike MSME. Ancillary businesses can compensate your margins. We are also focused on e-trades, ESD discounting and GST discounting.

We want to come out with 40 products that are suitable for 40 (MSME) clusters that we have identified.

Why is the credit card business being spun off into a distinct entity?

Our customer bases stands at 11 crores, and theactive customer base is almost 9 crore. In comparison, our existing credit card base is only 6.5 lakh. So the scope (for growth) is great. Now that we are focusing on the segment, our card base has crossed 10 lakh, though the number of active cards is around 6.5 lakh as on date.

Given whatever is happening in the economy, how fast can you grow this year and will NIM (Net Interest Margin) improve?

We are confident that a 12 to 14 per cent growth rate can be easily achieved. There is a lot of scope to improve NIM as the bank has historically run with a low CASA. So, for balance sheet growth, we depend partly on CASA and partly on term deposits. But term deposits in the current high interest rate regime are a costly affair. That’s why we have been focusing on CASA for growth. In the March quarter, while term deposits are flat, CASA has grown 4.04 per cent quarter-on-quarter. That is why we could show NIM of 3.07 per cent growth in the March quarter.

Though we are confident about recording 15-17 per cent growth in corporate, we will aim to grow at par with RAM, keeping margins in mind. And the RAM average yield will be 8.8 to 9 per cent. We don’t want to lose that. That’s why we have made so many changes to be more customer-friendly.