Canara Bank may sell its excess priority sector loans in Q2: MD Raju
During the quarter ended June 2025, the bank earned ₹ 1,248 crore as commission by selling priority sector loans.
Despite sale in the first quarter, the total priority debt stands at 45.63 per cent as against regulatory requirement of 40 per cent of the total loan, Canara Bank MD and CEO K Satyanarayana Raju told PTI.
"We have a cushion under priority sector space. There is demand in the market and we may take advantage of the Priority Sector Lending Certificate (PSLC) sale during the current quarter itself," he said.
Asked about impact of moderation in interest rates, Raju said, main concern for the ongoing financial year would be Net Interest Margin (NIM) and the guidance of 2.75 per cent seems difficult at the current juncture due to 100 basis point rate cut by the RBI so far this year and expectation of another one as inflation has come down below 3 per cent.
Whether the rate cut happens in August or October policy, one has to wait and watch, he said, adding, therefore pressure would be there in the current quarter as well and slight improvement can be witnessed in the third and fourth quarters.
Besides, he said, stake sale in two subsidiaries would provide some comfort during the year.
The bank is aiming for listing of one of its subsidiaries in the current quarter and another in the next quarter, depending on the regulatory approval, he said.
Canara Bank has already initiated the process for listing of asset management joint venture Canara Robeco AMC. The bank is planning to sell its 13 per cent stake in the mutual fund arm through initial public offering (IPO).
Besides, it is also planning a listing of its life insurance joint venture, Canara HSBC Life Insurance Company. Canara Bank has already approved the process of diluting a 14.5 per cent stake in its life insurance venture Canara HSBC Life Insurance Company.
Despite stake dilution, Raju said, the bank would continue to be the majority owner in the both entities and continue to earn substantial fee income by selling their products.
For the first quarter ended June 2025, Canara Bank reported a 22 per cent growth in standalone net profit to ₹ 4,752 crore as against ₹ 3,905 crore in the same quarter of the previous fiscal year.
The total income rose to ₹ 38,063 crore during the latest June quarter from ₹ 34,020 crore in the same quarter of FY25.
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