AQR slippages stood at Rs 3300 crore for Q3: Canara Bank

Canara Bank in its third quarter earnings reported weak set of numbers on all parameters this Friday.

Net non-performing assets (NPA) increased 100 basis points to 3.9 percent quarter-on-quarter and net profit fell 87 percent to Rs 85 crore year-on-year.

In an interview with CNBC-TV18, Rakesh Sharma, MD and CEO of Canara Bank said that asset quality review (AQR) slippages stood at Rs 3300 crore for this quarter and the stressed assets witnessed an increase of 67 basis points.Below is the transcript of Rakesh Sharma’s interview with CNBC-TV18's Ekta Batra and Anuj Singhal. Ekta: If you could start by just highlighting what the impact of the asset quality review (AQR) was this quarter for you. In terms of fresh slippages and how much of that came from the AQR? A: In fact just to give a brief line one is our deposits have increased by 6.2 percent, advances have also increased by 6.3 percent. So, basically our purpose is that we want to consolidate our position and while in business growth the major growth has happened in retail, MSME and agriculture. If you see our growth in large advances that is almost flat or rather in some cases it is negative. So, the more than 15 percent has come in retail SME and agriculture. So, we are reorganisation structure and last year as on December retail SME and agriculture portion was around 49 percent which has now increased to 54 percent. The Current Account, Savings Account (CASA) that is again our focus and deposition. Having said that about your question this AQR our gross non performing asset (NPA) position of course it was 4.27 percent on September 30 which the gross NPA has increased to 5.84. Here I would like to point out one thing. The total stressed assets it was like 4.27 percent of our gross NPA and if we include the restructured standard asset the total was 11.24 percent. Although there is increase in NPA by more than one percent but if you see the stressed asset it has gone up to 11.94 percent, so, 64 bps increase is there. So, some of the accounts which were restructured have turned it to NPA. Maybe they could not do well as per the planned exercise. So, overall stressed assets continue to be below 12 percent. So, that is one issue. Second is because of that AQR we have started up cleaning up exercise and this cleaning up exercise some addition is there but now this will help us in diagnosing issues and taking all corrective steps. Ekta: Just share the numbers with us if you could. Fresh slippages this quarter how much came from asset quality review. How much slipped from the restructured book? A: Total if you see these NPAs have increased by Rs 5,752 crore. Out of that because of AQR it is around Rs 3,300 crore. Ekta: How much was from the restructured book? A: Some restructure book because as I said it has almost from 6.94 percent the standard asset book is around 6.07. So, almost 90 bps there is a reduction. There are some accounts which have improved also. With this the overall stressed asset ratio is below 12 percent. As far as this profit is concerned there is two things. Under profit one is that expenditure we have been able to control our expenditure and there is only 0.65 percent increase in expenditure and as a result our cost to income ratio continue to be below 50 percent, around 49 percent. Then this capital adequacy ratio that we had raised around Rs 1,500 crore tier-II bonds and with that now from 11.04 percent as on September 30 our capital adequacy ratio has increased to 11.54 percent. But because of that tier-II bonds it could have increased by 30 bps but because of our data cleaning exercise again here this we we have been able to clean our data properly and that has also contributed about 20 bps increase. So, overall what I wanted to say is that AQR is one of the part of cleaning exercise. But apart from that we are taking many steps.