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Business Standard
3 days ago
- Business
- Business Standard
Planning to sell excess priority sector loans in Q2 FY26: MD Canara Bank
Canara Bank plans to offload its excess priority sector loans in the second quarter (Q2) of financial year (FY) 2025-26 to reduce stress on margins due to the reduction in interest rates. The total priority debt stands at 45.63 per cent of total loans, compared to the regulatory requirement of 40 per cent, Canara Bank MD and CEO K Satyanarayana Raju told PTI. As of FY26 June quarter, the bank has surpassed the mandated targets, achieving 45.63 per cent in priority sector lending and 23.25 per cent in agricultural credit, compared to the regulatory norms of 40 per cent and 18 per cent respectively, as per an exchange filing. Raju said: "We have a cushion under the priority sector space. There is demand in the market, and we may take advantage of the Priority Sector Lending Certificate (PSLC) sale." The company's net interest income declined by 4.59 per cent quarter-on-quarter (QoQ) to ₹9,009 crore, compared to ₹9,166 crore in the first quarter of the previous financial year. The CEO expressed concerns over net interest margin (NIM) in the current financial year, stating, "The guidance of 2.75 per cent seems difficult at the current juncture due to the 100 basis point rate cut by the RBI so far this year and the expectation of another one as inflation has come down below 3 per cent." Raju added, "Whether the rate cut happens in August or October policy, one has to wait and watch." Due to the interest rate cut, he expects pressure in Q2 FY26 but remains optimistic about improvement in the third and fourth quarters. Subsidiary IPOs The public sector bank (PSB) is also targeting the listing of one of its subsidiaries, Canara Robeco AMC, on the stock market in Q2, with another listing planned for the next quarter. It has already initiated the process for the listing of the asset management joint venture. The bank is planning to offload 13 per cent of its stake in the AMC via an initial public offering (IPO). Moreover, Canara Bank has already initiated the process to divest 14.5 per cent of its stake in its life insurance subsidiary, Canara HSBC Life Insurance Company, through a public listing. Q1 Results The PSB posted a 22 per cent year-on-year (YoY) increase in net profit to ₹4,752 crore for the April–June quarter of FY26, supported by a strong rise in other income despite pressure on its net interest margin. Other income, comprising fees, commissions, and treasury gains, surged 32.73 per cent YoY to ₹7,060 crore. Fee-based income grew by 16.39 per cent, while treasury income saw a sharp jump of 296.22 per cent.
Mint
3 days ago
- Business
- Mint
Canara Bank may sell its excess priority sector loans in Q2: MD Raju
New Delhi, Jul 27 (PTI) State-owned Canara Bank plans to sell its excess priority sector loans in the ongoing quarter to compensate for the stress on margins due to moderation in interest rates. 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.
News18
3 days ago
- Business
- News18
Canara Bank may sell its excess priority sector loans in Q2: MD Raju
Agency: PTI New Delhi, Jul 27 (PTI) State-owned Canara Bank plans to sell its excess priority sector loans in the ongoing quarter to compensate for the stress on margins due to moderation in interest rates. During the quarter ended June 2025, the bank earned Rs 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 Rs 4,752 crore as against Rs 3,905 crore in the same quarter of the previous fiscal year. The total income rose to Rs 38,063 crore during the latest June quarter from Rs 34,020 crore in the same quarter of FY25. Interest earned by the bank increased to Rs 31,003 crore compared to Rs 28,701 crore in the June quarter of the previous financial year. PTI DP HVA view comments First Published: July 27, 2025, 17:00 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Economic Times
24-06-2025
- Business
- Economic Times
RBI eases priority lending norms for SFBs, unlocks Rs 41,000 cr for low-risk sectors
The Reserve Bank of India's move to lower priority sector lending target for small finance banks (SFBs) is expected to free-up around Rs41,000 crore that could be re-deployed into lending to low-risk segments like housing. The number equals about 15% of advances of small finance banks' balance sheets as on March 31, 2025, according to estimates by CareEdge. 'The ability to redeploy this capital into higher-yielding or lower-risk segments such as secured retail, MSME, or housing finance offers significant upside for SFBs,' the rating agency said in a report Tuesday. The report added that the regulatory shift comes at a time when the gross non-performing Assets (GNPA) for small finance banks increased to 4.35% as of March 31, 2025, compared to 3.50% a year earlier. The rise was primarily driven by SFBs with a higher concentration in microfinance lending. 'In this context, the revised norms offer relief, allowing SFBs to rebalance their portfolios, mitigate concentration risk, and chart a more sustainable growth path.'CARE also said that a lower PSL requirement would create opportunities for SFBs to sell Priority Sector Lending Certificates (PSLCs) or offload excess PSL exposure to other market participants. However, since the PSLC premium is currently low, this change's immediate impact on profitability may be limited in the short to Kotak Institutional Equities, the central bank's relaxation does not solve the PSL compliance challenge for the small and marginal farmers (SMF) sub-sector, where the requirement stays unchanged at 10% of ANBC. This sub-segment is the most attractive with PSLC commissions in the range of 1.5-2.0% historically. 'In the near term, the relaxation will likely free up additional PSL in other subsectors (where PSLC commissions are much lower) for SFBs to earn modestly higher commissions until the share of PSL assets is in surplus,' the brokerage house banking regulator on Friday lowered SFBs'' priority sector lending target to 60% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposures (CEOBE), whichever is higher, from 75% earlier. The SFB shall continue to allocate 40% of ANBC or CEOBE to different sub-sectors under the priority sector, while the balance 20% can be allocated to any one or more sub-sectors where the bank has a competitive advantage.
Time of India
24-06-2025
- Business
- Time of India
RBI eases priority lending norms for SFBs, unlocks Rs 41,000 cr for low-risk sectors
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Reserve Bank of India's move to lower priority sector lending target for small finance banks (SFBs) is expected to free-up around Rs41,000 crore that could be re-deployed into lending to low-risk segments like number equals about 15% of advances of small finance banks' balance sheets as on March 31, 2025, according to estimates by CareEdge. 'The ability to redeploy this capital into higher-yielding or lower-risk segments such as secured retail, MSME, or housing finance offers significant upside for SFBs,' the rating agency said in a report report added that the regulatory shift comes at a time when the gross non-performing Assets (GNPA) for small finance banks increased to 4.35% as of March 31, 2025, compared to 3.50% a year earlier. The rise was primarily driven by SFBs with a higher concentration in microfinance lending. 'In this context, the revised norms offer relief, allowing SFBs to rebalance their portfolios, mitigate concentration risk, and chart a more sustainable growth path.'CARE also said that a lower PSL requirement would create opportunities for SFBs to sell Priority Sector Lending Certificates (PSLCs) or offload excess PSL exposure to other market participants. However, since the PSLC premium is currently low, this change's immediate impact on profitability may be limited in the short to Kotak Institutional Equities, the central bank's relaxation does not solve the PSL compliance challenge for the small and marginal farmers (SMF) sub-sector, where the requirement stays unchanged at 10% of sub-segment is the most attractive with PSLC commissions in the range of 1.5-2.0% historically. 'In the near term, the relaxation will likely free up additional PSL in other subsectors (where PSLC commissions are much lower) for SFBs to earn modestly higher commissions until the share of PSL assets is in surplus,' the brokerage house banking regulator on Friday lowered SFBs'' priority sector lending target to 60% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposures (CEOBE), whichever is higher, from 75% earlier. The SFB shall continue to allocate 40% of ANBC or CEOBE to different sub-sectors under the priority sector, while the balance 20% can be allocated to any one or more sub-sectors where the bank has a competitive advantage.
