Punjab National Bank conducted a conference call on 09 May 2024 to discuss its financial results for the quarter ended March 2024. Atul Kumar Goel, MD of the company addressed the call:

Highlights:

The bank has witnessed one of the best quarters in Q4FY2024. The performance of the bank is in line with the guidance shared earlier.

The bank has recorded 9% growth in the business to Rs 23.53 lakh crore. Deposits have increased by 7% to Rs 13.69 lakh, while advances have increased by 11% to Rs 9.83 lakh crore end March 2024.

CD ratio stood at 71.79% end March 2024.

Casa deposits increased by 3% to Rs 5.52 lakh crore end March 2024.

Casa deposits ratio stood at 41.44% while the bank aims to raise the Casa deposit ratio to 42% by March 2025.

The share of retail, agriculture and MSME (RAM) Loan book stood at 55.18% end March 2024.The bank aims to raise the share of RAM loan book to 60% in the next 2-3 years.

The bank has reduced Net NPA ratio below 1% to 0.73% end March 2024, in line with the guidance.

The bank has improved provision coverage ratio substantially higher to more than 95%. More importantly, the credit cost has declined to 1.4% in FY2024 from 2.03% in FY2023. The bank targets to reduce credit cost below 1% in FY2025.

The bank has reduced fresh slippage ratio to 0.72% in FY2024 from 2.31% in FY2023. The bank is targeting to maintain the fresh slippage ratio below 1% in FY2025.

The bank has improved capital adequacy ratio to 15.97% end March 2024.

The domestic net interest margin stood at 3.23% and global at 3.09% as against the guidance of 2.9 - 3% for FY2024. The bank continues to guide at the net NIM of 2.9-3% for FY 2025.

As the bank has provision coverage ratio of more than 95%, the bank expects the time to come when there would be reversals of provisions.

The bank is having technically written off loan book of Rs 90000 crore which would contribute to recoveries.

The bank has recorded recoveries of Rs 22530 crore in FY2024 against the guidance of Rs 22000 crore.

The bank has witnessed increase in the establishment cost on account of higher AS-15 provisions of Rs 2396 crore in Q4FY2024 compared with Rs 1244  crore in Q4FY 2023 and Rs 330 crore in Q3FY2024 due to wage revision and decline in g-sec yield.

The fresh slippages of loans stood at Rs 2206 crore in Q4FY2024 of which Rs 804 crore came from agriculture, Rs 666 crore from MSME, Rs 422 crore from retail, Rs 187 crore from others and Rs 128 crore from the existing NPA accounts.

As per the bank, about 35% of the loan book is linked to the MCLR, 40% to the repo rate, 10% to the T bill benchmark, 9% is fixed and 2% is linked to base rate.

The bank is focused on improving the underwriting standard and improving collection efficiency.

With respect to the new underwriting of loan since 1st July 2020, the bank had sanctioned Rs 7.87 lakh crore of loans, disbursed Rs 7.01 lakh crore and outstanding amount stands at Rs 5.5 lakh crore. The NPA is just Rs 1775 crore or 0.25% end March 2024.

The segment wise NPA for new loan book, stands at 0.38% for agriculture, 1.42% for MSME, 0.21% for retail and negligible for corporate loan book.

The bank does not have any immediate need for capital raising, while it has received board approval for QIP of Rs 7500 crore, AT1 bonds of Rs 7000 crore and Tier II bonds of Rs 3000 crore.

Under NCLT, the bank has exposure to 805 accounts with an outstanding amount of Rs 1.03 lakh crore, of which 776 accounts with the exposure of Rs 1.02 lakh crore have already been admitted. The bank has recorded recoveries of Rs 3603 lakh crore from NCLT accounts in FY2024, while it is targeting recoveries of Rs 3000-3200 crore from NCLT accounts in FY2025.

The bank has transferred 12 accounts with the exposure of Rs 3524 crore to NARCL in FY2024.

The bank is targeting loan growth of 11 to 12% for FY2025.

The bank has an excess SLR of Rs 1 lakh crore end March 2024.

The bank is expecting 5 to 7% increase in other operating expenses.

About 95% of the deposits have been repriced.

The bank expects to improve RoA to 1% by March 2025.