- Gross Business: INR 23.53 trillion, growth rate of 8.6%.
- Gross Deposits: INR 13.69 trillion, growth rate of 6.9%.
- Advances/Credit: INR 9.83 trillion, growth rate of 11.2% Y-o-Y.
- CD Ratio: 71.79%.
- Savings: INR 4.80 trillion, growth rate of 3.5%.
- CASA: INR 5.52 trillion, growth rate of 2.7%, CASA percentage 41.44%.
- Net Interest Income (NII): Quarterly: INR 10,363 crores, growth of 9.1%; Yearly: INR 40,083 crores, growth of 16.2%.
- Operating Profit: Quarterly: INR 6,416 crores, growth of 9.4%; Yearly: INR 24,930 crores, growth of 10.7%.
- Net Profit: Quarterly: INR 3,010 crores, growth of 159.7%; Yearly: INR 8,245 crores, growth of 228%.
- Gross NPA (GNPA): INR 56,343 crores, reduced from 6.82% to 5.73%.
- Net NPA: INR 6,799 crores, reduced from 2.72% to 0.73%.
- Provision Coverage Ratio (PCR): Improved to 95.39% from 86.90%.
- Credit Cost: Quarterly: 0.81%; Yearly: 1.40%, guidance for next year less than 1%.
- Slippage Ratio: Quarterly: 0.98%; Yearly: 0.72%, guidance for next year less than 1%.
- Capital Adequacy Ratio: Improved to 15.97% from 14.63%.
- Cost of Deposit: Increased to 5.06% from 4.54%.
- Yield on Advances: 8.54%.
- Net Interest Margin (NIM): Domestic: 3.25%; Global: 3.10%.
- Fresh Additions: Quarterly: INR 2,206 crores; Yearly: INR 5,826 crores.
- Total Recovery: INR 22,530 crores.
- AS-15 Provision: INR 2,396 crores for March '24 quarter.
- Sector-wise Slippage: Agri: INR 804 crores; MSME: INR 666 crores; Retail: INR 422 crores; Others: INR 187 crores.
- Capital Raising Plan: Board approval for INR 17,500 crores.
- NCLT Recovery: INR 3,603 crores for FY '23-'24.
- Transfer to NARCL: 12 accounts, INR 3,524 crores.
Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Punjab National Bank (BOM:532461, Financial) reported a significant increase in net profit, rising from INR 1,159 crores in Q4 2022-23 to INR 3,010 crores in Q4 2023-24, marking a growth rate of 159.7%.
- The bank's net interest income (NII) saw a substantial year-over-year increase of 16.2%, reaching INR 40,083 crores for the financial year 2023-24.
- Gross Non-Performing Assets (GNPA) reduced from 6.82% in March 2023 to 5.73% in March 2024, indicating improved asset quality.
- The Provision Coverage Ratio (PCR) improved significantly from 86.90% in March 2023 to 95.39% in March 2024, showcasing better risk management.
- Capital adequacy ratio improved from 14.63% in December 2023 to 15.97% in March 2024, indicating a strong capital position.
Negative Points
- The cost of deposits increased from 4.54% in March 2023 to 5.06% in March 2024, reflecting higher funding costs.
- Net Interest Margin (NIM) declined slightly from 3.38% in March 2023 to 3.25% in March 2024, indicating pressure on interest income.
- Slippages in the agriculture sector increased, contributing to overall higher slippages in the quarter.
- The bank's Loan-to-Deposit Ratio (LDR) decreased from 73% in December 2023 to 71.79% in March 2024, indicating a slower pace of loan growth compared to deposit growth.
- Operating expenses increased due to higher AS-15 provisions, impacting overall profitability.
Q & A Highlights
Q: What is your opinion on the RBI's draft circular on provisioning requirements for project finance, and what is the exposure of Punjab National Bank to this?
A: The RBI's draft guidelines are currently under consultation, and we should not panic. The guidelines aim to bring discipline in project completion timelines. While the proposed provisioning requirements are higher, we are confident in our ability to comply due to our healthy balance sheet. We will provide feedback to the RBI and await the final guidelines.
Q: Can you provide an outlook on loan growth and margins for FY '25?
A: We expect our net interest margin (NIM) to be sustainable at 2.9% to 3%. Our focus will be on increasing net interest income quarter by quarter. For loan growth, we are targeting an 11% to 12% increase, with a focus on the RAM (Retail, Agriculture, and MSME) sector, which we aim to grow to 60% of our total advances.
Q: What is the target loan-to-deposit ratio (LDR) for FY '25?
A: Our LDR was 71.79% at the end of March '24, and we aim to improve it to 73% to 75%. We are comfortable with our current deposit levels and will raise deposits as needed based on credit growth opportunities.
Q: What is the future trajectory for loan distribution, and which sectors are you focusing on?
A: We see good demand in the RAM sector, particularly in housing and vehicle loans. We also expect growth in corporate loans, especially in the steel, cement, and infrastructure sectors, including road projects and gas pipelines.
Q: What is the impact of the new investment classification norms on your CET1 ratio?
A: The new norms, effective from April 1, 2024, will result in an estimated CET1 accretion of around INR 5,000 crores. This figure is subject to market fluctuations and the performance of our listed subsidiaries.
Q: What is the composition of the written-off pool in terms of NCLT and non-NCLT accounts?
A: While the exact numbers need to be verified, most high-value accounts in the NCLT have likely been written off. The remaining written-off pool consists of non-NCLT accounts.
Q: What is the expected increase in operating expenses (OpEx) for the next fiscal year?
A: We expect wage revision costs to be around INR 3,500 crores to INR 3,600 crores, with additional AS-15 provisions as needed. Other operating expenses are expected to increase by 5% to 7%.
Q: What is the current status of your capital adequacy and future capital raising plans?
A: Our capital adequacy ratio is 15.97%, well above the regulatory requirement of 11.5%. We have Board approval to raise up to INR 17,500 crores through various instruments, including QIP and Tier-2 bonds, if needed.
Q: What is the outlook for recovery from NCLT and other written-off accounts?
A: We expect to recover around INR 3,000 crores to INR 3,300 crores from NCLT in the next financial year. Overall, we aim to recover INR 15,000 crores to INR 20,000 crores annually from our written-off pool, which includes both NCLT and non-NCLT accounts.
Q: How do you plan to manage your SLR investments in light of changing interest rates?
A: Our strategy will depend on interest rate trends. If rates are expected to fall, we may increase our SLR investments. Conversely, if rates are expected to rise, we may liquidate some SLR holdings. We will also consider the incremental cost of deposits versus the yield on investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
