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Informist, Monday, Oct. 28, 2024

--PNB MD: See gross NPA ratio 3.5-3.75% by March-end 

--PNB MD: Will raise tier-1 capital at appropriate time 

--PNB MD: See 0.9-1.0% return on assets in FY25 

--PNB MD: To add around 150 branches in FY25 

--PNB MD: Deposit growth at peak, won't rise further 

--PNB MD: Raising funds via CASA a challenge 

--PNB MD: Likely to achieve deposit growth of 10-11% in FY25 

By Shubham Rana and Christina Titus

MUMBAI – Punjab National Bank has lowered its guidance on gross non-performing assets ratio and expects deposit growth to be higher than previously expected. PNB Managing Director and Chief Executive Officer Atul Kumar Goel on Monday said that the bank sees the gross non-performing asset ratio in the range 3.50-3.75% by March-end as against 4.00% mark previously expected.  

The bank's gross non-performing asset ratio moderated to 4.48% as of Sept. 30 from 4.98% a quarter ago and 6.96% a year ago.

"As far as asset quality is concerned, there is a significant improvement in the asset quality of the bank. Gross non-performing assets which used to be INR 655.63 billion in September 2023, has been reduced to INR 475.82 billion," Goel said at a post-earnings media call Monday. "Actually, at the beginning of the year we had given the guidance that our gross NPA would be 5% by the end of March. But since we achieved 4.98% in June itself, then we have revised our guidelines last quarter so that it will be less than 4 percent."

The bank reported a 145.1% on year rise in its net profit to INR 43.03 billion during Jul-Sept. Analysts had estimated the bottom line to rise 99.1% on year to INR 34.97 billion during Jul-Sept.

The bank retained its guidance of net non-performing assets at below 0.5% for the current financial year. The net non-performing assets of the bank were 0.46% for the quarter ended September.  

The bank also revised the credit cost guidance to be in the range 0.25-0.30% by March-end. For Jul-Sept, the credit cost was at 0.08%, down by 123 basis points on year. It pegged the guidance of return on assets at 0.9-1.0% by March-end. 

DEPOSIT GROWTH

The bank raised its deposit growth guidance to 10-11% for 2024-25 (Apr-Mar), from 9-10% earlier. Global deposits of the bank rose 11.3% on year to INR 14.58 trillion as of Sept. 30.

Goel said that raising low-cost current account savings account deposits is a challenge right now for the bank. The bank is trying to raise low-cost deposits through the corporate mobile application, Goel said. The bank's current account savings account ratio was 39.31% as of Sept. 30, lower than the full year guidance of around 42%.

"Maybe in the next quarter or the March quarter, we may see some traction because, in my opinion, we have already reached a peak," Goel said. "We have already reached a peak on deposit rates because we are also giving thrust to increase the current account, savings account." 

When asked about any plans to raise funds, the bank said that it would raise additional tier-I in the December quarter depending on the interest rates in the market, but immediately there was no requirement. According to the investor presentation, the lender plans to raise INR 70 billion through additional tier-I bonds this financial year and INR 30 billion through tier-II bonds.  

The bank plans to add around 150 branches in the current financial year. Currently, the bank has 10,159 branches across the country and is looking to enter southern states where it has less presence, Goel said. On the National Stock Exchange, the shares of the bank closed 3.1% higher at INR 98.64 on Monday.  End

Edited by Akul Nishant Akhoury

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