Punjab National Bank raises FY25 credit, deposit growth guidance to 13-14%
This story was originally published at 18:13 IST on 31 January 2025
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MUMBAI – Punjab National Bank has raised its guidance on credit and deposit growth in 2024-25 (Apr-Mar) to 13-14% each with the bank's credit and deposits growing much faster than projected, its Managing Director and Chief Executive Officer Ashok Chandra said at a post-earnings media call. The bank had earlier guided 11-12% credit growth and 9-10% deposit growth for FY25.
As of Dec. 31, the bank's global advances grew 14.8% on year to INR 11.10 trillion and global deposits rose 15.6% to INR 15.3 trillion. "(Deposit) growth has already happened at 15.6%, but we are going to see some contraction in that, and we are mindful... the direction and the guidance which we had given at 9-10% growth... we will be substantially over and above that," Chandra said.
The bank retained its guidance for net interest margin for FY25 at 2.9-3.0%. The bank's global net interest margin was at 2.93% in Oct-Dec, against 2.92% in the previous quarter.
Chandra said the bank's liquidity coverage ratio may fall by 13-14 basis points if the Reserve Bank of India's draft guidelines are implemented from next financial year. Currently, the bank's liquidity coverage ratio is at 134%, Chandra said. RBI's draft guidelines proposed several changes to the existing liquidity norms, including an additional 5% run-off factor to internet and mobile banking-enabled retail deposits. Currently, banks must maintain high-quality liquid assets worth 100% of their expected outflows for the next 30 days.
Chandra said RBI's guidelines on expected credit losses might not have a major impact on the bank. "Overall, the impact on our bank is not going to be there on the ECL (expected credit losses) front because of the provisioning already there with the system now," Chandra said. The bank's provision coverage ratio was at 96.77% as on Dec. 31 compared with 94.28% a year ago.
The RBI came out with a discussion paper on the expected-credit-loss approach for loan loss provisioning by banks in January 2023. It intends to enhance the resilience of the banking system, so that banks can incorporate the more forward-looking expected-credit-loss approach. Currently, banks in India follow the RBI's guidelines, where provisioning is done once an account is recognised as non-performing.
On capital raising, Chandra said the bank does not see a need to raise capital through additional tier-I bonds for now, though the board has given approval to raise funds. In December, Punjab National Bank raised INR 30 billion through Basel-III compliant tier-II bonds maturing in 15 years, at a coupon of 7.43%. The bank in September raised INR 49.99 billion through a qualified institutional placement.
Punjab National Bank on Friday said its net profit for the December quarter more than doubled from a year ago to INR 45.08 billion due to a sharp fall in provisions. Shares of the bank rose after the announcement of the results and ended 4.9% higher at INR 101.20 on the National Stock Exchange. End
Reported by Ashna Mariam George and Kshipra Petkar
Edited by Saji George Titus
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