More Stories

Informist, Friday, Jan. 31, 2025

--PNB:Would like to tweak cost of deposits, yield on advances to improve PAT 

--CONTEXT: Comments by PNB's management in post-earnings analyst concall 

--PNB: Expect credit growth of 13-14% in coming quarters 

--PNB: INR 3.50-bln refund from tax department aided other income 

--PNB: Locational advantage in north, northeast India will aid CASA growth 

--PNB: Recovery of technical write-offs to bring good income to bank 

--PNB: See recovery of INR 5.7 billion worth of NCLT accounts in Jan-Mar 

MUMBAI – Punjab National Bank may see recoveries of INR 50 billion-INR 60 billion in Jan-Mar, especially from some large accounts, the bank's management said in a post-earnings analyst conference call on Friday. "We are aiming for 18,000 cr (INR 180 billion) but with a conservative estimate, I can tell you that in this particular quarter (Jan-Mar) we should be in a position to mop up the recovery to the extent of around INR 5,000-6,000 crores (INR 50-60 billion)," it said. "There were some bigger accounts which didn't materialise last quarter... (which) we are expecting in this quarter (Jan-Mar) and some bigger recoveries are going to come in February." 

Out of the estimated amount, INR 14 billion-INR 15 billion of recoveries are seen in the technical write-offs book in the quarter ending Mar. 31.

So far, the bank has achieved recoveries worth around INR 115 billion in 2024-25 (Jan-Mar). It currently has a technical write-off book of INR 910 billion, out of which INR 540 billion are NCLT accounts, which include those getting resolved through National Asset Reconstruction Co, the bank's management said.

The bank's management estimates a recovery of a sum total of INR 10 billion from both the National Company Law Tribunal and National Asset Reconstruction Co route in the Jan-Mar quarter. 

In the Oct-Dec quarter, the bank saw recoveries worth INR 3.80 billion through the National Company Law Tribunal book. However, in Jan-Mar, the bank's management expects recoveries worth INR 5.70 billion from these accounts. The bank also estimated around INR 5 billion worth of recoveries via the NARCL route for the Jan-Mar quarter.  

For the quarter ended Dec. 31, the bank reported a net profit of INR 45.08 billion, a 103% jump on year. The bank reported total income of INR 347.52 billion for the quarter, up 15% on year. Out of the total income, the state-owned lender reported an 'other interest income' of INR 5.22 billion. In the conference call, the management said that INR 3.50 billion of this amount was due to a refund from the income tax department. 

The bank's management said it was looking to shift to the new tax regime in 2025-26 (Apr-Mar). "We are estimating and we are planning now, to decide in the FY25-26 at any quarter. Depending upon our position, I think definitely we would like to move to the new regime." 

The bank's credit grew 14.8% on year, and deposit growth was 15.6% on year in the reporting quarter. The management forecast credit growth of 13-14% in the current financial year, due to a rise in lending to corporates. 

"Growth will continue to move in the range of 13 to 14%. I think that we'll continue to have that because we already have 1.3 trillion corporate book sanctions in place. And I'm expecting that in this quarter and the subsequent quarter, all these books are going to be availed by the corporates. So there is going to be a good growth in the corporate segment," the bank's management said. 

It said the Reserve Bank of India's measures to inject durable liquidity into the system could increase the bank's treasury income. The RBI on Monday said it would buy government bonds worth INR 600 billion through open market operation auctions in three tranches.

The bank estimates a rough figure of more than INR 1.50 billion of inflows from the RBI's open market purchases via auction. Easing liquidity in the banking system is expected to ease the bank's cost of deposits in the Jan-Mar quarter. 

Managing Director and Chief Executive Officer Ashok Chandra said the bank would like to "tweak" its cost of deposits and yield on advances in the interest of profitability. "There is enough potential which I see that even if some tweaking happens in the cost of deposit and the yield on advances, we have enough for kitty in the book which will take care of my (the bank's) growth also and the profitability part also. We have more than 130,000 corporate book sanctions in place so if (there are) any adjustments which we need to do, in the yield on advances, low yield advances assets, I think we have enough cushion to do that," the managing director said. On Friday, shares of the bank closed at INR 101.20, up 4.9% on the National Stock Exchange.  End

Reported by Cassandra Carvalho

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.