Punjab National Bank, which reported a 53% year-on-year drop in Q2 profit, expects a turnaround in the second half of FY14. CMD of the bank KR Kamath told reporters that PNB would see a 15% y-o-y growth in credit and deposits by the end of FY14. To attract deposits, the bank raised its deposit rates in certain buckets by 25-50 basis points. The bank, however, plans to keep base rate steady at 10.25%. Excerpts
What is your credit and deposit growth projection for FY14?
Credit growth should pick up in the next two quarters. We had taken the path of consolidation last October, which we have completed. Now, the base effect of this will be seen. Along with that there is also 15% growth in the retail segment and we would expect it to go up to 20%. We expect loan growth to be as per the industry expectation of 15% and deposit growth also to be around that level.
Since the bank is raising deposit rates, how will it affect the net interest margin (NIMs) going forward?
NIMs will be affected to some extent, but we need money to fuel credit growth which we expect to be higher in the second half of the year. In last four years, NIMs have been around 3.5%, but time has come to review this and work on lower NIMs, so as to enable growth. We expect NIM to be around 3.25% going forward.
Do you plan to tinker with the base rate?
As we need to support growth, we do not intend to raise base rate. Our base rate will remain at 10.25%.
Any plan to raise funds from the market via qualified institutional placements (QIP) in future?
The government will be infusing capital of about R500 crore that should keep our capital adequacy ratio at a decent level. We may not go to the market immediately to raise funds through QIP.
How does your restructuring pipeline look?
I do not have the exact numbers, but it should taper down going forward as the economy is showing signs of a turnaround and our recovery measures have also improved.