State-owned lender Punjab National Bank (PNB) on Saturday reported a 159% year-on-year (YoY) rise in its net profit for Q1FY25 at Rs 3,252 crore, largely led by lower provisions and stable core income.
The June quarter profit after tax (PAT) was higher than a Bloomberg consensus estimate of Rs 2,955 crore.
During Q1FY25, the bank’s overall provisions other than tax fell to Rs 1,312 crore from Rs 3,965 crore a year ago.
Gross non-performing asset (GNPA) ratio moderated to 4.98% as of June 2024 from 7.73% last year, and net NPA also fell to 0.60% in Q1FY25 from 1.98% in Q1FY24.
Credit cost, too, was lower at 0.32% in the reprinting quarter, as against 1.99% a year ago.
The bank has now guided for 4% GNPA ratio for FY25 as against 5% earlier, and revised credit cost outlook to below 0.5% from below 1% earlier.
The bank’s MD & CEO Atul Kumar Goel, in a post earnings conference, said that the bank will not hesitate in lending to stressed micro, small and medium enterprises (MSMEs) as the Centre will declare a credit guarantee for such loans.
“As mentioned in the FY25 union Budget, a separate fund for MSMEs will be created which will provide guarantee (for loans to stressed MSMEs), so we will not mind lending,” he said.
MSME loans with over Rs 5 crore ticket size amounting to Rs 1,012 crore are currently in the bank’s special mention account-2 (SMA-2) doubtful debt category. Loans overdue for between 61-90 days come under lenders’ SMA-2 category and once a loan interest or principal is unpaid for over 90 days, it is classified as a NPA.
Further, PNB’s overall advances rose 12% YoY to Rs 10.28 trillion as on June 30, and the lender will continue growing its overall loan book by 11-12% in FY25.
As much as 56% of the lender’s advances are extended in the retail, agriculture and MSME (RAM) sector, while the remaining are corporate loans.
On liabilities side, overall deposits rose 8.5% YoY to Rs 14.08 trillion in Q1, but domestic current-account and savings account ratio fell to 40.1% from 42% a year ago.
The bank aims to deliver 9-10% deposit growth in the current fiscal.
The Reserve Bank of India’s (RBI) draft circular on banks’ liquidity coverage ratio (LCR) standards will have 10% impact on the lender’s LCR, which stood at 125% as on Q1FY25, Goel said.
In line with peer lenders, PNB’s net interest margin (NIM) also moderated by 3 basis points (bps) sequentially to 3.07% in the reporting quarter.
The lender is targeting NIM in the range of 2.9%-3% in FY25, Goel said.
Net interest income of the bank, meanwhile, rose 10% YoY to Rs 10,476 crore in Q1.
Lastly, PNB’s capital adequacy ratio stood at 15.79% as on June 30, and the lender will raise Rs 5,000 crore via qualified institutional placement (QIP) going ahead and another Rs 10,000 crore via tier-I and tier-II bonds at an ‘opportune time’, Goel said.