Punjab National Bank (PNB) reported a 13% year-on-year rise in net profit to Rs 5,100 crore for the quarter ended December, even as provisions increased, aided by improving asset quality and steady business growth. Bloomberg estimates had pegged the bank’s net profit at Rs 4,751 crore.
The bank’s global business grew 9.5% year-on-year to Rs 28.91 lakh crore as on December 31. Global advances rose nearly 11% during the period, while global deposits increased 8.5%. For the current financial year, PNB expects to meet its loan growth guidance of 11–12% and deposit growth guidance of 9–10%.
What did managing director and CEO, PNB say?
“We have sanctioned credit lines of more than Rs 3.12 lakh crore during nine months of this financial year, out of which we have pending disbursement to the tune of Rs 1.02 lakh crore, which are yet to be disbursed that will favour the overall credit growth of the bank,” Ashok Chandra, managing director and CEO of the bank said in the post earnings press conference.
The bank’s credit-deposit ratio increased to 74.2% at the end of December from 72.6% a year ago. Chandra said PNB continues to see sustained growth in low-cost deposits. Retail, agriculture and MSME (RAM) loans accounted for 56.3% of total advances, with the bank aiming to raise this share to 60%. The corporate loan book rose 9% year-on-year to Rs 5.04 lakh crore.
The net interest income of the bank fell by 4.5% on a year-on-year basis to Rs 10,533 crore in Oct-Dec quarter. Domestic net interest margin (NIM) declined by 7 basis points (bps) on a sequential basis to 2.65% and the global NIM fell by 8 basis points on quarter to 2.52%.
The bank attributed the margin pressure to an unchanged cost of deposits and lower yields on advances following the 25-basis-point policy rate cut in December. “For Q4, we expect our NIM to remain broadly at Q3 levels despite the full impact of the December rate cut,” Chandra said. For the full year, domestic NIM is expected to remain above 2.70% and global NIM close to 2.60%, subject to no further rate cuts.
Strategic Provisioning Increases
Provisions and contingencies rose to Rs 1,150 crore from Rs 643 crore a quarter ago. PNB made additional floating provisions of Rs 955 crore during the period. “We have created additional floating provisions on a prudential basis in Q3, which has led to a higher credit cost of 0.46%. The bank’s total floating provisions now stand at Rs 1,775 crore, which will support our transition to the expected credit loss (ECL) framework,” Chandra said.
In terms of asset quality, the bank’s gross non-performing asset (NPA) ratio stood at 3.19% as on December 31 as against 3.45% a quarter ago and the net NPA ratio improved to 0.32% from 0.36% a quarter ago. Slippage ratio continued to be below their guidance of 1%.
During the quarter, PNB rolled out several digital initiatives, including Digi Sarthi for two-wheeler loans and Tractor Xpress. Digital transactions accounted for nearly 95% of total transactions in the October–December period. The bank also launched a metal credit card, PNB Luxura, targeting high-net-worth individuals, professionals and affluent business owners. “We have set a target of issuing over 10,000 cards in this segment by March 31,” Chandra said. On Monday, shares of Punjab National Bank closed 3.03% lower at Rs 128.35 on NSE.