Analyst Meet / AGM - Analyst Meet

08-Aug-2018, 09:10
Punjab National Bank conducted an analyst meet on 08 August 2018 to discuss its financial results for the quarter ended June 2018. Sunil Mehta, MD&CEO of the bank addressed the meet:

Highlights:

• The bank has posted strong 30% growth in the operating profit for quarter ended June 2018, while improved asset quality with strong recoveries and upgradations of Rs 8445 crore.

• The recoveries included Rs 3049 crore from Bhushan Steel and Rs 335 crore from Electrosteel in Q1FY2019.

• The domestic Net Interest Margins (NIM) of the bank improved to 2.9%, while the bank expects to sustain margins are current level with strong CASA deposits ratio and recent hike in MCLR. The interest income for Q1FY2019 includes Rs 800 crore from recoveries in Bhushan Steel accounts.

• The bank has made additional provisions of Rs 321 crore in Q1FY2019 for exposure to NCLT account with total provisions rising to Rs 10670.75 crore end June 2018.

• The bank has made further provisions of Rs 1863 crore in Q1FY2019 for a fraud detected at Brady house Mumbai Branch amounting to Rs 14357 crore, in addition to Rs 7178 crore provided in Q4FY2018. Overall the bank has made 63% provisions, while the balance would be provided over next two quarters.

• The bank has witnessed decline in fresh slippages of loans to Rs 5250 crore in Q1FY2019, of which Rs 1300 crore cane from agriculture sector and Rs 1100 crore from SME segment. The bank expects fresh slippages of loans to continue to decline, going forward.

• As per the bank, the stressed non-fund exposure pending to be classified as NPA is significantly lower at end June 2018. However, the bank has already addressed the impact of RBI 12 February circular.

• The SMA-2 category loan book of the bank is significantly lower at Rs 8000-10000 crore end June 2018.

• The stranded restructured loan book, including loans restructured under various schemes, stood at Rs 4000 crore end June 2018.

• The bank has set up Stress Asset Management Vertical in June Quarter for recovery or resolution of NPA and controlling fresh slippages. 'War room' a dedicated cell is operating in Head Office for intensive daily monitoring of NPAs.

• The bank has identified 159 accounts with the exposure of Rs 17800 crore for sale to ARCs in FY2019.

• The bank is targeting strong recoveries and upgradations of Rs 11500 crore for Q2FY2019, of which Rs 4000-5000 crore is expected to be contributed from 6-7 large accounts.

• Towards conservation of capital, Bank has focused on reducing RWAs through churning its credit portfolio/cleansing of data. The RWA density of the portfolio has reduced to 55% end June 2018 from 64.5% end June 2017. The bank has substantially reduced the risk weigh assets by Rs 40350 crore, despite 11% growth in domestic loan book end June 2018 over June 2017.

• The bank expects its domestic loan growth at above 10% for FY2019, while the focus would continue on quality loans.

• The bank has substantially improved provision coverage ratio to 61.8% end June 2018 from 58.4% end March 2018.

• The bank maintained the CASA deposits ratio at healthy level of 42.6% end June 2018.

• The bank has set a target to garner Rs 8600 crore from monetisation of its non-crore assets during FY19. It has raised Rs 167 crore in Q1FY2019 from sale of offices and its various investment.

• The bank has appointed merchant banker for selling its stake in PNB Housing Finance, while it expects proceeds of up to Rs 6500 crore from stake in PNB Housing Finance. With regards to PNB MetLife, the bank plans to sell a 4% stake for price discovery ahead of the listing on the exchanges.

• The bank is making provision for wage hike at more than 6%.

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