Analyst Meet / AGM - Analyst Meet
Asset quality pain to continues for few more quarters
Punjab National Bank conducted an analyst meet on 23 February 2016 to discuss the financial performance of bank for the quarter ended December 2015 and the prospects of the bank. Usha Ananthasubramanian - MD&CEO addressed the meet:
Highlights:
The performance of the bank was impacted by higher NPA provisions. However, the bank has maintained the edge over peers in terms of higher operating profit, margins and CASA ratio.
Bank expects NIMs to remain subdued in the range of 2.6-2.8% for Q4FY2016.
The bank has been focusing on retail sector loans growth has improved the share of small ticket loans to 60% at end December 2015 from 57% a year ago.
The deposit growth of the bank remains healthy, despite reduction in deposit rates for six times in a year.
Bank has reduced the high cost bulk deposits to mere 0.5% of total deposits at end December 2015 from 5% a year ago.
Bank has witnessed an improvement in the CASA ratio to 40.4% at end December 2015 compared to 40.2% at end June 2015 and 39.4% at end December 2014.
The PMJDY account balances improved to Rs 1324 crore at end December 2015. Bank expects PMJDY accounts to turn profitable by March 2016.
Bank is reorganising its structure, while it is planning some external senior management recruitments for specialised skills.
The fresh slippages of advances surged in Q3FY2016 not only because of RBI advice to the banks to classify certain weak accounts as NPAs under asset quality review (AQR) of the banking system, but has also taken initiative in identifying weak accounts.
Fresh slippage of advances to NPA category galloped to Rs 12712 crore in Q3FY2016 compared to Rs 2388 crore in the previous quarter.
The slippages on account of RBIs AQR amounted to Rs 5500 crore in Q3FY2016, which is about 51% of the overall AQR related identified RBI for the bank. The rest 49% of the AQR accounts will be considered in Q4FY2016. Of the AQR slippages in Q3, about Rs 4399 crore slipped from restructured advances book.
As per the bank, the slippage rate for its restructured advances book stands at 19%.
Bank has been strongly focusing on recoveries of NPAs. Bank has declared about 904 borrowers as wilful defaulters with the exposure of Rs 10870 crore at end December 2015. Bank has also been conducting e-auctions of properties to add to NPA recoveries.
Bank has conducted sales assets worth Rs 1342 crore asset recoveries companies (ARCs) in Q3FY2016, against which bank has received securities receipts worth Rs 740 crore. Bank is also planning more sales of assets to ARCs.
However, bank expects asset quality pain to continues for few more quarters.
The SEBs exposure of the bank stands at Rs 8500 crore to UP, Haryana, Rajasthan, and TN. Under the UDAY scheme, about 75% of the this exposure would be converted in state government bonds.
The outstanding refinancing under 5/25 scheme stands at Rs 6800 crore for 13 accounts.
The outstanding Strategic Debt Restructuring (SDR) stands at Rs 7000 crore for 13 accounts.
The bank has requested to the Government for capital infusion, while it is also looking at various other ways to improve capital position.
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