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Analyst Meet / AGM - Analyst Meet

Expects fresh slippages to be lower than recoveries and upgradation in Q4FY2017

Punjab National Bank

08-Feb-2017, 04:26
Punjab National Bank conducted an analyst meet on 08 February 2017 to discuss the financial performance of bank for the quarter ended December 2016 and the prospects of the bank. Usha Ananthasubramanian - MD&CEO addressed the meet: Highlights:

The bank has continued to improve the operating profit for last many years with 8% growth recorded in the operating profit for 9MFY2017. Amid weak revenue growth, the cost control is supporting the operating profit growth for the bank.
The credit growth of the bank has weakened in the absence of strong credit offtake and large ticket project loans opportunities. The focus is mainly on retail small ticket loans for loan growth.
The gross loan book of the bank was flat at end December 2016 over a year ago, while the loan growth was mainly driven by retail, agriculture and MSME (RAM) loans. The share of such small ticket or RAM loans has increased to 56.6% at end December 2016 from 55% a year ago.
The bank had earlier targeted loan growth of 10% in the beginning of year, but the target is unlikely to be achieved given steep moderation in growth.
The risk weighted assets of the bank were flat end December 2016 over December 2015, despite 10% growth in assets on balance sheet, indicating growth of the quality assets.
During the demonetization period, the bank has received Rs 95000 crore of old demonetized currency notes, of which Rs 14000 crore were received into loan accounts and Rs 6000 crore were exchanged. The bank has retained about Rs 43000 crore deposits under cash received in old notes in Q3FY2017, while bank expects to sustain at least 50-55% of these deposits over medium term.
Bank has witnessed an improvement in the CASA ratio to 47.1% at end December 2016 compared to 42.1% at end September 2016 and 40.4% at end December 2015.
Fresh slippage of advances to NPA category including debits in existing NPA accounts eased to Rs 5660 crore in Q3FY2017 compared to Rs 6202 crore in the previous quarter.
The bank has continued strong recoveries and upgradation performance with Rs 3947 crore of recoveries and upgradation posted in Q3FY2017. As per the bank, the recoveries and upgradations could have been higher by Rs 1500-2000 crore in Q3FY2017 in the absence of demonetization.
The recoveries and upgradation stood at Rs 14725 crore in 9MFY2017, while the bank is on track to achieve the target of Rs 20000 crore for FY2017. The recoveries and upgradation were Rs 1300 crore in January 2017.
On slippages front, the bank expects fresh slippages to be lower than recoveries and upgradation in Q4FY2017.
The SMA -2 category loan book of the bank stood at Rs 19000 crore.
The bank is holding Rs 8000 crore of financial assets in terms of shareholding in subsidiaries. The bank may consider stake sales to support capital position.
The bank has posted strong growth in non-interest income driven by both core fee income and treasury income, while the bank expects non-interest income to continue to remain strong, going forward.