Back

Analyst Meet / AGM - Analyst Meet

Targets loan growth of 10% for FY2018

Punjab National Bank

07-Nov-2017, 07:55
Punjab National Bank conducted an analyst meet on 07 November 2017 to discuss its financial results for the quarter ended September 2017. Sunil Mehta, MD&CEO of the bank addressed the meet:
Highlights:

The bank has recorded 2% growth in the net profit to Rs 560.58 crore, while posting 20% growth in the operating profit to Rs 3279.08 crore in Q2FY2018.
The Net Interest Margins (NIM) of the bank improved to 2.35%, while the domestic NIM was higher than the guidance of 2.5% at 2.65% in Q2FY2018. The bank is focusing on qualitative fresh credit growth for supporting margins.
As per the bank, the margins are pressure with reduction in lending rate and shift of loan book to MCLR based lending rate system. About 65% of the loan book has switched to MCLR lending rate system.
The business growth of the bank was healthy at 8% end September 2017, driven by 11% growth in domestic business. The overseas business declined 13% end September 2017 over September 2016. The bank is targeting loan growth of 10% for FY2018.
The bank has improved CASA deposits ratio to 44.4% end September 2017.
The bank has substantially reduced fresh slippages of loans, while improving asset quality in Q2FY2018. Fresh slippage of advances to NPA category dipped to Rs 3510 crore in Q2FY2018 from Rs 6018 crore in the previous quarter.
The bank aims to contain fresh slippages of loans, while it has created exclusive war room for pro-active monitoring of weak accounts. The bank expects fresh slippages of loans to be contained at Rs 17000 crore in FY2018 compared with Rs 22000 crore in FY2017.

The bank has improved provision coverage ratio to 59.2% end September 2017. The front loading of provisions has helped the bank to improve provisions.

As per the bank, it has exposure to 9 out of 12 accounts amounting to Rs 11000 crore identified by the RBI for resolution under IBC. These accounts are well provided, while bank is required to make additional provisions of Rs 1018 crore on these accounts in FY2018, of which Rs 800 crore of provisioning is already done.

The bank is more confident about resolution of 5-6 accounts from the first list under IBC, mostly from steel sector, in a time bound manner.
With regard to second list of accounts for likely resolution under IBC, the bank has exposure to 20 accounts amounting to Rs 6500 crore, requiring additional provisions of Rs 800 crore. The bank has already made provision of Rs 75 crore in Q2FY2018, while the balance may be provided over next few quarters.
The bank has exposure of Rs 21000 crore 5/25, SDR and S4A scheme together, of which Rs 10000 crore of exposure is already classified as restructured standard or NPA. The exposure to 5/25 scheme stands at Rs 11500 crore, SDR scheme at Rs 6400 crore and S4A scheme at Rs 3000 crore end September 2017.
The bank is well capitalized, while it has approval to raise Rs 5000 crore of equity capital. The bank has empanelled merchant bankers for execution of capital raising and expects to come out with QIP by March 2018.
The bank has also identified non-core assets such as real estate, stake sale in subsidiaries etc amounting to Rs 5000 crore and may decide on sale of these non-core assets at appropriate time.