Speaker #1: Gentlemen, good day and welcome to Punjab National Bank Q2, FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star and then 0 on your touchdown phone. Please note that this conference is being recorded.
Speaker #1: I now hand the conference over to Mr. Nitin Agarwal, thank you, and over to you, sir.
Speaker #2: Yeah, thanks, Arjun. Good evening, everyone. On behalf of Motilal Oswal, I welcome you all to this call to discuss the Q2, FY27 results of Punjab National Bank.
Speaker #2: We have with us Mr. Ashok Chandrajee, Managing Director and CEO, along with his top leadership team, represented by Executive Directors Mr. M. Paramasivam and Mr. Amit Kumar Srivastav.
Speaker #2: To take us through the key highlights of the quarterly performance. I'll now hand over the call to Mr. Sunil Kumar Goyal, Chief General Manager from the Strategic Management and Economic Advisory Division, to take things forward.
Speaker #2: Over to you, Mr. Goyal.
Speaker #3: Good evening. Now I'm speaking as a disclaimer: statements made during this call may contain certain forward-looking statements apart from historical information; these forward-looking statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements.
Speaker #3: Punjab National Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the present date. Now I request MD Sir for his opening remarks.
Speaker #4: Good evening, ladies and gentlemen. First of all, I would like to touch upon the state of Indian economy. Indian economy continues to demonstrate a strong underlying growth momentum, supported by resilient domestic demand infrastructure investment, expanding services activity, and a steadily strengthening financial system.
Speaker #4: India recorded real GDP growth of 7.8% in the first quarter of 2027, compared with 6.9% in the corresponding quarter of the previous year. Recently, MPC in its meeting and World Bank in its India Development Report had also revised the GDP estimates for financial year 2027 to 7.1% from the previous estimates of 6.7% and 6.6%, respectively.
Speaker #4: On external front, India's merchandise exports grew by 17.85% YOY during the period April to August 2026, reaching an estimated USD 215.91 billion. The banking sector categorized by historically low levels of stress assets and strong profitability is well positioned to play a pivotal role in supporting and sustaining India's economic expansion.
Speaker #4: Coming to Punjab National Bank, we sustained a strong business momentum in Q2, marked by a decisive improvement in margins in line with our expectations.
Speaker #4: Continued strengthening of asset quality and enhanced operating efficiency—our performance reflects the strength of our franchise—and disciplined execution of strategic priorities. We remain firmly on track to deliver our FY26-27 guidance.
Speaker #4: Our focus on retail, agriculture, and MSME continues to guide our efforts toward building a diversified and resilient advanced growth. At the beginning of the financial year, we have targeted to open 250 branches in this financial year, with particular emphasis on strengthening our footprint in the southern and western regions.
Speaker #4: We have already opened 162 branches out of which 119 are in the southern and western region. In parallel, we are accelerating our digital transformation to build a more agile, efficient, and customer-centric organization.
Speaker #4: Our investments in technology, process automation, and data analytics are aimed at simplifying banking journeys and improving service delivery, and enhancing productivity. While positioning the bank to scale efficiency in a rapidly evolving banking environment.
Speaker #4: With this context, let me now turn to the bank segment-wise performance and key developments during the quarter. First, I will touch on the overall business growth.
Speaker #4: Our gross global business has reached 31.18 lakh crore, registering a robust YOY growth of 11.9%. Our advances grew by 14.7% YOY to Rs. 13.41 lakh crore, despite reducing IBPC exposure by 23,700 crore.
Speaker #4: Excluding this impact, core advances registered a robust YOY growth of 17.4%, reflecting healthy credit demand and strong underlying business momentum. Our core RAM portfolio continued to deliver healthy growth with retail advances excluding IBPC growing by 16.3%, MSME by 19.8%, and agriculture by 18.1% YOY, reflecting broad-based traction across key segments.
Speaker #4: Credit growth is well positioned to maintain its strong momentum, supported by a robust sanction pipeline. Bank sanctioned Rs. 4 lakh crore in 2025-2026 in corporate credit lines, further in the first half of this year we have already crossed more than 2.5 lakh crore of sanctions.
Speaker #4: In the corporate credit. Our pipeline credit is to the tune of 1.58 lakh crore, which provides a strong visibility for future credit growth. Global deposits of the bank have reached 17.77 lakh crore, with YOY growth of 9.9%.
Speaker #4: Our CASA strategy is centered on deepening customer engagement and enhancing individual savings account balance, which grew by 8.1%. YOY. In the beginning of SG&R campaign, we had targeted to raise 2.5 billion USD, and we have raised 2.7 billion in a calibrated manner.
Speaker #4: The same has been utilized for shedding off our high-cost bulk deposits and CDs. With a CD ratio of 75.5%, we have adequately balanced headroom to support planned credit expansion, accordingly our deposit mobilization remains measured and strategic, with a clear emphasis on optimizing the cost of funds rather than pursuing volume at any cost.
Speaker #4: I will touch upon the profitability. Improving profitability remains the bank's foremost strategic priority, as consistently emphasized across various forums. As indicated in our previous interaction, we had expected a sequential improvement in margins during 2026-2027.
Speaker #4: Our Q2 performance validates this assessment, with a substantial improvement in margins during the quarter. Domestic NIM improved by 10 basis points sequentially from 2.64% to 2.74%, while global NIM increased from 2.5 to 2.58%.
Speaker #4: We expect this positive trajectory to strengthen further in the coming quarters, supported by disciplined balance sheet optimization. NII increased to 11,601 crore, registering YOY growth of 10.8% and sequential growth of 7.4%, surpassing our stated guidance of 7%.
Speaker #4: Operating profit is continuously above 7,500 crore, marked from the last 3 quarters, and stands at 7,532 crore for Q2 of this year. Core operating profit, excluding recovery from return of accounts and treasury gains, grew by 29.4% YOY basis and 8% on QOQ basis.
Speaker #4: Core operating profit found 79% of the total operating profit, in Q2 of 2027, which was 64% in Q2 of FY26. Our fee-based income grew by 16% on YOY basis, reflecting continued progress in diversifying revenue sources.
Speaker #4: The bank recorded a net profit of 5,532 crore in Q2, with YOY growth of 12.8%. The bank's overall earnings profile reflects a sustained focus on profitable growth and strengthening core earnings.
Speaker #4: Efficiency ratios. Our return on assets has consistently remained above 1% mark, and stands at 1.05% in Q2 of this year. Our return on equity stands at 17.32%.
Speaker #4: Our tangible book value per share stood at 111.94 as of September 30, 2026, registering a significant improvement over 95.92 as of September 30, 2025.
Speaker #4: Our cost-to-income ratio has demonstrated a consistent declining trend, improving to 50.42%, 45% in Q2 from 51.20% in Q2 of last year. Reflecting our continued focus on operational efficiency and cost optimization.
Speaker #4: I will touch upon the asset quality. Asset quality continues to strengthen with the gross NPI ratio declining to 2.55% as of September 30, 2026.
Speaker #4: From 3.45% as on 30 June 2026. The net NPI ratio has also improved to 0.25% as of September 30, 2026, from 0.36% as on 30 September 2025.
Speaker #4: This sustained improvement reflects our disciplined credit underwriting, robust monitoring, and focused recovery efforts, while keeping us firmly on track to achieve our FY26-2027 guidance on both GNPA and net NPA.
Speaker #4: We have not seen any material impact of geopolitical tensions on the bank's asset quality, our slippages remain contained, SMA accounts are stable, and the overall credit portfolio continues to perform well.
Speaker #4: Our SMA 0, 1, and 2 all combined is all-time low levels of 2.50% of the overall loan book, our PCR stands at 97.32%, which is well above our guidance of more than 96%.
Speaker #4: Total fresh slippages during the Q2 of this year is 2,395 crore, and our guidance for slippages ratio to remain below 0.9%, we are already below we are at 0.77%.
Speaker #4: Total recovery stood at 2,805 crore for Q2 of this year, and our recovery is 1.17 times of the slippages in Q2, reflecting our commitment towards improving asset quality.
Speaker #4: We have made additional floating provision of 125 crore on prudential basis, making our total floating provision of 2,560 crore. I will also touch upon the asset quality underwriting standards.
Speaker #4: From the 1st July 2020 to 30 September 2026, almost 6.25 years, we have sanctioned around 15.97 lakh crore out of which we have disbursed 14.09 lakh crore loans, and the outstanding in these loans is 9.60 lakh crore, which is close to 71.60% of our total outstanding loan book as of today.
Speaker #4: And NPA in this book is hardly 0.42% of the disbursed amount. Our capital adequacy is 17.95% as on 30 September, and compared to 17.19% as on 30 September 2025, our CET-1 capital stands at 14.44% against regulatory requirement of 8%, TIRE-1 capital stands at 15.89% against regulatory requirement of 9.5%, including CCB and TIRE-2 capital stands at 2.06% as on 30 September 2026.
Speaker #4: More than 87.6% of the total externally rated advance above 25 crore are above A-rated, and more than 52.4% are triple A-rated, which indicates our balance sheet strength from risk point of view.
Speaker #4: Our digital transformation is reshaping the bank into future-ready institution, driving superior customer experience, operational efficiency, and sustainable growth. Our H127, our digital sanction has crossed 41,500 crore, reflecting a strong momentum towards our ambition of adding one more lakh crore during this financial year.
Speaker #4: On the transaction side, over 95% of the customer transactions are now digital, and there is 31% YOY increase in digital transactions. We have further strengthened our digital payment offering by enabling UPI services for our current account customers through PLAXI product PNB1 Business Mobile app.
Speaker #4: There is good traction in the PNB1 Business app, and this app caters to more than 4.14 lakh customers with more than 225 teachers. We remain at the forefront of supporting RBI and government-laid initiative in CBDC and digital public infrastructure.
Speaker #4: Going forward, we are expanding the application of AI and machine learning across operations, advanced analytics, risk management, and decision-making. Anchored in responsible AI practices, robust governance, and regulated compliance, these initiatives will further enhance the bank's agility, productivity, and customer centricity.
Speaker #4: PNB is taking towards a step towards becoming quantum-ready, we have deployed quantum-safe encryption in 246 of our customer-facing applications, best on framework provided by NIST US.
Speaker #4: We are pioneering quantum technologies in banking through our quantum finance innovation hub at Amravati, Andhra Pradesh, to advance cybersecurity, fraud detection, and secure digital financial services to extend the bank's technological resilience and future readiness.
Speaker #4: Now I will touch upon the most important aspect, that is the human resource. We are investing in targeted capability building through customized certification program in collaboration with IIBF, bank has launched a large-scale artificial intelligence enablement program with Microsoft, which has trained 47,544 officers of the bank.
Speaker #4: These initiatives have equipped our workforce with future-ready skills and enhancing technology adoption across the bank, and the bank has received golden peacock national training award for the year 2026.
Speaker #4: Through initiatives such as PNB SPARCE, offering telecommunication support for mental well-being, regular health checkups, and wellness sessions, and childcare facilities, including crib services, we are fostering a supportive and inclusive workplace that prioritizes employees' physical, mental, and family well-being.
Speaker #4: Our Pan-India initiatives such as PNB Khel Utso and PNB Tal Trang provide platforms for employees to showcase their supporting and cultural talents. Fostering a sense of belonging and promoting a vibrant organizational structure.
Speaker #4: Now I will be concluding the bank is sharpening its focus on profitability, by strengthening its savings individual franchise, and drive calibrated growth in the retail, agri, and MSME segments to enhance margins optimize the cost of funds, improve business mix, and deliver sustainable growth in the earnings and returns ratio.
Speaker #4: Our robust risk management framework, anchored in prudent underwriting, disciplined credit monitoring, and focused recovery, is strengthening asset quality, and containing credit cost. Credit cards, cash management services, and supplies in finance are emerging as key drivers of diversified fee-based revenue growth.
Speaker #4: In parallel, the bank is expanding its growth avenues through the introduction of wealth management services and the comprehensive revamp of trade finance models aimed at enhancing customer value, strengthening service delivery, and improving non-interest income.
Speaker #4: Anchored in a strong balance sheet, disciplined execution, and diversified growth drivers, the bank is well-positioned to drive sustainable profitability strengthening return ratios and deliver consistent long-term values to stakeholders.
Speaker #4: Thank you very much, and I am open for any questions or any clarification related with the financial performance of our bank of Q2 financial year 2026-2027.
Speaker #4: Thank you.
Speaker #1: Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone phone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then 1.
Speaker #1: Your first question comes from the line of Kunal Shah with Citi. Please go ahead.
Speaker #2: Yeah. Hi, sir. Congratulations for a good set of numbers. So firstly, on the utilization of FCNR side, if you can just highlight in terms of how we have utilized it, was it more towards the repayment of the bulk deposits as well as maybe repayment of some of the low-yielding corporate advances, as there is no inch up on the either on the investments or on the cash side.
Speaker #2: So how much of FCNR is, how it is utilized, that would really be helpful, yeah.
Speaker #3: Yeah, thank you. Kunal ji, we raised 2.7 billion USD, and whatever amount we have mobilized to that extent, our high-cost deposit in the bulk segment and the CD, we have already said now.
Speaker #3: So we have practically utilized the entire amount now.
Speaker #2: Okay, so it is just a replaced, and that's the reason we are seeing the decline in the cost of deposits.
Speaker #3: Absolutely. Absolutely right.
Speaker #2: Because last time you mentioned, like, larger part of the repricing is already done. So I think entire benefit would have been because of the so now how much is the bulk deposit or the high-cost deposit in the overall deposit base now?
Speaker #3: It is around, yeah, 17, 17 percent both, bulk deposit plus CD put together.
Speaker #2: And this was last quarter?
Speaker #3: It was around 19 percent. So around 23,000, see, it is already there in the public domain also. We had the CD of around 60,000 crore.
Speaker #3: And we have brought it down to 40,000 crore now.
Speaker #2: Oh, okay. Okay. So overall, now in terms of margins, so yield also appeared to have improved. So that is largely because of the repayment of the low-cost maybe the corporate advances or anything much to reduce almost like 8 basis points increase in the yield on advances.
Speaker #2: Yeah.
Speaker #3: Domestic yield has gone by 10 basis point, 2.64 to 2.4. And if you recall my last conversation also, I had indicated that banks is working on the rebalancing of our balance sheet towards the credit portfolio.
Speaker #3: That is one of the reasons you are seeing the growth in the advances side we are growing at around 13 to 14 percent. We are sitting the low-cost low-yielding advances.
Speaker #3: And to that extent, we are mobilizing the good portfolio now. I think coming quarters also, you will see these things are happening. And I think there will be improvement in the name further.
Speaker #2: Sir, how should margins pan out? We are very comfortable to get into the guidance of 2.6 to 2.7, given that we are already at 2.5 at now.
Speaker #3: Yes, yes. I think in this quarter also, we are expecting that with the strategy which we have put in place, there will be some good improvement.
Speaker #3: And now 25 basis point, the repo rate hike which has happened, I think that also going to add I'm expecting around 7 to 9 basis point addition should further happen in this particular quarter.
Speaker #2: So our reset of this entire repo linked both 53 odd percent, that would happen say quarterly or how is it?
Speaker #3: No, no. It is very same day. Means the next working day. So the days yeah, the day it gets announced. Whether it is increase or decrease, as per the policy, we need to pass it on to those things in the very next working day.
Speaker #3: So already that we have done it. And 56 percent of our book is linked with the yeah.
Speaker #2: So 25 basis points of 56, that should clearly reflect in terms of yielding the next quarter itself.
Speaker #3: Absolutely.
Speaker #2: Almost like 10, 12 basis points impact would be there.
Speaker #3: Minimum, minimum 7 basis point overall impact will be there. In the name side.
Speaker #2: Sorry. In the end, the overall 7 basis point, sorry.
Speaker #3: 7 basis point improvement, minimum it should happen in the name side.
Speaker #2: Okay. On name, it should be 7. And on yield, it will be more than 10.
Speaker #3: Yield will be, yes.
Speaker #2: Okay. Okay. Got it. And one last question on the corporate side after a long we saw some slippage. Anything to read into that of Priya?
Speaker #2: Maybe it's a smaller amount, but maybe what that pertains to almost like 300 odd crores and that's leading to slightly higher slippages quarter on quarter.
Speaker #2: And any worry, worry which we would see on the MSME or the corporate or maybe any of the retail portfolio given the Middle East conflict which is there.
Speaker #2: Yeah.
Speaker #3: No, there is no impact of the Middle East crisis or the geopolitical tensions I think it is one of case and for a very long time, we have seen any corporate loan is slipping to NPA.
Speaker #3: So I don't think any other stress is there in the system now.
Speaker #2: And this is domestic.
Speaker #3: It is domestic. It is domestic.
Speaker #2: Okay. Okay. Yeah. Thank you.
Speaker #3: Thank you. Thank you, Kunal.
Speaker #2: Thank you.
Speaker #1: Thank you. The next question. Comes from the line of Chanchal, an individual investor. Please go ahead.
Speaker #4: Hello.
Speaker #3: Yeah, please.
Speaker #4: Hello. Yeah. So my question was basically on the right back. I say this quarter the provision are only say 97 crores, right, despite you have 1817 crore of NPA provision.
Speaker #4: And additional, you know, 1150 crore is standard asset provision, right? From where does this 2,000 crore of right back comes from? One time, you know, and your 1150 crore parts to your retail requirements?
Speaker #3: See, 125 crore we have kept as a floating provision. And there was a right back to the extent of around 148 crore. Right back of provision is there.
Speaker #3: And we have made some additional provision also to keep the provision coverage ratio intact. So all
Speaker #5: All put together, it is ₹817 crore provision we have made in the NPA book now. Okay, my question was basically on the right side.
Speaker #5: Is there any roadmap of close to 2,000 crore? It seems like it's there. No, no, right back of 2019. Okay. Okay. And success, yes.
Speaker #5: I think the other question of slippage was already answered, but I also see there is a slippage increase in agriculture sector, right? And I see there is a dot rate that slippage happening in Maharashtra and Andhra Pradesh.
Speaker #5: So do you see further, uh, you know, stress in this particular segment? As of now, stress is not there, but, uh, yes, you are right.
Speaker #5: I think we need to be very careful and our team is working on that. Uh, the large-scale connect program with the farmers that we have organized now in all the geography wherever the agriculture loans is there.
Speaker #5: So we need to be very watchful. Need to have very close liaising with our borrowers, and I think we will be able to navigate this.
Speaker #5: Yes, and possibly my last question, you know, on your recovery, right? It seems that we are able to reach ₹5,600 crore. You know, we still have a target of, uh, you know, as per guidance, more than ₹14,000 crore.
Speaker #5: So we'll be able to meet that. How do you Uh, still we are, we are Yes, in fact, we were expecting in this quarter to have recovery in the range of around ₹3,000 to ₹3,500 crore, but recovery always happens.
Speaker #5: Sometimes you initiate the process but it slips to the next month or next quarter. So I am expecting that at least in this quarter the recovery should happen in the range of around ₹3,500 crore.
Speaker #5: So we will be trying to reach that figure around ₹13,000 crore figure, but of course it is a challenging figure. Somewhere around ₹12,000 to ₹13,000 crore definitely will be there.
Speaker #5: Thank you so much and congratulations for, uh, the best copy. Thank you so much. Thank you. Ladies and gentlemen, to ask a question, please press star and then 1.
Speaker #5: Once again, to register for a question, you may press star and then 1. Your next question comes from the line of Ankit Bansal with AB Investment Limited.
Speaker #5: Please go ahead. Hello. Yeah, please go ahead. Okay, sir. Okay, sir. The question of slippage is for that corporate loan. Then can you tell me from which sector that has been It is a road sector.
Speaker #5: Roadways and infrastructure. Infrastructure, yeah. अच्छा ओके सर सर लाइक यू आर डूइंग योर बेस्ट टू रिवाइव पीएनबी एंड योर एफर्ट्स हैव आल्सो बीन सीन सर व्हाट नेगेटिव और व्हाट environment are you seeing that will affect bank in a negative way?
Speaker #5: Like, uh, you are doing everything right, NPA, slippages, provision, everything is under control. Bank is doing its best to perform at the highest level.
Speaker #5: What negative— what future negatives are you seeing that can affect the environment of banking? That an investor can be careful of. I can tell you that we are in the best of position.
Speaker #5: Not only from the PNB angle I am talking about, for the entire banking industry I am talking. See, when the economy is growing at 7.8%, And not only the Indian data, it shows even the World Bank report and the IMF has also confirmed that in '26-'27, the growth— GDP growth will be around 7.1%.
Speaker #5: If that growth is going to happen and if the nominal GDP will be around around 11%. It means That much opportunity is going to come in the country now.
Speaker #5: And we always say that if 7.7% plus is the real GDP and around 11% is the nominal GDP, it means around 13 to 14% credit growth should happen in the country.
Speaker #5: And that is— it is happening, it is getting reflected. I will tell you that for the last 1.5 years we are talking, uh, that, uh, and really it is a geopolitical crisis is there.
Speaker #5: Earlier, 2 years back, US the Russia-Ukraine challenges were there, and now the Middle East crisis is there. So globally, a lot of challenges are happening, and that is one of the reasons you see all the countries in the global they are after the GDP growth of around 3-3.1%, whereas the country India is growing at this speed.
Speaker #5: I am expecting that and the, all the latest data also shows that all the retail, agri, MSME, a lot of opportunities are going to come.
Speaker #5: And it is for every institution, financial institution, to participate and take the cake from the bigger size which is available in the country now.
Speaker #5: So what I'm expecting, that growth momentum is going to continue Q3 anyway in every financial year, it becomes a very busy season for the bankers.
Speaker #5: That is the best season for everybody. Now I'm expecting that 1 or 2% growth should happen in the credit side.
Speaker #6: And, uh,
Speaker #5: Since the repo hike is also there, so there will be momentum and there will be growth in the NIM and the NII also. All put together, a lot of opportunities are there in the system now.
Speaker #7: Okay, oh sir, have you used that 900 crore, 900 crore provision that you got right off, right back?
Speaker #5: आह 900 करोड़ विच वन पर्टिकुलर अकाउंट यू आर टॉकिंग अबाउट यस यस यस आपने डेट यू हैव नॉट यूटिलाइज्ड From the quarters, you know, have you— we have utilized this quarter.
Speaker #5: Ah, we have utilized in this quarter, and you must have seen in the note also we have mentioned that, uh, ₹1,150 crore Uh, we have made a provision in the standard provision now.
Speaker #5: We have kept an extra provision and we will utilize this at the time of migration in the ECS.
Speaker #7: Uh, you have not utilized yet.
Speaker #5: We have kept it as a provision in the standard account. Okay.
Speaker #7: Okay, okay, thank you, sir. Thank you very much. But that's, that's from my side.
Speaker #6: Thank you.
Speaker #8: Thank you. The next question comes from the line of Sameer Bissey with Diamond Asia. Please go ahead.
Speaker #9: Uh, thank you very much for the opportunity and congrats on a strong quarter, sir. Uh, thank you. I don't know if this is covered earlier, uh, can you comment if we have further improvement left on the cost of funds side or cost of deposit side, uh, and how do you see the trajectory shaping up incrementally?
Speaker #9: Uh, that's my first question, uh, and then I, I'll come to second.
Speaker #5: Okay, so cost of deposit side, September 25th. Our domestic cost of deposit was 5.18%, which we have brought it down to 4.97%. June 26th, it was 5.02%.
Speaker #5: So every quarter that is coming down, it means the incremental deposit which we are garnering We are very mindful of the cost deposit there now, and we have kept it at a very, very nominal growth which we are investigating and consciously we are keeping it at, uh, 9— between 8 to 9%.
Speaker #5: And this quarter, because of the FCR deposit, it has gone to 9.9%. Otherwise Consciously, we are going to keep it between 8 to 9%.
Speaker #5: Cost of fund also, we are well within that parameter. And if you see the data domestic cost of fund was 4.5%, 5.7%, and today we are at 4.34%.
Speaker #5: Even the global Global cost of deposit also, it has reduced from 5.18% to 4.96%, and global cost of funds also from 4.58% to 4.35%.
Speaker #5: So A lot of improvements have happened, and we are very, very mindful of garnering any high-cost deposits. In this entire financial year, I am not talking about only Q2.
Speaker #5: If you see in the Q1 and Q2 put together, absolutely we have totally came down from the CD business. We have not gone for the mobilization of the CD now.
Speaker #5: So bank is putting a lot of focus on the profitability, and in our every review of the zones and the circles, this is the topmost priority.
Speaker #5: We start with the review of these parameters only. And that is the reason, uh, in one quarter itself you are seeing the 10 basis point improvement has happened in the domestic NIM now.
Speaker #9: No, sir, I appreciate, uh, the excellent execution. Wanted to understand how should one think, uh, going ahead, uh, given the way rates are moving.
Speaker #5: Going forward also, uh, we are not going to increase the deposit rate. First of all, I want to clarify that because enough liquidity is there and having 75% CD ratio, I think we are well placed to grow in the credit side to the extent of around 77-78% with the present deposit growth now.
Speaker #5: That is one thing. And second, from the credit side also, a lot of churning we have done in this particular quarter. And in my remarks also, I have mentioned that ₹58,000 crore of low-yielding advances we have said See, in this last 6 months, we have sanctioned ₹2,50,000 of corporate loan book.
Speaker #5: We could have grown 17-18% in the corporate loan book, but what we have done now, we have replaced those advances we are sanctioning at a good rate.
Speaker #5: With the low-yielding advances. And that, uh, the entire activity I am going to continue in the Q3 and Q4. I think you will find from all the profitability angles bank will be well poised after this end of this financial year.
Speaker #10: Sure, uh, great. So thank you. Uh, so second question, slightly more medium term. Uh, now, uh, you have also indicated that, uh, obviously the recovery number, you will achieve it, I'm sure, but it is a bit of an uphill task.
Speaker #10: Next year when we have slightly lower recoveries and probably credit costs start normalizing Uh, how should one think of, uh, ROE, uh, for, for next year?
Speaker #10: Uh, will we still be able to deliver at least 14-15% ROE? On tangible equity, is, is that a fair assumption to make?
Speaker #5: Absolutely fair, and I will share some data to you. If you see our core operating profit The core operating profit is growing at more than 29%.
Speaker #5: Last quarter also, the core operating profit had grown by 35%. And core operating profit, you know that it is excluding that technical write-off recovery and the treasury recovery.
Speaker #5: If that is picking up so well and that is the consistency is there in that If you see the June quarter, our total core operating profit was ₹5,531 crore, and in this quarter it is ₹5,971 crore.
Speaker #5: This anyway, it is going to continue. It is not going to come down further. The activity with the bank has started, and when we are putting a lot of focus on the high-yielding advances, I think this core operating profit will further go up.
Speaker #5: And that will be the strength of our bank as far as the profitability is concerned now. The activity with the bank is
Speaker #10: there is some bit of ECL inch up, uh, and, and lower, say, recoveries and lower trading profits. At least that number should be protected.
Speaker #10: Absolutely. ECL has going to be no impact on our book now.
Speaker #5: Uh, we have done the ECL calculation. Last time I had told that we will have the digital calculation also in place in the month of October, and we have those calculations.
Speaker #5: What we had invested earlier, that it will be around, uh, 9,000 to 10,000, roughly it is going to come to around 8,000 crore now on the loan book.
Speaker #5: So, sir, on ongoing basis, the run rate credit ongoing basis also See, the credit underwriting— why the ECL has come down, uh, to the extent of around 8,000 crore, it is because of the underwriting standard of the bank which has improved now.
Speaker #5: And I mentioned in my opening remarks, the last 6.5 years, the bank which has sanctioned and disbursed, our NPA percentage is only 0.42%. So to that extent, our provisioning requirement is going to come down, and I am factoring that also in my credit cost to the extent of around 15 basis points.
Speaker #5: With that, our credit cost will still— it will remain between 2.52 to 2.30%. So rest assured that we are very mindful to provide the ROA of more than 1.0405 and the ROE around 15 to 17%, minimum it will be there.
Speaker #10: Good. So thank you and, and all the best. Thank you. Thank you.
Speaker #8: Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to 2 questions each and rejoin the queue for any further questions.
Speaker #8: The next question comes from the line of Jayant Karote with Axis Capital. Please go ahead.
Speaker #10: Thank you for the opportunity. So just clarifying on the previous, you said, uh, you are expecting a 15 basis points impact on a steady-state basis from the ECL next year.
Speaker #10: And with that, where do you expect your credit cost to be running at?
Speaker #5: Around 0.25 to 0.30. 0.2 to 0.3. Yeah, yeah.
Speaker #10: So just, you know, like if I take your 2nd quarter, uh, you are literally at zero credit cost and you've done an ROA of 1.09.
Speaker #10: So that 15 basis points means you have to compensate on the NIMs by then, uh, by at least that much, uh, or if there are other line items where you, you have identified that, that should compensate for this 15 basis points in your P&L.
Speaker #10: See, when, uh, present also our credit cost is 0.25%.
Speaker #5: And still I am committing that with the ECL provision also we will be able to maintain this. See, this 0.25% also, which is the additional provisions which we have made it in the system.
Speaker #5: This quarter also we have made extra provision of— in the NPA account itself we have made extra provision around 700 crore. Otherwise there was a write-back of provision was there to the extent of 146 crore.
Speaker #5: So to keep the provision coverage ratio at around 97% and net NPA under control, we have made this additional provision. We have also made 125 crore extra floating provision in this quarter.
Speaker #5: With all those things, the credit cost is 0.25%. So that is already being factored, and that we are doing it every quarter.
Speaker #9: I'm just— so, and what is your total outstanding, uh, standard provisions used against that ₹8,000 crore to offset? Uh, that is, uh,
Speaker #5: 2,150 crore this quarter we have made in the standard account. We have kept it now, and 2,560 crore we have kept it in the NPA account as an ECL provision, extra provision.
Speaker #5: So these 2 things put together, substantially it will reduce my burden on the ECL migration.
Speaker #9: And you might also make some for the next 2 quarters to make sure the transition is smooth. Yeah, around 100 to 150 crore. And the second question is on the cost of deposits at system level.
Speaker #9: We are seeing CD rates have hardened. Your SAR growth, uh, this quarter is like 2%, 1.5%, 2%. While I understand, uh, you are willing to take the CD ratio up, but every time you press the pedal on deposit growth, it's going to be NIM dilutive unless, unless the asset mix is meaningfully different.
Speaker #9: How do you address the structural problems? So the SAR growth doesn't seem to be moving up.
Speaker #5: ता देरा टू कंपोनेंट्स, वन इज़ दी एसवी इंडिविजुअल एंड अनदर इज़ दी एसवी इंस्टीट्यूशनल। SB institutional, it is, uh, there for all the banking industry.
Speaker #5: It is coming down because of the government deposits moving to just-in-time deposit to RBI. So going forward also, there will be decline in the SB Institutional, but we are putting focus on the current account and SB Individual.
Speaker #5: SB Individual, we are growing at more than 8.5%. In this quarter also, we have grown at 8.36%. Last quarter it was at 9.41%. So a lot of activities we are doing it in the SB individual and the current account.
Speaker #5: Current account, there has been a good growth and it was more than 10.76% growth was there in the current account. Almost 12% growth is there.
Speaker #5: So going forward, bank will put a lot of emphasis on mobilizing, mobilization of these deposits. Along with that, we are also mindful of mobilizing the retail deposit which comes at a reasonable price.
Speaker #5: Incremental cost of deposit, bank is putting a lot of focus, and we are not in the CD business at all. We are also not aggressive at all in the bulk deposits.
Speaker #5: We are quite comfortable at this point of time to grow the credit around 77-78 with the present deposit flow rate.
Speaker #9: And your previous comment that you will not take hikes on deposits was about bulk, not retail. Retail TD, you are willing to take hikes, uh, to get that growth?
Speaker #5: As of now, we are not going to change any rate in this particular month now, so we will be still holding on because we are able to mobilize deposit every day.
Speaker #5: We are monitoring it. And we are able to garner the deposit in the retail term deposit and SB individual. So last data keeping, last data keeping question, sir.
Speaker #5: In the SA book, how much is the individual SA and government SA split broadly? I will tell you the exact figure. I will tell you, see, the total saving deposit is ₹5,42,900 crore.
Speaker #5: ₹5,42,900. In that, SB individual is ₹4,82,700 crore. And institutional is only around ₹60,100 crore. And you're saying it's the institutional that is degrowing and individual has grown 8.5%?
Speaker #5: Yeah, individual has grown by 8.5% and institutional has degrown by 3.84%, and that is the reason Overall CASA, it comes down and CASA growth is only 7.33%.
Speaker #9: Great, great. Thank you, sir. And again, congrats on the excellent performance on the NIMs, uh, that, that we're heading since 2 quarters. Congrats. Thank you.
Speaker #9: Thank you.
Speaker #8: Your next question comes from Bhavik Shah with Goldman Sachs. Please go ahead.
Speaker #10: Oh, hi sir, thanks for the opportunity. Uh, sir, what is the LCR ratio, uh, for the quarter? 133%. Okay, and sir, how much of the FCNRB was self-funded?
Speaker #5: Self-funded, it was around 30%. 70% was the leverage, 30% was self-funded.
Speaker #11: Okay, understood. Uh, and there are
Speaker #10: So how should we think about your recovery from written-off? So I understand ₹13,000 crore is the overall recovery that you are seeing for the year.
Speaker #10: So of that, yeah, ₹900 to ₹1,000 crore
Speaker #5: I'm expecting recovery should happen in the next 2 quarters.
Speaker #12: Okay, and as in, how so confident are you to sustain this pace over the next 2 years?
Speaker #5: Definitely recovery will go— it will come down in the coming years. Now I think next year, uh, we will be keeping the target at around ₹12,000 crore of total recovery.
Speaker #5: So what we are doing it, uh, in fact in the last con-con also I had mentioned, keeping in mind that recovery in the next 2-3 years will come down and going forward also it will come down.
Speaker #5: Because now the slippages are coming down, so raw material is coming down, so definitely it will be recovery also will come down. So what we have done now, the credit card business which we have accelerated, supply chain vertical which we have started headed by a general manager, and the third is the cash management services.
Speaker #5: These 3 activities last year Uh, first we put the digital platform in place. Uh, it took 5-6 months to put in place, and then, uh, November onwards we started this activity, and all these 3 activities has picked up very well in this financial year.
Speaker #5: And that is the reason fee-based income of our bank, if you see, it is growing at more than 16% YOY. So, and this year we have started another 2 activities.
Speaker #5: One is the wealth management services. I think from January onwards, so that vertical will be in place. And another activity which we have accelerated is the trade finance model.
Speaker #5: We are putting it in the full entire thing on the new digital stack, and another 2 months' time that, uh, that journey will be through the mobile app and the digital facility.
Speaker #5: So these 5 activities put together, uh, will navigate our profitability point of view, when our— the recovery is coming down or the treasury will come down, I think these are the activities which will supplement our profitability.
Speaker #12: हाँ अच्छा सर, तो दिस इज़ वेरी हेल्पफुल। एंड सर लास्टली आह सर इन द ट्रेजरी गेन्स, इज़ देर एनी लम्पी वन ऑफ़ गेन ड्यूरिंग द क्वार्टर?
Speaker #5: No, no, nothing.
Speaker #12: But not even in the CEO meeting.
Speaker #5: NFC, we had a small amount, so MTM was there in that, but very small amount, not a substantial thing. Understood, sir. Thank you, sir.
Speaker #5: That's it from my side. Thank you.
Speaker #8: Your next question comes from the line of Jay Prakash Mundra with ICICI Securities. Please go ahead. Yeah, hi, good evening, sir, and congratulations.
Speaker #5: Good quarter. Sir, I have few, few questions. First, on the clarification, first, sir, on ECL, right? So you mentioned that what the transition impact is needed is ₹8,000 crore.
Speaker #5: And we have already done 12,560 plus 1,150, right? So around 3,700 we have done and 4,300 crores is pending. Is that understanding correct or
Speaker #7: 8,000 is still needed.
Speaker #5: No, no, no, no, we'll be requiring only around ₹5,000 crore. That's all. Okay. And sir, this is only related to loans, right? There may be ECL impact because of the HTM hardening.
Speaker #5: Have you taken that? And, or, or, or that is outside of this remaining 5,000? That is outside that. This book, this is what we are talking about, is only the loan book.
Speaker #5: And, uh, yeah, rest still the discussions are going on with RBI and, uh, we will see how it comes out, then we take a call.
Speaker #5: Right, right.
Speaker #7: So sir, uh, in the notes to account, we have also mentioned that, you know, because this IFR reserves is no longer needed, some ₹4,000 crores have been added back.
Speaker #7: Uh, could this be utilized towards, let us say, ECL transition or the HTM? If you were to do HTM on MTM on HTM,
Speaker #5: Yeah, we will see that because if, uh, the— as it is going to happen for the HTM transition Then I think that amount will be required for that.
Speaker #5: We'll use that.
Speaker #7: Okay, sure. And sir, on your asset quality, uh, one is if you're given the SMA 1+2 number is at 2.5%, which I believe has improved even from Q1, which was I think 2.9% something.
Speaker #7: Uh, you have the number, sir, separately, 1 and SMA 1, 2, and 0 also.
Speaker #5: Yeah, yeah, I have, I have. SMA 0 is, uh, ₹16,963 crore. SMA 1, 7,463 crore. And SMS to 8,984 crore. All put together, it is ₹33,410 crore.
Speaker #5: It comes to 2.49.
Speaker #7: That's right. Okay. And sir, in the area, I think a few districts have been declared drought-hit. Um, have you done any rough calculations, sir, if those would require restructuring?
Speaker #13: That is number one. Or you are seeing a delayed recovery in those districts or states, any preliminary assessment there?
Speaker #5: No, as of now, uh, see, if you see my SMS 012 book also, uh, those challenges are not visible. But I'm— you are absolutely right, we are very mindful of that.
Speaker #5: Those things may happen in the next 2-3 months' time. So what we have done now, we have accelerated the activity in the field, uh, connecting with the borrowers especially in the agriculture segment.
Speaker #5: A lot of activities in the field level we are doing it to have a very close monitoring. Our monitoring department headed by a CGM is looking into entire aspect of it.
Speaker #5: And, uh, as in today when I am talking to you, still the things are fully under control. We— there is no alarm button to be put down.
Speaker #13: Right, but sir, do you suspect any restructuring window to be opened, or that has already been decided by SLBC? No, no, there are, I think, 1 or 2 states they had decided some 2-3 months back.
Speaker #5: But on the large scale, we need to wait for some time now. And once the SLBC decides and the local government and the SLBC decides, then there is a proper framework is there as per the RBI guidelines.
Speaker #5: We need to restructure those things and all those things will do that. But as of now, uh, no such things have started happening.
Speaker #13: Right, okay. And, um, sir, sorry, on just to come back on yields, uh, do you have the movement of AFS reserves? I think because Or the, the— so AFS reserves for Q1 and at the end of Q2, and this loss of— loss profit of revaluation of investment, which is only ₹32 crores.
Speaker #13: Uh, if you were to strip off NSC, MTM, then how much would that be, if, if you can go in that? Yes, yes, AFS reserve, I think, uh, you, you can My CFO is there, he will make the comment.
Speaker #13: Yes, reserves in this quarter was minus 128, uh, it was total 1286 negative. Cumulative, right? And versus the last quarter
Speaker #5: Last quarter it was positive. Last quarter it was positive.
Speaker #7: Yeah, but
Speaker #13: Sure, sure. Yeah. Okay. And lastly, sir, this gold loan and the progress, sir, I think we, like you mentioned on CMS and Uh, other things.
Speaker #13: So I wanted to check on gold loan, what is the quantum, how have you— how are we doing? It is growing at, uh, almost 97-98% of ROI, right?
Speaker #5: Yes, so September 25th, the figure was ₹18,300 crore, and now we are at ₹36,000 crore now.
Speaker #13: Okay, and so you have the breaker between agree and non-agree of the gold? It is 93-94% is agree.
Speaker #9: Okay.
Speaker #13: And the similar thing, sir, वो PL and credit cards हैं। Now I think credit card has it reached decent size और and PL also personally.
Speaker #5: It has started picking very well now, and today we are at around 11 lakh credit card. See, it was 6 lakh on March 25th, and, uh, March 26th, it was 8 lakhs.
Speaker #5: Today we are at 11 lakh now, and this area we are going in a big way now. So You remember we had launched a very high premium PNB Luxura credit card, and now that number has also passed us almost 27,000.
Speaker #5: Number now. So this activity, bank is putting a lot of focus, a lot of tie-up arrangements, offers we have brought in. Now I'm expecting that from next financial year This particular activity itself will contribute around ₹200 crore of income, fee-based income, to the bank.
Speaker #5: Right. Similarly, the supply chain where the dealer and vendor financing which we had started, they are also outstanding book under that supply chain is around 4,000 crore now.
Speaker #5: Sanction itself is, uh, Sanction itself is more than ₹7,600 crore and outstanding is ₹5,000 crore. Similarly, the cash management services which we have started, I think all those areas the bank has started putting a lot of focus, and that is the reason if you see, uh, Last time also we had a discussion that pre-operating, uh, the core operating profit now excluding the treasury and the recovery, TWA recovery.
Speaker #5: Now that is growing at 29% in this quarter also. Growth is 29%. Last quarter also it was 35% YUI growth. So, right, I think this is one area which is going to bring a stability in our profitability.
Speaker #5: All right.
Speaker #13: Very well said, sir. Thank you so much and all the very best. Thank you. Thank you.
Speaker #5: Thank you.
Speaker #8: The next question comes from the line of Param Subramanian with Investec. Please go ahead.
Speaker #10: Hi sir, congrats on the quarter. Thanks for taking my question. So my question is on the, on the, on the provisioning for the quarter.
Speaker #10: Uh, sir, the provisioning is only 97 crore. Uh, while you have shown the NPA provision is 817 crore, so what is the balance, sir, which is the negative number?
Speaker #5: See, uh, 817 crore constitutes the provision which have been made as a floating provision, 125 crore for ECL. And remaining additional provision we have made in our NPA accounts to keep the provision coverage ratio at 97%.
Speaker #10: No, I got that, sir. I mean, but the P&L provision is only 97 crore. So despite having 817 crore NPA provision in the quarter, there is a write-back of provision from somewhere else.
Speaker #5: Yes, yes, yes, I think 720 crore, 798, 798, ah, 798 crore write-back is there. So this is coming from where? That one account was there, a particular account.
Speaker #5: There the write-back of provision has happened. One particular account. Okay.
Speaker #10: Okay, NPA account, is it a standard account or it is a standard account? Okay, okay, sir. And sir, in the, uh, uh, you know, when you were speaking initially, you said the SMA book 012 is 2.5%.
Speaker #10: That is including all ticket sizes, is it? Uh, less than 5 crore? Yeah, yeah. Okay, sir, if you could kindly break that up into, say, SMA 0, 1, and 2.
Speaker #5: If that is available, SMS zero. Yeah, SMS zero. Uh, shall I give you the percentage number or you want absolute number? It's convenient. SMA 0 is 1.26%.
Speaker #5: SMA 1 is 0.56%. And SMA 2 is 0.67%. All 3 put together is 2.49%.
Speaker #10: Okay, sir, perfect. That's all I wanted to ask. Thank you so much and congrats on the call.
Speaker #8: Thank you. Your next question comes from the line of Ashlesh Sonje with Kotak Securities. Please go ahead.
Speaker #1: Sir, just a few questions from my side. Uh, what is the retirement-related provision that you have made in the employee expenses line during this quarter?
Speaker #5: I think 394, 345, 345 crore we have made.
Speaker #8: Sir, what was the corresponding number last quarter?
Speaker #5: Q1, it was 440 crore. 490 crore was there in Q1, and this quarter we have made the 340 crore.
Speaker #12: Understood, sir. Uh, sir, and you can share what is the average yield you have on the golden book?
Speaker #5: Uh, it is around 8.6%.
Speaker #13: Okay, so you think this Gold Loan pricing, which is closer to the bottom end of the industry, do you think there is scope to increase it from this level?
Speaker #5: The portfolio you are talking
Speaker #10: Yeah, so when we look at the pricing offered by peers on the Gold Loan portfolio, it varies between this level of, let's say, 9— 8.5-9% to as high as, let's say, 20%.
Speaker #9: for some NDFIs.
Speaker #10: Yeah, do you think you can take this 8.6% number, let's say, closer to 9 or 9.5%?
Speaker #5: We are— I think there will be some increase will happen now. So somewhere I think 8.75 to 8.9%, we'll take it down.
Speaker #10: But that would be led by the repo rate increase, or you think beyond that also you can increase the spread?
Speaker #5: No, repo rate will do that.
Speaker #10: Okay, understood, sir. Um, sorry, and just one last clarification. There used to be this ₹1,200 to ₹1,300 crores of provision from the Island FS recovery which was available.
Speaker #10: Yeah.
Speaker #13: Has that been fully written back now?
Speaker #5: We have done that, and that is the reason we have made additional provision in the standard account now as a, uh, understood part for keeping the ECL provisioning now.
Speaker #5: So 100,000— 150 crore additional provision we have kept now in the standard account. Perfect, sir. Thank you. Those were all the questions. Thank you.
Speaker #8: Thank you. The next question comes from Sushil Sitosi with Indus Equity Advisors. Please go ahead.
Speaker #12: Good evening. Congratulations to Team PMB for excellent result.
Speaker #5: My question was more pertaining to growth outlook rather than the past numbers.
Speaker #12: Yeah, do we anticipate, based on what is credit pipeline, the current Indian economy situation, demand coming from infra new sectors are emerging, whether it is GPU trade, financing for data centers, power transmission, that you'll outbeat the system.
Speaker #12: by few higher basis points and even higher than your estimates?
Speaker #5: In fact, absolutely you are right, a lot of activities are happening, and that is the reason, uh, last year our credit, corporate credit sanction was 4 lakh crore.
Speaker #5: And this year, already within 6 months' time, we have crossed 2 lakh 50,000 crore of sanction. It is not the pipeline, it is sanction we have given now.
Speaker #5: And still 1 lakh 57,000 crore of disbursements are going to happen of the previous year sanction and this year sanctions now. And all those areas which you have mentioned, in fact, these are the emerging areas where the bank is putting a lot of focus now.
Speaker #5: So whether it is the infra, power, renewable— in fact, renewable energy is the champion sector we have identified, and we are taking up good proposals under this particular segment.
Speaker #5: Road, anyway, it is happening. Petroleum and natural gas, even the chemical, fertilizer, real estate, data center, the food processing, we are getting some good proposals.
Speaker #5: EPC, anyway, it is there. REIT, all those sectors. In fact, a diversified field, uh, bank is taking the exposure now. And actually, our corporate loan book should have grown by 17-18% plus.
Speaker #5: But what we are doing it, and that is the impact you are seeing in on our name now, that there was some low-yielding advances which we are supplementing it with this, uh, new advances which we are doing it at a higher price now.
Speaker #5: And this we are going to continue in this quarter and the next quarter also. So have the full, uh, the shedding of our low-yielding advances, and maybe from '27-'28 financial year I think the profitability will be a— absolutely, there will not be any challenge.
Speaker #12: So how do you see your balance between RAM and corporate book by the year-end based on the current prospects?
Speaker #5: I'm expecting that somewhere around 58-59% by end of this year will be there.
Speaker #12: 58-59 on RAM and balance on corporate.
Speaker #5: Balance corporate, yeah.
Speaker #12: Then you're outbeating all your peers from a perspective of corporate book is concerned.
Speaker #5: Yes, I think you are right. Many corporates, they are still at around 40-41% now. So, and what kind of CG ratio you expect? See, I am not averse to the corporate loan book.
Speaker #5: If I am able to get at the same return from the corporate loan book, uh, which should be very reasonable in the corporate loan book growth also, as well as the RAM growth also.
Speaker #5: So basically our strategy is that wherever we are able to get the pricing which we have set for ourselves, that this is a return which will— we should get out of any proposal.
Speaker #5: Whether it comes from the corporate or the mid-corporate or from the RAM, we are able to do that and we will be doing it.
Speaker #5: But with that, still we will be holding that around 58-59% RAM contribution should be there in the overall credit. Yeah, any view on M&A financing, GIFT City, and your international book?
Speaker #5: Yeah, yeah, yeah. M&A, we are very shortly, we are going to have an MOU with one foreign bank. And I am expecting that 1 or 2 transitions should happen in this quarter.
Speaker #5: Even the gift city. I, I think give me some time, uh, I will announce that. Let me have that clarity. Then Gift City branch also, a lot of activities we have started.
Speaker #5: Even for the aircraft engines, their maintenance, that funding also we have started there.
Speaker #12: So aviation is one. Any other sector where you're seeing, uh, second thing is a lot of global houses and domestic Indian industry are opening their offices in Gift City because we escape all the norms which the international guys enjoy through Gift City.
Speaker #12: Are we targeting some large numbers, businesses out of there for routing of finances and Healthy balances to accrue in gift city.
Speaker #5: We are planning now, we are planning. In fact, uh, the M&A which we are going to sign with one foreign bank, I think that sort of arrangement we are going to do it in the Gift City also.
Speaker #5: And, uh, you will see some good traction happening from the Q4 onwards. Yes, sir. A key question on this, if Ambition and PMB's prospects
Speaker #12: Can be better than many peers. To emerge a winner, we need good talent on the sectors which traditionally public sector banks were not permitted.
Speaker #12: And we may need faster TAT too for such transaction because M&A can't wait. And you may have alignment with foreign banks, 1 or 10, that doesn't matter.
Speaker #12: But ultimately, Indian humans have to work faster on those services and capability to even engage in certain transactions. How are we creating a team to accept this kind of business emerging?
Speaker #5: We have created a separate department in the corporate credit. First, I will talk about the corporate credit. Different verticals are there headed by an industry expert.
Speaker #5: In the infra, in the renewable energy power sector transmission. So there are 3-4 important key verticals, even the emerging areas. We have created a vertical, and that is the reason, in fact, we have gone for financing to the defense also, even for the hydrocarbon.
Speaker #5: I think, uh, one another major activity which is happening in the country towards the drone and all. So all those areas, bank has started creating the pool and the expertise to do the funding.
Speaker #5: Second thing, uh, Bank has put a lot of emphasis on the technology side. Whether the artificial intelligence, then AI, or the quantum, we have declared, uh, in the country now that we are going to have the center of excellence in these 3 areas, and that we will work not only for PNB but for the entire financial community now.
Speaker #5: We are the— I think you must have heard that we are the only bank in the country who have started working on the quantum.
Speaker #5: And I have mentioned in my opening remarks also that 200 plus. of our public-facing applications, we have deployed the Quantum Now that has been certified by the NIST USA.
Speaker #5: We have also created a Quantum Financial Innovation Lab in Amaravati, uh, along with the Andhra government partnership. And that lab is providing— they are working on 3 huge cases.
Speaker #5: Not only for PNB, for the entire financial sector now. So a lot of activities, a lot of talent, uh, the churning we are doing it in-house.
Speaker #5: We have good talent, we have more than 150 good software technology people are there. I think you assign any job and within 48 hours they can deliver the things now.
Speaker #5: That is the strength and that is the talent pool Punjab National Bank is having now. My last question. Uh, sorry, sir, we request you to return to Q4.
Speaker #5: No, no, please, please let him, let him land. This is the last question. Please continue.
Speaker #12: Sir, uh, as all public sector banks have expedited the result earlier than most of the private sector banks, any view on consolidation which is a rumor in the market, or the committee is being formed for consolidation for the 2047 vision.
Speaker #12: No, these I am also hearing from you. Thank you for answering my question. Thank you. Good luck for the year. Yeah, thank you. Thank you so much.
Speaker #12: Thank you.
Speaker #8: Thank you. We will take the last question from the line of Saket Kapoor from Kapoor Company. Yeah, namaskar sir. Namaskar.
Speaker #13: Thank you firstly for the opportunity, and sir, thank you for a very exhaustive discussion, uh, on, on the operational numbers and clarifying all, all our doubts.
Speaker #13: So just to summarize, sir, H2 in, in all parameters looks to be a better quarter, a better half than what H1 was in terms of the operating performance, and with, with more impetus on
Speaker #9: improvement in NIMs because of the repo, repo hike. So this understanding is, is correct, sir, on the summary part?
Speaker #5: Absolutely right, absolutely. Okay, not only from the repo rate hike, in fact, uh, I had mentioned in my last conversation also that since the internally bank has put a lot of focus on the profitability, so without repo also you have seen the growth happening in the NIM and the NII.
Speaker #5: 10 basis point domestic NIM has gone up without any repo impact. Now repo impact which has come, that will add further fuel to increase the NIM now.
Speaker #13: Okay, sir. Secondly, when we mentioned, uh, in our, in our P&L statement, uh, line number D, wherein we, we provide 2
Speaker #9: 2 line items. Firstly, about the provision other than tax and contingency, and then the second line is only for the non-performing assets. So that number is only mentioned for the For our understanding, it does not have any calculative impact, uh, on generating the profit.
Speaker #9: So can you explain the rationale, sir? Uh, why is this 817 figure mentioned there? And
Speaker #5: it is not accounted for if we take the profit and loss from— yeah, my CFO will give you the 817 crore. The figure is that is computed for the purpose of the credit cost.
Speaker #13: So if we are mentioning 817, that is the provision which has been accounted for, for computation of the credit cost. And 97 which has been arrived at, there are other provisions in the form of the
Speaker #7: Not only in the loans but in the investments also. As sir has already mentioned in the earlier question that there is a release of ₹798 crore in one account which was in the form of investments.
Speaker #7: NPI provision has been released.
Speaker #9: So netting that, it comes to 97. ओके ओके एंड द टोटल मतलब सर हेड ऑफ़ वाला फिगर जो पीएनएल के थ्रू रूट होगा वो 97 है बट टोटल प्रोविजन आपका नॉन परफॉर्मिंग एसएल का 817 करोड़ है डेट इज़ और एंड लोन्स का मेरा प्रोविजन 817 है वो क्रेडिट कॉस्ट का पार्ट बना है वो जो
Speaker #7: हमारा ये इन्वेस्टमेंट्स का पूर्जन होता है, उसकी नेटिंग हो जाती है और वो जो बैलेंस शीट्स में इन्वेस्टमेंट्स की नेटिंग के साथ इसको करते हैं इन्वेस्टमेंट्स को शिड्यूल में
Speaker #9: इस फिरूल एट के अंदर ओके एंड लास्टली सर ये जो ईयर्स हार्डेन हुए हैं हमारे गवर्नमेंट सिक्योरिटीज़ टेन इयर्स के उसका इनफैक्ट इस क्वार्टर में हमने कैसा देखा है एंड गोइंग हेड आई थिंक तो देरा फरदर फोर्टी बेसिस थर्टी बेसिस
Speaker #5: पॉइंट हार्डनिंग ऑफ़ फील्ड तो हमारा बुक कैसे पोजीशन है और उसका एमपीएम में क्या इम्पैक्ट रहेगा हेल्थ टू मेच्योरिटी एंड इस क्वार्टर में भी देर इज़ एन इम्पैक्ट नेगेटिव इम्पैक्ट इस क्वार्टर में भी हुआ है Otherwise, uh, our, uh, the treasury profit would have been more than ₹1,700 crore because last year in the same quarter ₹1,700 crore was our treasury income.
Speaker #5: So because of that MTM loss, uh, our, uh, the profit from the treasury is subdued now, but we are putting a lot of focus on other activity like exchange income, trading income.
Speaker #5: So I am expecting that around 700 to 800 crore things should happen in this quarter also. Let us see that how the yield movement happens.
Speaker #5: So maybe it is a transitory thing where the 7.41% yield is there, but that rate will not continue for a long time.
Speaker #13: That is correct, but when we look at the P&L part for treasury income, our number for this quarter is 2193, uh, that is quarter on quarter up only from 2182.
Speaker #13: So
Speaker #9: Or what explains— I mean, you were, you were mentioning that there's a negative impact. So where is this accounted then, uh, that ₹700 crore?
Speaker #13: 753 crore is the income of the treasury income. Treasury income, yeah. Treasury income is 753 CR. Where you have seen that? Sir, I am just referring to the P&L segment result.
Speaker #9: वेरी नावर ट्रेजरी ऑपरेशन से हमने इनकम दिखाई है 2193 की। Our submit page number 12. इन हमार आह हमार ट्रेजरी इनकम इस 753 हमार ट्रेजरी कंट्रीब्यूशन इस 753 जो आप कह रहे हैं देना
Speaker #13: I will, I will, uh, he will speak to you. I will reach out to you on this.
Speaker #9: ठीक है साहब तो मेरा कॉल पे मेरा नंबर दिया हुआ है आप काइंडली मुझे फिर फीडबैक दीजिए एंड थैंक यू वंस अगेन सर आह फॉर आंसरिंग एंड एक्सप्लेनिंग टू अस
Speaker #13: In a very detailed manner. Yeah. Thank you sir and all the best. अच्छा बताइए। एक मिनट रिपोर्टिंग करूँगा सर मैं देख देता हूँ। ठीक आप बता दीजिए। हाँ।
Speaker #9: Okay. Thank you. Ladies and gentlemen,
Speaker #8: As there are no further questions, I now hand the conference back to the management for closing comments.
Speaker #5: So thank you very much to all the esteemed panelists and investors. I think the faith which you have reposed in our bank, it is our responsibility to continue this momentum.
Speaker #5: And, uh, definitely going forward, like every quarter I mentioned that, that we will maintain the consistency in the growth, profitability, and asset quality improvement.
Speaker #5: I think that trend will continue, and we will— we are all committed, we, we are all committed to the important stakeholders of the organization.
Speaker #5: And we need to deliver the best, uh, the thing which is going to happen in the future. Now, thank you very much. Thank you.
