Pnb gross non-performing assets will be in single digits by the end of the year: Md Atul Kumar Goel

The state-owned Punjab National Bank (PNB) expects its gross and net non-performing assets (NPA) to decline by 50 basis points (bps) every quarter going forward, the director said on Friday. General and CEO Atul Kumar Goel, after the lender announced its first-quarter fiscal 2023 results with improved asset quality and a sharp decline in net income.

“The number of raw NPAs was 11.78% in March 2022, which has fallen to 11.27%, there is a reduction of approximately 51 basis points. Similarly, the net NPA was 4.80 which reduced to 4.28, there is a decline of about 52 basis points. Our forecast is that every quarter it will be decreased by 50 basis points,” Goel told CNBC-TV18. One basis point is one hundredth of a percentage point.

Goel added that the bank’s gross NPAs will be in single digits by the end of the fiscal year, while net NPAs will be below 3.5% by then.

PNB announced its first quarter results on Thursday with a 70% decline in standalone net profit to Rs 308.44 crore due to lower interest income and higher provisioning for bad debts.

His the shares were trading down 3.53% to Rs 31.45 per share on BSE at the time of writing. The stock hit the low of the day at 31.3 rupees per share, down 3.99% and underperformed the sector by 3%.

Over the past year, the stock has fallen 20%, underperforming Sensex by 29.39%, while year-to-date it has fallen 15.95%.

The company’s total revenue fell to Rs 21,294 crore from Rs 22,515 crore a year ago, while interest income fell to Rs 18,757 crore from Rs 18,921 crore in the first quarter.

Provisions for bad debts increased to Rs 4,814 crore from Rs 3,248 crore in the same period last year.

However, asset quality has improved with gross NPAs falling to 11.2% of gross advances from 14.33% a year ago and net NPAs falling to 4.26 from 5.84% at the same period of the previous year.

Goel said the company is targeting a recovery in the range of Rs 9,000 to 10,000 crore per quarter, while slippages are expected to be less than Rs 6,000 crore each quarter.

The company’s objective is also to increase the net interest margin (NIM), which stood at 2.79% for the June quarter, to 2.85 or 3% and to reduce the cost of credit, from 2.46% during the quarter under review, to 2.25% for the year as a whole. .

On the SMA-2 pound, Goel said, “The SMA pound was 11,730 (cr) at the end of June 2022 and to date has fallen to 8,438 (cr).”

SMA-2 is late payment of principal or interest between 61 and 90.

There are no plans to sell a stake in PNB Housing Finance, the MD said, adding that the bank will invest Rs 500 crore in the housing arm when the company announces a rights issue of Rs 2,500 crore.

The Board of Directors of PNB Housing Finance had given its endorsement to the proposal to issue shares by rights issue to raise up to Rs 2,500 crore to meet capital adequacy standards and support the growth of businesses.


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