Focus is more on operating profit, “quality growth” in FY26, says PNB MD
PNB has slipped to 3rd largest public sector bank position in Q4FY25. Do you aim to retain your position?
We are not in that race. Definitely, we are mindful of growth, and quality growth. We have focused a lot on operating profit. That was one of the concern areas for the bank. We were the second largest State-owned bank in December quarter, but in terms of operating profit, we were at number four position. Even below Union Bank of India and Canara Bank. So whatever needs to be done to improve operating profit is being done. We have shed around₹35,000 croreof corporate loans which was giving lower yields. Had we continued with it, we would have beaten other banks. Accordingly, improving operational profit and quality growth would be the focus areas for us in FY26.
Core income and margin were muted in Q4FY25. But even FY26 guidance for NII and NIM is lower than FY25…
We are cognisant of the various factors playing out in the market. We are moving into a lower interest rate regime now. With two rate cuts till now, net interest income (NII) has dropped and will continue being under pressure. This is because deposit interest rate changes with a lag of 1 year to 18 months, whereas loans, especially those linked to repo rate, reprice immediately after repo rate cut. And going forward , we expect that there will be further rate cuts in FY26, and thus NII and net interest margin (NIM) will be under pressure. That is why we have lowered the guidance on these parameters, but these are conservative estimates, we will cross this guidance, that is our goal.
In absence of higher core income growth, would focus be on other income?
We are putting a lot of focus on cash management services. Especially, in supply chain finance segment as there is a very big market for it in the country now. We have made made a cell in our head office led by a GM for this. We are making tie-up arrangements with large companies and then tapping them for vendor financing and supply chain financing. We will do this activity in a big way. Treasury will also contribute in a big way this fiscal. We are focusing on higher recoveries and recoveries through technically written-off loans. With growth rate of more than 12 per cent in credit, it will also contribute to profits. Overall, we are focusing on retail, agriculture and MSME (RAM) segment in an aggressive way now, which helps with higher yield.
Fresh slippages in Q4FY25 were the highest since Q4FY23. Which segments did bad loans emerge from?
About ₹1,400 croreof slippages came from agriculture sector. Of the ₹1,400 crore of agri slippages, ₹1,100 crore slippages came from loans up to ₹10 lakh. We have strengthened the system now and already ₹288 crore of recovery has happened in April from these slippages. This quarter I would like to call an outlier. From here on, every quarter we are going to restrict fresh slippages to ₹1,700 crore-₹1,800 crore. Apart from agriculture slippages, we saw around ₹1,000 crore of slippages from MSMEs and retail slippages were at ₹490 crore.
The apex court struck down the resolution plan of JSW Steel to acquire Bhusan Power and Steel. Why did the bank not make provisions against the amount recovered due to the resolution?
The judgment has recently been declared. In total, there are 32 lenders, and there is a committee of creditors (CoC). All these lenders are going to deliberate over the matter soon and then we will decide the future course of action. There are multiple options before the lenders. As per the law of the land, whatever is required to be done for this particular account, bank will do it as per CoC mandate. Unless and until the final recourse is available, I think there is no need for banks to go for any other activity. Our exposure to this account was around 0.5 per cent of our total loan book, we recovered ₹3,000 crore from the account post JSW Steel acquisition.
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