After just having a growth of over 2 per cent in net interest income, Ashok Chandra, MD & CEO of Punjab National Bank, is confident of achieving a 7 per cent growth for FY27. Talking to businessline, he said deposit growing lower than credit is not a concern.
What are the new initiatives to achieve the target of $2.5 billion through FCNR (B) deposits by September 30, 2026?
One is connecting with the NRIs. We have large franchise and good NRI base. We have started connecting all tools. We are explaining this product. Reaching out to the people that is one important strategy, and second strategy is explaining the benefits that NRI can derive from this. We are hopeful of achieving the target.
You have given a guidance of 7 per cent for growth related to Net Interest Income (NII). However, growth during first quarter was 2.1 per cent. How are you going to achieve this kind of guidance?
We have started building the good quality credit book now and now we have come out from the challenge of having low holding advances. Cost of deposit has started coming down. Mobilisation of the FCNR (B) deposit also will reduce the cost of deposit because whatever we are going to mobilise, it will not carry the CRR-SLR purpose also. To that extent, the cost of deposit will come down. so. We are working on both the front – cost of deposit and yield on advances and I am expecting that good growth should happen on the NII front from now onwards.
Guidance for operating profit is 9-10 per cent while growth during first quarter was 6.2 per cent. How are you going to achieve the guidance for the operating profit?
Last year, the bank initiated three new activities – the supply chain vertical, cash management services, and the credit card, which was totally stabilised in the month of December, January and these three activities have started picking up very well in this financial year now. For all three verticals, we have revenue target. Second is the rejigging of the balance sheet which we have done, the low yielding advances and all which we have said. It will also add to the profitability of the bank. The operating profit also will go up. And third, there has been very muted recovery has happened in the first quarter which is expected to improve All those things I am aiming and the target which we have said that at least 9-10 per cent growth should happen in the operating profit.
Your net profit surged over three times in first quarter and one reason is that last year your tax outgo was very high in the corresponding quarter. However, on a sequential basis, the growth in net profit appears to be plateaued. Is it so?
No. In fact, we are making some additional cushion like in this quarter like ₹390 crore for the ECL provision. It is a floating provision we have kept and the entire floating provision as of today is ₹2435 crore. This we have started doing it from the Q2 onwards last year and we have built up a very substantial provision. Now all these things will help us. In migration, that will happen from the first of April 2027. If I would have added this in my net profit, it would have been more than ₹5700 crore. If the opportunity is there, why not keep it for the future when the migrations and the challenges are going to happen, so that there should be smooth transition will happen in the system now. Another important aspect is first quarter of the last year was the challenge because of the migration of old tax to new tax and that was aberration. Otherwise, Q2, Q3, Q4 and this quarter, every quarter there has been substantial improvements are there and there is if you plot the graph, it is going in upside only now, all the critical parameters now. Bank is very consistent in managing all those things and we will deliver the figures like this in the future also.
Deposit growth is lower than credit growth in your guidance too, is this a concern?
It is not a concern at all. We have a deposit growth of 8.5 per cent and credit growth of 12.7 per cent in Q, still my CD ratio is 73.4 per cent. This means we have enough room with this growth to reach a level of 77-78 per cent and then only we need to think of growing at a faster speed or at least at the speed with which the credit is growing, but up till now, we will be restricting ourselves to grow at 9 per cent, which we have given the guidance. We are very mindful of raising the deposit in the bulk segment or in the CD market. It is not that we are not getting the deposits, they are available. However, they come at a cost and if that is not helping me in getting the good reward out of that mobilization, we are not interested in mobilising those deposits.
