Punjab National Bank (PNB) Earnings Call Transcript & Summary

On behalf of Prabhudas Lilladher, it is a pleasure to welcome the CMD, Mr. S. S. Mallikarjuna Rao and the top management of PNB. Without further ado, I would like to hand over the call to the MD for his remarks on the financial results followed by Q&A. Thank you, and over to you, sir.

Yes. Right. Thank you very much. Once again, thanks to everyone of you who are there in the con call. I'll give a brief related to what has been our performance year ended March 2021 that is related to PNB standalone. Besides, I'll also give certain details related to the 2 banks because merger is effective from 1st of April, though the opening balance sheet is yet to be, what you call, prepared. So the figures when I'm giving combined for PNB 2.0, we can consider them as not, what you call, audited. The reason is audit for individually, all the 3 banks have been completed. In order to have a better understanding for the future outlook, I will be [ interpassing ] with the details of the, what you call, merged identity. Now coming back to PNB standalone. The domestic deposits have increased by 4.9% to INR 6,86,493 crores. Domestic advances have increased by 1.1%. It is as good as flat to INR 4,95,045 crores. Overall domestic business has grown by 3.2%. The capital adequacy ratio stood at 14.14% as at the end of March '20. CASA deposits grew by 6.1%. The composition stands at 44.05%. Retail credit grew by 6.1%. Inter year within the housing grew by 14.2%. Operating profit grew by 37.4% year-on-year basis. Net interest income also grew by 33.9% on a year-on-year basis. Net NPAs stood at 5.78%. Gross NPA stood at 14.21%. Provision coverage ratio stood at 77.79% if you are considering TWO. If you are removing TWO, it will be -- it stood at 62.96%. Other than that, the -- if you look at various parameters, like I said, gross NPA 14.21%. Similarly as of 31st March, if you take the combined entity, gross will be 13.79%. And net NPA for the standalone is 5.78%. If we take it as a combined entity, it is 5.50%. PCR 77.79% standalone. If we take combined entity, it is 79.40%. PCR for -- other than TWO, it stood for standalone at 62.96%, whereas for combined, it is 63.56%. Now capital adequacy ratio, as I have already indicated, 14.14% for standalone. In combined entity, it is going to be 12.67%. The CD -- CASA ratio stood at 44.06% (sic) [ 44.05% ] standalone. Combined, it will be 42.01%. These are the major, what you call, items of the presentation. There are various efficiency ratios as well, other account-related information. Quite a few issues related to provisioning deferment in terms of the fraud accounts what we have taken RBI dispensation, that is available in the balance sheet when we have declared the notes and accounts. So for us, it stands at INR 776 crores, which is required to be provided in the next few quarters. Then wage revision provision also we have given figures there. Then the restructuring of advances figures also we have given in the presentation. And the amount where asset classification benefit was taken, for example, SMA2 as on 29th of February, which otherwise could have become NPA as on 31st of March, but RBI dispensation was given, where we were to make 5% provision, we have done the provisioning, and the amount roughly comes to, what you call, INR 5,600 crores. So that you can say that, that is an amount which is under threat if recovery is not received by 30th of September, it can become NPA. But by June, because of the moratorium, there's no demand for interest and installment payment, so that will not be there. Now these are the, what you call, basic amounts or the performance indicator related to PNB. Now I am open for question-and-answer session from you all.

[Operator Instructions] The first question is from the line of Jai Mundhra from B&K Securities.

Sir, in your BSE filing, you have mentioned that the total overdue loans are around INR 51,000 crores. So this would mean SMA 0 plus 1 plus 2, right? So wanted to check, sir, what is the status right now? So -- or this number is as of Feb end, have you seen any material progress in those accounts?

How much you said, INR 51,000 crores?

Yes, sir, if you look at the BSE notice.

That is related to SMA only, SMA 0, 1 and 2.

Correct. So that would be as of Feb end, right, sir?

That would remain the same because, 8th -- if you want correct figure, I can give you -- because the recoveries are there in those accounts, but there is no additional demand. So there's no possibility of increase in the amount because demand of interest and installment is not there.

Correct. No, no, I am asking if -- have they reduced?

No, they have reduced, but then we'll have to take the figure correctly, it remains -- one minute. No, Mundhra, I will give you the figure separately because I'll have to verify properly because June figure is not taken into that. That means at the end of June, what recovery has come, that is to be considered in that.

Sure, sir. Sure. And secondly, sir, in terms of moratorium, if you have any sectoral details, so let's say, agri and SME or MSME, by value, how much that would have taken moratorium?

See, the total amount of moratorium availed by the combined entity, if you want -- for all the 3 banks together, it is INR 1,51,000 crores. That comprises of agriculture, retail, MSME, corporate and others, which comes to roughly around 21%, 22% as on today for the combined entity. That is out of that, if you look at bifurcation, INR 42,000 crores in agriculture; retail segment, INR 31,000 crores; MSME INR 28,000 crores; corporate, INR 47,000 crores. So this is the overall composition of INR 1,51,000 crores who have availed the moratorium facility. Others have, what you call, made the payment in the accounts. There are recoveries which we are receiving in those accounts.

So this is as of, let's say, June, right, 15 June or 20 June?

No, recovery observed up to, what you call, 15th of June.

15th of June. Sure, sir. And sir, if you have the figure handy for the combined entity, let's say, agri, INR 42,000 crores is in moratorium, but what is the total figure, if you have that readily available because...

Agriculture total amount?

These are combined only.

For the entire -- for the...

P No. You want the agriculture total amount? I'll give you, just 1 minute. That means in terms of percentage, you can look at.

Yes, sir.

Yes, yes, 1 minute. INR 1,13,476 crores. That is the agriculture combined entity as of March.

Sure. No, sir. If you have also for retail, corporate and MSME, so that will give you an idea of the percentage there.

Retail figure is INR 2,74,563 crores. No, 1 minute, I'll give you, just 1 minute. Retail is INR 1,32,016 crores. Hello?

Yes, sir.

Overall, it comes to roughly -- if you look at, 25% to 26% is the people who have taken the moratorium benefit.

[Operator Instructions] The next question is from the line of Ashok Ajmera from Ajcon Global.

There is great pressure on the entire banking, and of course, you tried your best to give the performance, though the loss is widened. But still now our major focus these days is only to check the effect of the COVID and what is happening. So you just said in your opening remarks that up to June -- I mean, those who were standard up to 28th of February, and they would have slipped into NPAs, they would not have paid up to 31st March.

Correct.

But because of the dispensation, now it has gone up to June. But I believe that it has gone up to August, isn't it, or...

Correct, correct, correct. So that is why I said in September, that would become NPA, not in June.

Yes. So it means in 1 month after August, if they don't pay up to 30th September, it will become NPA?

Absolutely right.

Yes. So -- and secondly, this interest on the working capital dispensation is also, say, up to August for those who have opted...

Correct.

And they have to pay from September, the arrears of the interest as well as September interest also. September, October, November, up to March, they have to pay the -- this 6-month interest also. Sir, don't you think that it will be a great pressure and it will amount to a very large amount of NPAs in the months of September, October, November or December going forward? Number one question. What is -- what are the approximate figures, which -- I mean, you are counting on this?

Okay. The first point in your opening remark, you said loss has widened. I could not understand that. There is no increase in loss. Whether you compare with year-to-year or quarter-to-quarter, loss has come down. And for the year ended March 2020, overall, it was a profit of INR 336 crores. So there was no increase in loss. On the contrary, there was a decrease gross NPA as well as net NPA, not only in terms of percentage but also in the value. So coming back to the accounts which are outstanding as on March -- sorry, 29th February 2020, the combined entity amount comes to around INR 5,800 crores, where the asset classification advantage has been taken. As I said, they should have become NPA by 31st March, but because of dispensation, they did not. Now in those INR 5,800 crores, by 30th of September, if recovery doesn't come, they will become NPA. These are the dispensation taken accounts. Since there is no additional demand, either for installment or interest, there won't be new additions to SMA until 31st August. Now the point comes in the month of September. In case of working capital accounts, September month interest, which is expected to be debited by September 30, is supposed to have been repaid by them. Only the interest not recovered right from 1st of March till 31st of August will be converted into FITL, and that would be given time until March '21 to be paid. Now that is as far as the dispensation is concerned. Now the fundamental point is, your question is, will it not increase the NPA? It will always dependent on how the economy is coming back. Now around 22% overall are the -- from the amount wise, the people who have taken, what you call, moratorium benefit. Remaining, other people are paying the money, that means they have paid money until 15th of June what we have taken the calculation. Now we'll continue to monitor to understand whether they're paying the money continuously. So overall, I expect that this composition will be there who would have taken the moratorium benefit. Out of that composition only, we have to predict as to how much will come back to normalcy, how much may go down. So it would be very difficult for us to make an estimate, but definitely, stress will be there. Now the stress, how it is going to play out in what quantum, we can assess only at the end of September.

Fair. Now see, coming on this NBFC portfolio advances, I think net of HFCs, which is around INR 31,000 crore, INR 32,000 crore, NBFC. Can you give some color to it as what kind of NBFC they are? Are they -- these are the all AA, AAA NBFCs? Or is there any stress on this -- some of these NBFCs or the breakups?

Yes, I'll give the data. Now NBFC, so overall for combined entity, the outstanding is INR 94,660 crores.

As a combined, yes, yes, yes. Okay.

Combined. So now because we are talking about future, we need to know the combined figure. Now in that, BBB and below is INR 7,030 crores. So the composition of -- if you look at from the stress perspective, it is BBB and below, is INR 7,030 crores. And in that also, it includes the -- whatever NPA advances which have already become.

Which has already been taken?

For example, if you look at the DHFL... That is around INR 2,200 crores, plus INR 460 crores, INR 2,660 crores is there only, combined together, all the 3 banks.

All right. Okay. What is the status of this aviation advances?

Aviation advances, we don't have exposure to many of them. We have only Air India, which is standard. The government -- guaranteed by Central Government. And the Jet Airways we have, which is already identified as an NPA.

All right. My next question is on the non-SLR about, I think, in this -- it's around INR 70,000 crore. The -- what is the composition of this, SLR INR 70,000 crores -- non-SLR?

Yes, give me a minute, just 1 minute. See, non-SLR portfolio for the combined entity is INR 1,18,058 crores. And SLR portfolio is INR [ 3,78,000 crores].

In this non-SLR, what is the composition? It's all highly rated?

Yes, you see non-SLR, you also have capital -- what you call, recapitalization bonds are also there. That is a huge amount there.

Recapitalization bond, how much is that?

Because -- it should be around INR 32,000 crores.

INR 55,000 crores is for PNB alone.

No, sir, just coming on the advances, overall advances numbers, I think the global advances have increased some by -- some few INR 5,000 crores something, whereas the global deposit has receded. So this -- suddenly, this entire -- the business -- local business, like overseas business is -- there is an increase of some INR 5,000 crore, INR 6,000 crore. So what kind of business is it now? Because we had some problems in the past and the overall -- the international book had got a major hit from INR 42,000 crore, INR 43,000 crore to INR 16,000 crore, INR 17,000 crore. Now from there, it has again come back to INR 22,000 crore if I talk about the standalone. So what kind of business now in this global -- international market we are getting?

See, earlier, if you look at -- we have global business when we say it's only 2 branches, 1 branch in Hong Kong, another branch in Dubai. And earlier, even for all the Indian banks who are having branches abroad, if you look at the position a couple of years back, it was the intrabank business in majority. Second one was the Indian corporates who have taken loan from abroad. These are the major 2 components. And some of the branches are not permitted to do the business in the retail as well. So if you look at from the perspective, we have reduced our, what you call, dependency on interbank lending area deposits or advance rates. And wherever the advances are given directly, they are only left. That is the reason why you find that overseas deposit, there is a degrowth of INR 4,141 crores. And advances level, they have gone by INR 5,500 crores.

Yes. Okay. So they are...

Even now we are moderating that means it is strictly in terms of what kind of business we can do, that is only being done, not for the sake of increasing the business.

Now sir, this, of course, you are all busy today in this COVID and the government schemes and dispensations and various [ listings ]. But is there any -- I mean what is your basic policy on the -- or planning for the advances growth, domestic advances growth I'm talking about? Are you open to the fresh accounts, corporate accounts, good credit accounts? Because I have just heard and seen also in some cases that there has been a reduction in the limits of some of the clients maybe because of the -- of course, their own papers and merits. But overall, in a policy matter, where the bank is heading, I mean, towards -- if you look at the total advances scenario for the -- just for assessment of future?

Yes. Let me make it clear as per policy, credit delivery is the basic tenet of the banking. Now having said that, because of COVID, the businesses have been impacted, there's no doubt. And if you look at majority of the credit from the commercial banking in the country, apart from RAM segment, it is the NBFCs. Almost every bank must be having a composition of anything between 10% to 15%. Then other corporate -- in other corporate also, again, the infrastructure segment, manufacturing segment is to a certain extent. Now if you look at all these things, RAM segment has been impacted. NBFCs are also impacted because internally, their collections are impacted. And then leaving infrastructure, manufacturing industry also to a certain extent, they're impacted. Now we're expecting that the economy should come back. Now what we are involved in terms of lending at this point of time is that emergency credit lines we are extending, which is guaranteed by the Government of India, to all the MSME borrowers so that they will be having a cushion of sanction that is available to them. And once the economy is coming back to normalcy, they will be able to utilize the money for immediately starting their businesses. Considering the current status, our estimate is, slowly, it will start from July onwards, but in a better way from 1st October, in a more effective way from 1st of January. There are some industries which will have an impact of long term, like tourism industry, hospitality industry, they may not come back that immediately as we envisage. Some of the industries which are very labor intensive may take longer time. Less labor intensive may come back. Now regarding the targets which are fixed for the bank is concerned, originally, before COVID, we envisaged on a credit growth of 12%. Now we have moderated that it will not be less than 6%. We are very open. If the opportunities arise, lending will be done by the bank. The only difference is, considering the tax reforms what government has introduced in September, it is effective from 1st of October 2019, we have not seen much of an investment. And COVID also has impacted. If the private investment or otherwise comes into the infrastructure or larger industries, banks will always be there to participate. PNB will not hesitate because it is the second largest public sector bank.

Great, sir. So last question, sir, this -- under this dispensation, I mean for this MSME out of that INR 3,00,000 crore, how much was the -- I mean, you calculated your share of the companies who are entitled and eligible for it, how much has actually been sanctioned and disbursed?

Right. Our is -- we have identified accounts around 5 lakh accounts, and the amount is INR 17,000 crores. INR 17,000 crores is 20% of the outstanding as on 29th February 2020. Now out of INR 17,000 crores and 5 lakh accounts, we have already sanctioned in case of 162,000 accounts, and the amount sanctioned is INR 4,800 crores. As far as the disbursement is concerned, it will happen only when the customer requires. As on today, the disbursement has crossed INR 1,200 crores. However, we expect the disbursements to pick up only when the units are coming back, mostly from mid of July onwards. We would like to complete the targeted sanctioning on priority in the next fortnight time from our side.

[Operator Instructions] The next question is from the line of M.B. Mahesh from Kotak.

Just 3 broad questions from my side. One, if you could just kind of clarify what was the moratorium at the end of May and what was the moratorium at the end of June, as we are speaking?

What are the moratorium means? What do you mean by that?

The end of May because the first moratorium ended in May, right, with response to [ COVID and all ]?

Correct, correct. No, what is that? You are talking about figures?

Yes, yes, what was that amount?

So that is what I have indicated. Out of the, what you call, entire portfolio...

INR 1,50,000 crores.

INR 1,51,000 crores is the one currently who have used the moratorium.

And what would be -- because the moratorium, second one has started, what has been the experience in the 2nd leg?

No, if people who are paying continue to pay. If you ask me, the SMA2 as at the end of 29th February, that is around 8,000 -- INR 5,800 crores, we have not received any recovery for combined entity as on today. But all other accounts, there is a recovery. And recovery not received in moratorium used is to the extent of INR 1,51,000 crores for the combined entity, including the INR 5,800 crores as it's with the overall advances position of INR 7,40,000 crores.

So you've just rolled over the moratorium will be June. I think all the existing borrowers have again taken the moratorium into the second option as well, the June, July, August.

But then more accurately, we will get the figure in a few days' time because we'll be collating for 30th June.

Okay. So second question is, if you could give us some color on what has happened this quarter with respect to slippages as well recovery and upgrade for this quarter.

Okay. Just 1 minute.

We had roughly about close to about INR 5,000 crores of slippages.

Yes, correct.

And about -- roughly about [ INR 4,000 crores ] ...

INR 3,850 crores is the slippage for PNB standalone. And overall, for the 3 banks, the slippage is INR 5,923 crores. Now out of that -- now let us talk about PNB standalone, INR 3,850 crores, retail loans have contributed INR 428 crores; agriculture, INR 376 crores; MSME, INR 1,982 crores; and corporate and others, INR 1,064 crores.

Okay. And on the upgrades and recoveries, you had about INR 4,000 crores?

Upgrade is around INR 4,000 crores for the PNB standalone. Whatever upgrade has taken place, it has taken place in the first 2 months, January and February.

Okay. And if I look at the breakup of gross NPAs, your gross NPAs in the MSME book is down from INR 20,000 crores to about INR 14,000 crores on a sequential basis from December to March. How should one read into this? Is that essentially write-offs or...

That is, no, no, no. There is -- major amount is due to classification problem. The MSME classification was wrong, so we had to remove it. That is why you must have seen degrowth in a big number, MSME year-on-year basis.

Sir, I'm just checking December, December, the gross NPAs in the MSME book was about INR 20,356 crores. The same number in the month of March 2020 is about INR 13,978 crores.

Just 1 minute.

Though the MSME book is down from INR 79,329 crores to about INR 70,541 crores. These are numbers from December 2019 and March 2020.

That is what, December 2019, you are comparing.

Yes, yes, third quarter and fourth quarter, third quarter...

That is only third quarter, okay, okay.

So just trying to understand the differences because the gross NPAs has declined quite significantly in your MSME. Because in March, if you look at Slide #40 of the presentation and you compare that with the last quarter's presentation that you have reported, which is not there in this update, just making comparison on a like-for-like basis.

No, I have the figure of -- INR 79,000 crores was there in the March '19 MSME. And now it is INR 70,541 crores.

Correct. And if you look at the corresponding gross NPAs, it was INR 20,366 crores. That -- the same number this quarter is about INR 13,798 crores. Quite a steep decline...

Gross NPA was -- no, INR 13,878 crores (sic) [ INR 13,798 crores ] only. INR 20,000 crore figure, where from you got?

This is for the last quarter, March -- this is for December.

March, that is December '19. That I will check and confirm that to you. Because it is not appearing to be a correct figure for me, let me check and come back to you. December quarter, that is you are having December quarter presentation with you.

Yes, I'm having the December quarter in front of me. I'm just comparing that with that December.

Okay, okay. Because one reason is the classification problem was there which we have done in the month of January. But that figure I can share with you, that means in December, which was appearing under MSME category, was not MSME, it had to be shifted to other corporates sector in the categorization. But I'll share with you the figure.

Okay. Perfect. Gems & Jewellery, the account where we had one major default for the -- about 2 years back, has there been any progress because there are some news articles around it?

No, the progress you see, if you look at, there are 2 parts, one is the prosecution proceedings which are being undertaken in London. Second is the domestic properties which were confiscated, but going through the legal process before they are handed over to the bank for auction. Now domestic properties valuing around INR 1,080 crores have already been, what you call, cleared by the respective courts. CBI has advised, what you call, that we can go for selling of the property. So those processes are on currently.

And how much have you recovered, sir in terms of what have you been able to recover at this point of time either by the regulatory authorities on this account by value?

So far, there has not been a significant recovery in that.

Sorry, and one final question. What will be the -- you just mentioned this in the starting of the call, what is the combined gross and net NPAs on absolute basis? And second, what are the -- the other balance sheet adjustments which typically happen with respect to the retirement-related cost, have you been able to ascertain that one as well?

Yes, yes. Now coming back to gross NPA percentage, standalone, 14.21%; and combined, 13.79%. In terms of the amount, INR 73,479 crores for standalone; combined INR 1,05,165 crores that is gross NPA. Net NPAs, standalone INR 5.78 crores; together INR 5.5 crores. In figures, standalone INR 27,219 crores; and combined, it is INR 38,319 crores. Now coming back to the AS 15. You're talking about the staff-related pension provisioning?

Yes, yes.

Correct? We have done in terms of the policy of Punjab National Bank, not only for PNB, but also for all the 2 banks. Now the policy has 2 dimensions. One is salary escalation ratio in terms of the guidance given by IBA, which ranges between 5.5% to 6%. Second one is the discount rate what we apply, which is required to be aligned to G-Sec prices. And the third dimension is the table latest of LIC for mortality to be used. So we have taken the latest position, taken the approval of the Board in the month of March and implemented in PNB, similar things we got it implemented from both UTI -- sorry, UBI and Oriental Bank of Commerce. And whatever provision was required, it was done. In fact, this was done, this was computed when we were doing the share swap ratio as well in month of January.

And sorry, do we know the closing net worth of the combined entity?

So I have given you the, what you call, capital adequacy ratio. Standalone stands at 14.14%; combined, it is 12.67% as of March.

But you are not going to disclose the closing net worth, sir?

Closing, what you said -- not required, no, it is not required. Entity is not there, so it is not required to disclose. Capital is there. So capital adequacy is taken care of combine of the 3 banks.

Sorry, can I -- can you at least -- do we know -- can we at least get to know what is the capital -- because we have one capital at the end of the March quarter for the combined...

For combined or individual?

Combined, combined.

9.55% CET1; AT1 is 0.81%; Tier 2 is 2.31, total 12.67%.

And what will be the risk-weighted assets, sir?

Requirement is much above that. Requirement in CET1 is only 8%, that too 8% effective from 30th of September because...

Risk-weighted assets was...

The capital conservation buffer last installment 0.625% is required at that time.

Correct. What is the risk-weighted assets of the combined entity?

Risk-weighted assets of the combined entity, just 1 minute. INR 6,19,567 crores.

The next question is from the line of Nidhesh Jain from Investec Capital.

Sir, my question is regarding your associate company PNB Housing, that company may require capital. So will you be -- any plans from your side to infuse capital in the company? Because they are alluding to a right issue, and you are a largest shareholder. So whether you will be supporting that company? And if yes, what would be the quantum of capital that you will -- you may infuse in that company?

Okay. See, I'll tell you the status. The reason being without declaring of the balance sheet of PNB as at the end of March, there would not have been any opportunity for me to think on those lines because 2018 March, PNB booked loss; 2019 March, PNB booked loss. In any investment if the company wishes to have joint ventures, the bank should be in profit. Besides, we need to take approvals from Government of India and the Reserve Bank of India. So the fundamental requirement was that I should have declared the results for March, which we have done only a couple of days back. So we will be discussing internally in the Board meeting, which will be coming up next -- in the next 15 days' time regarding this. Now coming back to PNB Housing Finance on their own, they've also done good job in declaring the results by March 2020, quarterly loss, they have booked because they've increased the provisioning in terms of the real estate assets where though projects have been completed, the cash flow was not coming. However, for the entire year, they have booked a profit. Now they need capital, but the capital requirement is not required that tomorrow only they need. If you have seen their capital adequacy, it is well above the regulatory requirement, roughly around between 16% to 17%, it is there at their end. Now the -- there's also change in the management. We have put an interim CEO there, and finally, the permanent CEO is expected to come in the next 1 month or 1.5 months' time. So all these things are in proper reckoning at our end as a parent as well as a non-Executive Chairman of PNB Housing Finance, I'm aware of that. But it takes time for finalizing our position, but our commitment remains that we don't want PNB brand to get impacted in PNB Housing Finance. That is the reason why, in January, when we have taken the approval of the Board, we mentioned that we will not go below 26%. Currently, we hold 32.64% in the state with PNB Housing Finance. So that is the status as on today. With respect to future, we will have a detailed discussion in the Board when it is coming up next.

Sure. Sir, because of what is happening is that because of your 26% requirement, the company and the valuation of the stock, if they want to raise capital without you participating in the capital raise, your stake is likely to decline materially below 26%. And hence...

No, otherwise, the amount which they can access market will get reduced.

Okay, okay.

So that's how it goes. They can't go below 26%. Now that is why I said, capital, there is no high pressure on them that they should get tomorrow only. It is -- capital support is required for the sake of better understanding with the rating agency and confidence in the investor. These are more importantly, the factors required. Otherwise, for running the business for next 6 months to 9 months or even up to March '21, the company can run with the existing capital because we are looking at various other opportunities or other revenues also in order to provide the liquidity to that. So that is not an issue. But the issue arises from the expectation of the rating agencies, expectation of the investors as to how the company will have capability to gather the capital.

The next question is from the line of Mahrukh Adajania from Elara.

Sir, my first question is on the moratorium again. So your moratorium at 22% is much lower than other banks, private and state owned. So would you know the reasons for that?

No, see, you can't attribute specific reasons because generally, typically in public sector banks, retail lending happens to salaried class. If you look at the retail lending, majority of the lending is skewed in favor of the salaried class. Very few people who are having either business income or from the unorganized sector, they are given the retail lending. As a result, wherever standing instructions are given, the standing instructions are honored. And people who are salaried income, people, they are paying the money. Having said that, 22% in retail also have utilized the moratorium. Now this position is there up to 15th of June what we have collated. We will again collate the position by 30th June to understand. What happens is recoveries, they are coming. We have to also properly understand if the moratorium is not given when the demand is raised, the recovery is equivalent or more than the demand or not. So that is also a critical mathematical calculation. As on today, what we have done the calculation is the people who have started paying the money since the April as per the installments. Now this should continue until 31st of August. And by which time, all the installments and interest due by them, if they are paid, we can conclude that they have not taken the moratorium. So it is an intermediary phase. First phase of moratorium is over. Second phase of moratorium is currently in progress. We are monitoring very closely, though it appears to be 22%, 23% at that point of time, it oscillates. Actually 31st of May, the position was 30%. Now by 15th of June, it has come down. So we need to look at how it plays out.

Sir, the figure given in the notes to account of [ INR 517 billion ], that's what, on moratorium?

517?

Billion.

That is INR 51,000 crores. That is standalone PNB that who have availed the moratorium.

Got it. In retail and SME only?

That's correct.

Retail and MSME as on May or on June -- May, right, or on June 15?

That is SMA, SMA category we have mentioned of the PNB standalone.

Right. No, no, not SMA. I'm talking about the INR 51,000 crores only moratorium of PNB of retail and MSME, that is as of end May or 15th June?

That is end May.

That is end May. And the figure of 22% that you gave for the combined entity is for 15th June?

15 June.

Okay. And that 22% is only retail SMA?

No, no, overall. Overall.

Overall, yes. Okay. And sir, anything in the interest income one-off? Was there any one-off in the interest income this time in the fourth quarter?

No, fourth quarter, nothing. Only third quarter, we had Essar Steel. Now it is -- fourth quarter is normal income only.

Got it. And which accounts would have got upgraded in the fourth quarter, upgraded or recovered, if any, in the fourth quarter, in the first 2 months?

Yes, yes, just 1 minute. See, Jaiprakash Ventures, we have recovered; Alok Industry (sic) [ Alok Industries ] we have recovered; RattanIndia, we have recovered. There are...

Sir, what is the third one, sir?

Which one? RattanIndia, RattanIndia.

Okay.

There are quite a few accounts. There are 10 accounts amounting to INR 800 crores where cash recovery has happened, bigger accounts.

Okay. Sir, Jaiprakash is upgraded or recovered?

Recovery, recovery.

Recovered.

Okay. So all these 3 are recovered.

Not only 3, there are 10 accounts overall, amounting to INR 800 crores.

10, sorry?

10 accounts, amounting to INR 800 crores, bigger accounts.

The next question is from the line of Bhavik Shah from B&K Securities.

Sir, I missed the breakup of slippages. Sir, can you just give me again? Sir, I took MSME as INR 1,982 crores, corporate as INR 1,064 crores. Agri and retail would be?

Slippages, I've told PNB standalone, slippage for Q4 is INR 3,850 crores. Out of that, INR 428 crores retail; INR 376 crores agriculture; INR 1,982 crores MSME; and INR 1,064 crores corporate. Now if you look at for the combined entity, it is INR 5,923 crores for Q4: INR 611 crores retail; INR 722 crores agriculture; INR 2,604 crores MSME; INR 1,985 crores corporate.

Okay, sir. And sir, moratorium for the combined book is 21%, 22%. Sir, what would be the combined book of MSME and corporate by absolute value?

Yes, 1 minute. MSME book is -- 1 minute, INR 1,17,605 crores for the combined. And the corporate, you can say, INR 3,74,671 crores. Now here, the definition of corporate is also very important. State Bank of India defines corporate as above INR 500 crores. And most of our other banks -- in our bank, we take it as INR 100 crore and above.

The next question is from the line of [ Deepak Kumar ], an individual investor.

Sir, can you give us the book value of a combined entity?

Book value of a combined entity, 1 minute. Have we done the calculation? Book value will be arrived at only once we finalize the opening balance sheet.

Approximate, sir.

Whatever I'll be sharing, it may be only rough estimate.

Yes, yes, that's fine.

Yes, 1 minute, just --

And RattanIndia is out of ...

Book value per share is INR 52.63. Hello?

INR 52.63. Yes, yes.

6-3. But you need to take it as a tentative only because I'm not supposed to say unless opening balance sheet is finalized.

INR 53. Okay. Approximate INR 52.

Yes.

RattanIndia is out of NPA, sir? RattanIndia Power.

It's already closed.

It's resolved?

Yes.

Okay. So you have recovered the money?

Correct, correct.

[Operator Instructions] The next question is from the line of Manish Shukla from Citigroup.

Sorry for repeating, but could you give the numbers for loans, deposits and net worth for the combined entity? Full?

Yes. Our, what you call, total deposits stand at INR 10,71,569 crore for the combined entity, what you call INR 10.71 lakh crores. And advances, INR 7,62,722 crores, INR 7.62 lakh crore or INR 7.63 lakh crore.

Okay. And net worth?

Which one, net worth?

Yes.

One minute. Net worth [indiscernible]. That is why I have given the capital adequacy ratio.

No, sir, that was my question that the capital adequacy number that you have given, do you think it will change once you have made the opening balance sheet?

No, it will not change.

That number will not -- there are no adjustments pending in that net worth?

No. Why I'm not able to calculate the net worth is because it is subject to audit.

Which is fine and true, but I'm saying is that...

Capital adequacy is available based on the figures available.

No, the CET1 that you have given, you are not expecting any further adjustments to that CET1, any material adjustments?

No, I'm not expecting, I'm not expecting.

Okay. Fair enough. Correct. And the group...

The harmonization was required to be done as per RBI requirements, that we have done. AS 15, we have done. These were all taken care in this share swap ratio. All those things have been adjusted as at the end of 31st March for all the 3 banks.

The next question is from the line of Punit Bahlani from HDFC Securities.

I just wanted to confirm one thing. The 5% provision that you mentioned for the combined entity as per RBI guidelines is INR 5,600 crores, right?

Yes, combined entity only, a little more than 5,000 -- 5%, it is actually. But minimum requirement is 5% from the RBI.

Okay. Right. So you -- like PNB for standalone has made INR 142.57 crores standalone?

Correct. Because INR 2,800 crores was the amount where asset classification advantage has been taken.

Right. And the balance is for the 2 entities, okay.

Correct.

The next question is from the line of Mahrukh Adajania from Elara.

Sir, follow-up for the standalone book, what is the corporate moratorium? The retail and MSME you've given in the notes to account. So would you have the number for the corporate separately?

Corporate standalone, I don't have. I have the combined figure, INR 47,460 crores.

Okay. And the INR 1,51,000 crore that you gave for...

That included this.

Yes, that's the total moratorium. That's for...

Correct. INR 42,000 crores agriculture; INR 31,000 crores retail; MSME INR 28,000 crores; INR 47,000 crores corporate.

Got it, got it, got it. Okay, sir. Sir, no, because if you just put it against the advances, it works out to only 20%, that's why I was asking. That INR 1.5 lakh crores?

Yes, yes, correct, correct, correct. No, but then you should do it with only domestic advances out of that gross. Global advances we have to take out to have a proper understanding of the percentage.

Okay. So basically, it's on domestic advances. 22% is domestic advances, basically.

Correct, correct, 22% it is coming. That is only because some recoveries have come in the month of June. It was earlier 30% roughly, 29% to 30% as of the end of 31st May.

The total moratorium?

No, no, no. Yes, that is people who have taken the moratorium. In terms of value, I'm giving the figures.

Yes. So it was 30% in May and 22% now.

22%, correct

Of the domestic book?

Correct.

Okay. And sir, just one more thing. You -- what were -- what is the reason for the sharp increase in overseas loans?

It was normal lending only. There was nothing -- only comparison to last year because some of the limits were not utilized, now they have used.

The next question is from the line of [ Anil Kumar ], an individual investor. As there is no reply from the current participant, we move to the next question from the line of [ Deepak Kumar ], an individual investor.

Sir, in term -- regarding the RattanIndia Power account, how much -- what is the percentage of amount to recover out of total loans, including interest? What is the percentage you recover?

No, right now, I cannot tell you. What amount we have received, I'm aware of that. We'll have to check because of the resolution plan, percentage and the interest income in interest, including the amount what we have put up, I need to take the details.

Approximately, it should be 50%, 60% or what?

It should be 54%, 55%, but then I should not guess without knowing the things.

Okay, approximately 55%.

Yes.

The next question is from the line of Jai Mundhra from B&K Securities.

Sir, do you also have this DTA number for the combined entity? Because I think you have not moved to the new tech regime?

Which one, DTA?

Yes, sir.

No, DTA, I don't have for the combined entity at this point of time. Because our balance sheet gives the figures, those 2, I can share with you.

Sure, sir. And second, sir, if you can talk about any recovery that you can see -- that you expect even in these tough times in the, let's say, 6 months kind of a window?

See, I -- with NCLT cases, which were in final stages where we were expecting recovery before March got impacted because of COVID and some cases related to, what you call, litigation. So we are definitely expecting recovery in those accounts. It would range anything between up to Q4, around INR 6,000 crores to INR 8,000 crores.

Okay. This is the NPA recovery and not the entire [ part. ] This is the of requisition of the NPA?

No, that is recoveries I'm talking about.

Okay. Sure. Okay. And sir, last thing on moratorium.

Major report is -- Bhushan itself is there. Bhushan account itself, our outstanding is INR 4,000 crores combined entity.

Sir, anything in Aircel? I mean is this thing moving? Is there any money that is coming from Aircel?

No, no, so far, no, Aircel.

Resolution plan is already submitted. It is expecting that approval -- COC has already placed that approval...

Resolution plan has already been submitted by COC. So we're expecting the resolution judgment in that -- in Aircel

Sure, sir. And last thing on moratorium, sir, just once again. So a lot of banks have defined the moratoriums [Audio Gap] they say that by May end, it was 30%, now it has come down to 21%, 22%. So...

No, our bank or other banks?

So I will tell. Some banks have excluded agri because that is not even due in this time. So they have excluded in numerator, denominator, both. So -- but it looks like we have included agri wherever -- in all our calculations.

Yes, we have included agri, correct, correct.

Sure. And second thing is that wherever -- so let's say, if a person, his amount due is 25th June, right? So in the initial 15 days of June, he may not have paid anything.

Correct.

So is he -- has he taken moratorium or has he not taken moratorium in your calculation?

No, in our calculation, we should look at only at the end of the month because 15 should not be criteria. Now here, in our case, because many repayments have come in the first 15 days, that is why the percentage has gone down. See, as of 31st May, even we had 30%.

Correct. Correct. Understood.

Our figure by 30th June, we have not taken, that we have to calculate. Here the question is not about receiving of the amount, but the amount being equivalent or more than the installment which are due if the moratorium is not given. So that also will come into picture. Just because one installment is received, we can say that he has not taken the moratorium, but one installment may not be sufficient, 3 months are there. So like that, we have to calculate everything. The only comfort what we will get is the intent of the borrower to make the payment even during moratorium.

Correct. And this 30%, sir, at the peak, what was this number, just to understand?

No, it was not more than 30%.

Okay, understood.

Even you look at State Bank of India also, if I remember, Rajesh Kumar was telling 28%, something like that.

Yes, 23% by value, sir, what's the...

23% by value something, correct.

The next question is from the line of Sushil Choksey from Indus Equity Advisors.

Sir, what is our targeted CASA for the combined balance sheet over a period of 1 or 2 quarters?

See, currently, the composition is 42%. And the amount is roughly -- INR 4,42,000 crores is the current figure. CASA has increased after even April by roughly INR 13,000 crores to INR 14,000 crores as on to date. There is a good growth. The major growth has come in savings. So we are expecting that in the current year, in spite of all these COVID and other related matters, CASA will have a healthy growth. Anything between, what you call, you can say, 6% to 8%.

My next question, what is your envisage number on domestic and international book? And in the domestic book, how much you think is your corporate book and how much will be retail book?

No, we are expecting an overall credit growth of 6%, and we expect in 6%, major contribution will be there from retail, MSME and mid-corporate segment.

On the combined balance sheet, what -- can you highlight a breakup, what is the envisage on the corporate and retail?

No, I can give you the advances outstanding figure, which is INR 7,62,000 crores combined book as at the end of March.

Okay. Are you likely to degrow...

In that, the corporate book is still at INR 74,000 crores.

Are you likely to degrow your international book? Or you think you'll be able to take care of that?

No, no, no, there won't be any degrowth in international book. International book also will grow.

International will grow. Sir, in the media interaction, you mentioned about some rationalization of selling some properties this year, some next year. So what is your plan on that, sir?

No, that is the real estate properties we are already having because of combined -- the amalgamation, we got more properties. We have identified properties worth anything between INR 300 crores to INR 400 crores to be sold before March.

That is in current year. And any plan for next year?

Current year only -- current financial year.

Any further plans? I mean how much -- have you identified what is the total asset value on approx basis which you are likely to sell over a period of 1 or 2 years?

1 or 2 years, it could be around INR 600 crores. Because some of the properties, we will not be able to sell before March, but we are working on that.

Sir, due to COVID situation and lockdown, which happened before the integration of all the 3 banks, what kind of initiative you may have to further take, technology integration and human resources concerned? Because your plans would have got disrupted in the last month of March and early April or mid-April, despite certain percentage of employees working.

No, I don't say disrupted, they got delayed. Already from 1st of July, entire organizational restructuring is implemented. We have posted the leadership roles for combined entity. So from 1st of July, it will be the new restructured entity which will be operational. So we've only seen -- we wanted to implement from 1st of May, which got delayed by 2 months. So we don't foresee any difficulty, though we'll be definitely controlling the number of transfers to be undertaken in a year. In general, for such a large bank, good number of transfers are undertaken, but this year, we'll be restricting them. But leadership roles, there is no compromise. We have already posted them. They have already taken charge.

Basically, your promotions have already been done and people have taken their respective places?

Correct, correct.

Sir, what is your general assumption on retirement based on the current structure after merger and on normal retirement?

It will be normal retirement only. The reason is in the -- if you're talking about people, what you call, premature exit, if you're talking about, nothing will be there. And even we will not offer any, what you call, opportunity for VRS otherwise because we require the employees. Today, our ratio is -- per branch, it stands at 8.9% which is required for taking forward because we are looking for a good number of plans for the bank to increase the business in the days to come. Normal course, if you look at as far as the, what you call, retirement is concerned, it runs around 1% to 2%. Only sometimes the number will be very high. Currently, our employee strength is around 102,000.

Okay. Sir, what is -- in view of COVID, what kind of technology enablers mainly, besides integrating technology, new processes on digitization are we likely to do to be more equipped with the situation, which is led by social distancing and COVID?

Correct. There are 2 challenges for us. One challenge is because of amalgamation, technology integration we have to undertake. That is on course, even though people have been working from different domains, not exactly by sitting in one place, including Infosys and other technology vendors. So that will be online, which we are planning to complete the surrounding technologies by September, core banking software integration by December and March. December, one bank and [Audio Gap] and successfully being used in the COVID arena. We are also now working to introduce new mechanism, thereby customers can be onboarded without visiting the branch. That will be operational very shortly. Some of the banks have already done, that is through an app, which can be download by anybody. That if you want to open the account, they can open the account. Credentials will be verified through electronic mode after getting the details from them. Besides, we are also looking at API-based banking for the corporate customers so that they need not come to the branch. Even their people who generally visit the branches for completion of banking transactions are also eliminated. But these are all in incubation status, we'll be able to implement one by one more effectively from 1st of October onwards, the reason being, by which time, we want to complete the integration of surrounding applications.

Okay. So what kind of digital -- rather, technology spend are we envisaging in the current financial year to take all the integration and new processes?

It will be anything around INR 300 crores.

INR 300 crores. Sir, you had a great initiative when lockdown started of cash vans in some cities in North, as I see it. And you were distributing cash almost at each one's home in the areas. Is this a permanent feature or it was more a temporary move?

No, it will continue for some time. In fact, it will be even a good feature. If we are having customers in the areas where we don't have a branch, we don't mind putting a BC or a cash van continuously. But as on today, it will continue until the lockdown problems are resolved.

Sir, were retail products added to that feature?

We can add, we are working on that actually. One concept was there, which we wanted to introduce by Airtel. Because of COVID, we could not do that, that also we are working, whereby it is called Ease Banking with only one facilitator, customers can go there and transact not only the operational activity, but they can also request for the loans and other requirements.

The next question is from the line of Mahrukh Adajania from Elara.

Sir, sorry to harp on this again. But when you say that your moratorium was 30% in end May, does it mean that 70% of the customers or 70% of customers by value had paid all installments or just one installment? I mean is it one or more or...

No, as of 31st May, it was all installments.

Sir, end May, all installments. And likewise, in end June, you'll assess. So those who have not paid all installments, they will be under moratorium.

Yes. But because we -- 15th June figure coming at 22% is -- that is very deceptive. We need to calculate properly by 30th June to understand whether they have paid all installments or not.

Okay. But only on all installments, they will be considered to not have taken the moratorium. Not one or...

No, I can't see. There's no mathematical or theoretical definition for that. The only difference is in normal course also, you find people in SMA 0, 1 and 2 category. The question is, if they have not become NPA as of 30th September, I would consider them, they have not taken the moratorium.

Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for closing comments.

Hello?

Yes, sir, any closing comments from your end?

Yes. Thank you very much for the opportunity given. We can -- we are open for getting the feedback from people, even if not through the conference call, otherwise as well. We would like to see that there are 2 dimensions: one is we are able to convey to the investors and analysts, the kind of -- what bank, how it is performed and how it is going to perform in the days to come. Next, by putting our presentations in the website, we have tried this time to show more disclosures as much as possible because on 7th of February, we had investor conference in Mumbai. Based on the feedback, we have done this. So we are open for that even in future as well. Thank you for the opportunity given, Prabhudas Lilladher.

Thank you. Ladies and gentlemen, on behalf of [Audio Gap]