Punjab National Bank (PNB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day. On behalf of Elara Securities, I would like to welcome you all to the Q1 FY '25 Earnings Conference Call of Punjab National Bank. We have with us the senior management team of Punjab National Bank, represented by MD and CEO; Mr. Atul Kumar Goel; Executive Director, Mr. Kalyan Kumar; Executive Director, Mr. Binod Kumar; Executive Director, Mr. M. Paramasivam; and Executive Director, Mr. Bibhu Prasad. [Operator Instructions] Please note that this conference is being recorded. With this introduction, I would now like to hand the conference over to the management of Punjab National Bank.

Thank you very much, Prakhar. Good afternoon to everybody. I welcome all the persons from the analyst team, other team also welcome to the -- this conference call of the Punjab National Bank for the First Quarter Results June '24 Quarter. I will give my brief about the results, then I will be -- asking any questions which you want to ask me whatever the doubt in our mind also. This is a very good quarter as far as results of the Punjab National Bank is concerned in all the parameters, whether it is a business, whether it is a profitability, whether it is the asset quality. First time we have achieved the total business of the INR 24 trillion. The gross business increased to INR 24.39 trillion with a growth rate of 10% and deposit growth INR 14.08 trillion, with the growth rate of 8.5%. As far as the gross credit growth is concerned, that is a very, I think, a robust growth, INR 10.28 trillion. We have achieved the credit with a growth rate of the 12.2% Y-o-Y. And if you see the quarter-on-quarter, it is 4.6%, and if we annualize the quarterly growth, it is coming more than 18%. So this is good growth. As far as the CD ratio, that is a very comfortable position, 73.05%. There is a growth in the saving bank, also CASA is the challenge for the banking industry. But saving bank, there was a positive growth. It was INR 4,84,377 as against the figure of INR 4,64,000 in the last year June '23 quarter as against the INR 4.80 trillion in the last quarter. So there is a growth in the -- from the June '23 quarter as well as the March '24 quarter. As far as RAM is concerned, there is a growth in the RAM also. And the percentage of the RAM to the total credit has also increased. It was 54.74% in last year of the corresponding year quarter, that's 54.74%, which has improved to 55.46%, even it is better than 55.18% in the last quarter, March quarter. As far as profitability is concerned, the net interest income increased to INR 10,476 crores with a growth rate of 10.2%. As far as operating profit is concerned, it has increased to INR 6,581 crores with a growth rate of 10.3% Y-o-Y. And net profit, there was a growth of 159%. Last year, this same quarter, June '23 quarter, the profit was INR 1,255 crores. It has increased to INR 3,252 crores with a growth rate of 159%. And if compared with the last quarter, the last quarter also, there is -- it was INR 3,010 crores, so 8% growth from quarter-to-quarter. And one thing I want to highlight to all of you. This NII, this operating profit and the net profit number of INR 10,476 crores, INR 6,581 crores, INR 3,251 crores (sic) [ INR 3,252 crores ] is the highest in the history of the Punjab National Bank in the last 4 years after the amalgamation of the 2 more banks. As far as asset quality is concerned, the gross NPAs which used to be around INR 70,899 crores year ago in June '23, it reduced to INR 51,263 crores and the percentage of the gross NPA, which used to be around 7.73% in June '23 quarter has reduced to 4.98%. And this last quarter, March quarter, it was 5.73%. So there was around 75 basis point reduction from the quarter-to-quarter. Net NPA, which used to be INR 17,129 crores reduced to INR 5,930 crores and the NPA percentage -- net NPA percent 1.98% June '23 reduced to 0.60% and last quarter, March quarter, it was 0.73%. The PCR, it was improved from 89.83% 1 year back to 95.90%. And the credit cost, credit cost last year June '23, it was 1.99%. And last quarter, March, it was 0.81%. The figure of the provision of the last June '23 quarter, INR 4,374 crores; March '24, it was INR 1,958 crores; and June '24, it is INR 859 crores, it is 0.33%. The credit cost has reduced drastically because there is 2, 3 things. So provision has already improved 95% and recovery every quarter, either double or sometimes triple also. If you see the last year also, the recovery was more than triple also. This is one of the reasons. And we are revising the guidance for 2 numbers. Last time, we have given the guidance for the gross NPA, it will be 5% by the end of the March '25. So since we have already achieved 4.98%, we are revising, it will be around 4%. Similarly, credit cost, which is the one of the major factors for the profitability is concerned, we had given the guidance 1% for the whole of the year. Since we have already 0.33% and 95.33% in this current quarter, we are revising it 0.5% for the whole of the year. Because I'm seeing time will come where there will be a reversal also because as I told you, see if there is a recovery, recovery [Foreign Language] 60%, 70% will be the write-back and the new addition, we have to provide 20%. So time will -- not far when we see the reversal in the credit cost also. But as on date, we are giving the guidance of 0.50% is concerned. As far as capital is concerned, 15.79% is the capital, Tier 1 (sic) [ CET-I ] 10.95%, AT-I 2.09%, Tier 1 13.04% and Tier 2 is 2.75%. As far as capital plan is concerned, last time I told you we have Board approval for INR 7,500 crores, and INR 7,000 for AT-I, INR 1000 crores -- INR 3,000 for the Tier-2, total INR 17,500 crores. Today, because as I told you, capital -- we are adequately capitalized, so instead of the INR 7,500 crores, we will reduce this quantum from INR 7,500 crores to INR 5,000 crores for this particular year. And INR 10,000 crores will remain unchanged for the Tier 1 and Tier 2 is concerned. As far as cost of deposit is concerned, cost of deposit is 5.08%. It was 5.06% in the last quarter. And the yield on advance 8.43%, last quarter it was 8.54%. And last year, it was 8.13%. As far as NIM is concerned, NIM 3.21% for the domestic and 3.07% for the global. And we have given the guidance of 2.9% to 3%. And I think we will give -- the same guidance we will give you. As far as cost-to-income ratio is concerned, this is a very important ratio, cost-to-income ratio. It was 56.09% in the March quarter, last quarter. The reason was that when -- we have explained in the last quarter also because on account of the wage revision the AS-15 provision was INR 2,396 crores in March '24 quarter. It has reduced to INR 742 crores. And it will remain in the same line basically, it will not further increase. So this was the reason to reduce the cost-to-income ratio from 56% to 53.28%. And last year June '23, it was also on the same line, 53.87%. As far as -- as I told you, the NIM, et cetera also, the guidance will remain unchanged. Movement of NPA, I would like to tell one thing, the recovery, as I told you, is INR 3,249 crores for this quarter. This is the recovery including the technical written-off as well as the some interest has been moved in the interest income. Because entire amount is not reflecting in the movement of the NPA also. The remaining amount, which is in addition to the TWO and the recovery of the disorganizing debt that is coming in the movement. The slippage, INR 1,755 crores slippage. It is the 0.76%. We have given the guidance for the 1%. We are not revising our guidance. But this slippage is the least slippage in the last 12 quarters. Last [Foreign Language] INR 1,755 crores and it will remain within the 1%, that will remain the same. As far as this SMA 0, 1, 2 is concerned, total SMA 0, 1, 2 was INR 1,01,883 crores and the INR 5 crore and above SMA2 is hardly INR 1,600 crores. As far as slippage is concerned, INR 1,700 crores, as I told you. The sector-wise slippage is, this agri INR 399 crores, this MSME INR 637 crores, retail INR 493 crores, others INR 89 crores, others means corporate, et cetera, and existing account INR 102 crores, so INR 1,755 crores, the highest NPA also in this quarter the INR 89 crores. Otherwise, if you see the first 5, 6 highest NPA of this quarter, the first is INR 89 crores and the fifth is only INR 7 crores, so this is the improved -- quality has been improved too much. So as far as growth is concerned, growth, as I told you, business 12.20% is the credit growth, domestic it was 11.56%, RAM it was 13%, MSME 7.92%, agriculture 15.75%, retail 14.93%. So this is about the growth and the slippage and the CD ratio I have already discussed with you. One more thing I would like to tell you, which normally I give every quarter, how the new underwriting is behaving? The data of the -- from the 1st of the July '20 to 30th July '24, it is data of 4 years, 48 quarters data. This INR 8.32 trillion we have sanctioned, INR 7.49 trillion we have disbursed, outstanding in the INR 5.93 trillion. The NPA in this new underwriting of the last 4 years, INR 2,276 crores, which is coming around 0.30%. I will give the sector-wise also, out of 0.30%, retail, it is 0.27%; MSME 1.54%, agri 0.52%. As far as capital, I have already discussed, I will give more data, really you may be interested in data because on account of the worry from the regulatory side also. Unsecured loan, unsecured loan in the retail is INR 27,630 crores only, out of which, INR 938 crores is the credit card, education loan is the INR 4,219 crores, personal loan against pension is INR 4,451 crores and personal loan apart from the pension loan is INR 18,022 crores, so it is INR 27,630 crores. Out of this INR 18,022 crores, PAPL, digital INR 4,307 crores, nondigital INR 13,750 crores. The NPA in this PAPL, either digital or the nondigital is less than 2%, it is around 1.86%. One more thing because there is a change in the guidelines for the valuation of the investment, which was effective from the 1st of the April 2024, whatever the unrealized profit on the bonds or the G-sec or the equity, it was INR 2,099 crores net of tax. Please note INR 2,099 crores, net of tax. Otherwise, gross was INR 3,155 crores, but net of tax has been added only in the INR 2,099 crores. Out of which INR 3,155 crores, INR 2,582 crores was the unlisted stock, which is not allowed to be used for the capital computation. So CET-I only INR 573 crores is the gross, but INR 373 crores net of tax has been added only in the CET-I. I'm again repeating INR 373 crores added in the capital net of tax for the CET-I computation, otherwise INR 2,099 crores net of tax has been added in the general reserve. As far as the other thing is concerned, the investment 73.59% in the HTM and everything has been mark-to-market also. Retail, I already -- RAM as already discussed 55.46%. It was 55.18% in the March quarter and 54.74%. Our focus on the RAM to leverage the branch network of the 10,000 branches. CASA, I would like to give only one thing because CASA is the challenge for the banking industry, but this is not for the Punjab National Bank 10,000 branches. We are having 24 customers. We are having -- last year, we have opened more than 1 crore account. In this quarter also, 27 lakh accounts we have opened. Current, last year, we have opened 2.68 lakhs. In this particular quarter, we have opened 54,000. As far as NCLT is concerned, 813 accounts we have applied of INR 1,04,383 crores, out of which 790 accounts was admitted of INR 1,03,058 crores, 23 accounts remaining to be admitted of INR 1,325 crore, out of which, as on date, 259 accounts resolved for INR 46,425 crores, 307 account under liquidation INR 34,739 crores, 224 account pending at various stages for INR 21,894 crores. As far as recovery in the NCLT is concerned, last year, first quarter INR 566 crores, second quarter INR 556 crores, third quarter INR 1,831 crore, INR 648 crores in the last quarter. Total recovery was INR 3,603 in first quarter. INR 292 crores we have recovered and we are estimating INR 1,200 crore in the current quarter, September quarter INR 997 around third quarter, fourth quarter INR 500 crores, so around INR 3,000 crore plus we are also estimating in the current financial year also. And the NARCL, 14 accounts, we have transferred of INR 3,778 crores, out of which INR 974 crores we've realized by way of SR as well as the cash and 9 account under discussion for the outstanding of INR 1,549 crores, modified duration of the investment of AFS/MHFC is INR 3.61 crores. And for total portfolio is INR 4.76 crores. So I'm trying to cover all the basic main thing of the financial results. And I think whatever we have promised last quarter, we have tried to deliver that also. Again, I'm repeating the guidance. The credit growth, we have given the guidance 11% to 12%. We have achieved 12.20% and we are not revising. Deposit growth 9% to 10%, 8.5% we have achieved. CASA share, we have around 42%, it was 40.8%. Operating profit 10% to 11% (sic) [ 12% ], we have achieved 10.27%. NIM, net interest income, around 10%, we have achieved 10.23%. NIM 2.9% to 3%, we have achieved 3.07%. Gross NPA, we have given the guidance less than 5%. We have already achieved 4.98%. We are revising it to 4%. PCR 95%, 95.90% already we achieved, so this will remain in the same range 95%. Credit cost, definitely, credit cost, we have given the guidance for the 1%, actual is the 0.33%. We are revising to 0.5%. Although time will come, there will be reversal because if you see the recovery is more than the slippage sometimes 2x, 3x and 95% is the PCR. No much requirement for the aging provision. But we are revising to 1% to 0.5% this is the retail. INR 18,000 crore recovery target, and we are confident definitely although recovery in the first quarter on account of this election, on account of the transfer posting involved, more than 50% staff in the branches was involved in the election process also. So this was a little bit on the lower side, INR 3,249 crores, but definitely we will be achieving much more than in the full of the financial year, INR 18,000 crores. Slippage as I told you, 1% is the guidance we have given, 0.76% we have already achieved. So I'm not revising these guidelines, we will try to control, but 1% is, I think, a reasonable number at INR 2,000 crore per quarter out of the INR 10 trillion book. So this is my initial remarks. Thank you very much to all the analyst friends from the [ industry ]. I thank you for your confidence, which you have reposed in Punjab National Bank, and I hope that will remain continue also. I'm open for any question, answer, whatever you want clarity in any number, et cetera, which is in your mind. Thank you very much.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama Wealth.

Congratulations, sir. Sir, I had a few questions that you yourself mentioned in a brief comment on your annualized credit growth. So is it likely or do you see scope for your credit growth being faster than what you've guided given that your annualized run rate is already high? And do you think there are enough deposits in the system to be able to support any up move in credit growth forecast, if at all, there is any? That's my first question, sir. And then I have a few other questions.

Mahrukh, as far as credit growth is concerned, we had given the guidance of 11% to 12%. We will stick to same, 11% to 12%, although we have achieved 12.20%, so it is in the same range. 12% we have given the guidance, so I'm not revising. It will remain within 11% to 12%. As far as deposit is concerned, I may tell you one thing, the deposit although there is a challenge in the banking industry, I'm not denying that, because there is a gap between the cash cost and the deposit cash. But as far as Punjab National Bank is concerned, as on date, I'm not foreseeing any challenge because we are having 10,000 branches, 24 customers. As I told you, we have opened more than 1 core accounts last year, more than 27 lakh accounts we have opened. The money will come definitely even because -- if you see my CD ratio, it is 73%. So deliberately we are not raising the deposit because bulk deposit is available, but that is costly. But I will use that deposit if I'm not in a position to deploy that deposit in the remunerative manner. So deliberately we're not taking the bulk deposit. So we are trying to improve the CASA. And as I told you 73% is my CD ratio, so whatever additional deposit I will raise, I will not be required to maintain on that SLR because I'm sitting on more than INR 78,000 crores as SLR. So I will be in a position to use 100% incremental deposit for the credit growth. So this is my answer of your query.

And sir, the new LCR guidelines, have you got a chance, I know you'll be busy with results, but have you got a chance to have any rough impact of the new LCR draft norms, I know it's a draft, but based on the draft?

Mahrukh, it is a draft guidance. They have invited comment also. It will be applicable from the 1st of the April '25 next year. As on date, my LCR is 125%. We've made a rough calculation also, impact of the -- will be around 10%. So 115% will be the new -- as per the new guidelines.

Okay, sir. That's helpful. And sir, one more -- just a few questions on the net interest margin and income. So sir, what was the recovery income this time versus last year first quarter, which is included in NII. And then what was the improvement in yield on investment because of the new investment guidelines, the new investment norms that kicked in, for which your reserves have also increased?

Yes, yes. As far as this interest income in the -- concerning the recovery from the -- recovery that is in the range of the INR 600 crores to INR 700 crores. And I have seen that data also that is in the same range. This quarter is also between INR 600 crores to INR 700 crores. Even in the June '23 quarter, it was in the same range. So that has remained on the same. As far as your investment guidance is concerned, I would like to tell you, reserve already I have told you INR 2,099 crores has been added net of tax in the general reserve and mark-to-market is INR 257 crores. That is through P&L.

No, that's true. Other income, is there any uptick in yield on investment because of the new guidelines, the mark-to-market on investment will be in other income, no?

Mahrukh, if you see my investment yield, it was 6.82%, it is 7.06%, because a little bit of saving cost has been revised, if you see that was because unrealized profit has already been added in the asset side. So if you see it is on the higher side, if you will -- because you have to break a bit because part is the equity, part is the bond. Bond, there is no too much uptick because the appreciation which is INR 2,000 is coming, that is on account of the equity because we are aware because there was depreciation in the AFS portfolio, which we have reversed. So there is no impact as far as yield on investment is concerned on account of these revised guidelines.

The next question is from the line of Ashok Ajmera from Ajcon Global.

Compliments to you sir, Atulji. Your hard work of last 2, 3 years has been really paid off, and fantastic set of numbers are given by Punjab National Bank, and it is now firing on all the cylinders once again, achieved the past glory. Numbers are really wonderful, fantastic numbers, sir, once again, compliments. Having said that, sir, I have got certain questions and some observations. Now going ahead, sir, the same question which Mahrukh has raised, like, when you say that you're already 4.5% and above in the credit list 1 quarter itself. And if you analyze it is 18% plus growth is possible, still you're retaining the guidance of only 12%, whereas you said you are comfortable on extra SLR front also even if there is some challenge on the deposit. So what is stopping you to revise this guidance of the -- on the credit growth, like the way you are going now, can it not be considered like, say, 15%, 16% for FY '25? This is number one. I've got some -- like you said that the modified duration of the overall investment book, you said is around 4.76x or 4.75x. Don't you think that this modified duration has gone up a little bit high? And are you expecting surely for some rate cuts in the coming quarters so as to take the advantage of this higher duration. This is on the treasury front. And I would also like to hear a little more on NARCL, the pipeline recovery to ascertain the recovery pipeline. And one point on NARCL is that some accounts have already gone and accepted by NARCL. So how much amount of the SR, which we have received on those accounts because they are fully provided for, for the current value. So just to ascertain since it is guaranteed 100% by the government, I mean, one or other day, I mean, that provision will come back, that amount. So these are the few questions and observations on the round one, sir.

Okay. Okay. Ajmeraji, I will give one by one. First is the credit growth. Definitely, I told you 4 point which quarterly [indiscernible] by 18%, but I'm giving the guidelines for the 11% to 12%. Why I'm giving 11% to 12% because we are the big bank. There is some short-term advance also available in the book because we have to see what is our incremental cost of the deposit, whether we will reprice that advances or not because we are not doing any business where we should not get any remunerative profit also. We will not give any where there is a negative carry. This is the reason, we will not rollover if we will not get the pricing of our choice. This is the reason, we are stick to 11% to 12%, but definitely, we will try. If opportunity available, business is available, we will definitely do. Deposit is not the challenge. We will raise the bulk deposit as I told you. If I'm raising the bulk deposit 8%, if I will get the deal on the asset side, more than 8%, I will not allow to -- the opportunity to go down. Suppose I'm getting the asset side on the 8% because customers they are asking for the 8%, sometimes less than 8%. What is the benefit to raise the bulk deposit of the 8% giving the loan to just only increase of the top line. So this is the answer of the credit growth. As far as modified duration is concerned, as I told you, 4.76 is my modified duration for the entire portfolio and 3.61 is the duration for the AFS and HFT. You have told, it has been a little bit increased, definitely. So 3.61 is very reasonable because mark-to-market has to be done on the AFS and HFT, mark-to-market is not to be done for the HTM as on date also because even for the revised guidelines also. As far as -- because I think definitely interest rate will be declining scenario. Declining scenario, I think you will agree to me, there should be a higher modified revision, but we have kept a reasonable duration. So rate cut, it is very difficult to predict also. We were thinking rate cut will come from the last 6, 7 months, even whatever the inflation number we have seen in the last month also, immediately I'm foreseeing there will not be rate cut, I also feel Fed will -- if they're commenting on the 31st of this month also. So even I'm of the -- immediately 4 to 5 months, so I'm not expecting any rate cut will be there, but definitely, we have to wait for the regulators call also. So as far as the NARCL is concerned, this NARCL 14 accounts of INR 3,778 crores we have sold, out of which we have received INR 974 crores. In INR 974, 15% received. We have received as a case, remaining is the SR. Definitely, SR is the guaranteed by the government. Moment we will get the recovery from the SR, the entire 100% provision will be reversed.

So about INR 800 crores is about SR which is included in this total SR from NARCL, isn't it sir?

Yes, yes, INR 974, 15% we have got, yes.

Sir, this new discussion paper on the double provision on the deposits, which are generated through digital media or online. So sir, what is our assessment if that comes in, are we really going to be impacted by much because I don't know the exact mix of the deposits which are generated through the online media, I mean, digital media. So what is your take on that? And what is -- how do we take care of that? And the bank's overall position on the digitalization that how far we have succeeded in completing all the verticals, which we started and a good amount has been also spent on the digitalization. So what is the plans and how much budget is there, which is spent, which is yet to be spent? How many verticals started already giving the results?

Ajmeraji, as far as budget is concerned, INR 2,800 crore is the budget for the IT expenditure for the current financial year. And we have started this journey 2 years back and more than 100 product, process and service we have revised. And we are getting the results of the digital transformation also. And digital will -- digital is the future of the banking. Whatever you've told on account of this runoff from the 5% to 10% or the 10% to 15%, it is a calculation everybody will be impacted. We have made our calculation also whatever the deposit where we have provided the Internet banking, digital mobile banking, et cetera, even another category also deposit less than INR 7.5 crores apart from the individual and the joint NIM, also trust, et cetera, that is also included. So 125% of our LCR was there, and it will be reduced to 115%, around 10% there will be an impact.

All right. So you don't feel that, that will create any problem in the liquidity.

Yes, yes, yes. [Foreign Language] calculation. And they have gave the time to -- up to 1 year also, 8, 9 months also is available. But digital will remain. I can conclude this. We are not going to stop the digital. Digital is the future of the banking industry.

And ECL impact have been assessed...

I'm sorry to interrupt, Mr. Ashok sir. The next question is from the line of Nitin Aggarwal from Motilal Oswal.

Congrats on a very good quarter. Yes, sir, I have two questions. One is on the OpEx. If I look at the OpEx number this quarter, that still looks a tad higher, especially the other OpEx. So was there any one-off in this? And how should we see the run rate going ahead?

One-off, there were definitely a one-off because we have incurred INR 558 crores for purchase of PSCL. That is the only. On account of this, this number has increased. Otherwise, this number will be normalized in this time, in the subsequent quarter also.

Okay. So this is a nonrecurring expenditure?

It is nonrecurring because we have already -- whatever the requirement would be whole of the year we have already incurred INR 558 crores. This is one time.

Okay. Okay. Got it, sir. And sir, secondly, on -- while you have like realigned the credit cost guidance and -- but that will directly feed into RoA or you will want to keep the RoA guidance unchanged at 1% by '25?

Nitin, you are very smart. I have given the guidance of 0.8% at the beginning and I have kept the credit cost of 1%. And if you see the first quarter result also, it is around 0.82%. So definitely -- there will be definitely impact of the RoA, but I'm not revising the RoA guidance, 0.8%, only I'm giving one guidance because I have given last time guidance, 1% RoA will be exit of the current financial year '24-'25. So I think we will be in a position to achieve this 1% RoA before the exit of the current financial year. This only my worry, but guidance I'm remaining at 0.8%.

Okay. Okay, sure. And sir, the other thing is on the tax rate because that is something that will really drive up the RoA beyond 1%. So by when can we expect the PNB's tax rate to come down to 25%?

Can you repeat, Nitin, what you told, more than 1%?

Yes, the tax rate because tax rate is still around 38%, so by can we expect this normalize and come down?

Very good question you have raised. As on date, we are on the old regime. We are under discussion with our tax consultant because last time also I have said, we have some benefit. If we will switch over to the new, so immediately, we will lose whatever the benefit we have. But definitely, we have to take a call. I fully agree with you, the moment we will shift to the new tax method, immediately the RoA will be more than 1%.

The next question is from the line of Rakesh Kumar from B&K Securities.

Sir, a couple of questions, sir. Firstly, sir, the PSL, like I saw the, like, previous quarter also this quarter also, so we are actually fulfilling, meeting all the targets, especially in the small and marginal farmer also. So what was the need to purchase PSLC, sir?

There is a target for the 40% for the priority sector, 18% for the agriculture, out of the subsector agriculture 10% is for the marginal and the small farmer. So we had to not only achieve the agriculture, subsector also. This is the reason we're purchasing this PSCL from the market because we are short of the target.

This number is including the purchase, correct, no sir?

Number, definitely. That number, it will not come in the balance sheet in the form of the advance. It is only for the calculation for the priority sector. Whatever the presentation we have given, this amount has already been included.

There is a slight volatility in the recovery on return of numbers, sir, on a year-on-year basis. Now it is approximately INR 800 crores. So what is the full year target only on the recovery on written-off number, sir?

Rakesh, total target we have given for the INR 18,000 crores. Today, I'm having the TWO book of INR 93,000 crores and more than INR 50,000 crore we're at this gross NPA book. I think it is difficult to estimate whatever the recovery will come from this TWO, but total recovery, we are confident whatever the number we have INR 18,000 crores, definitely, we will be in a position to achieve.

The question is on which book, like AFS, HFT, which book we have the depreciation sir...

Yes, there is some disturbance in the -- disturbance of the voice. Can you repeat the question? Too much disturbance is there, Rakesh.

Yes, sir. No, sir, I was asking, sir, this INR 390 crores of investment depreciation, through which category this has come from? Like this should not be from AFS. So I just wanted to know this INR 390 crore number.

This I can explain. This is on account of one of the subsidiary. This is one of the -- because as per the revised guidelines, you have to revalue your subsidiary, et cetera, also. So this is our -- one of the subsidiary, which -- where there is accumulated loss is also there. The valuation we have to take it from the market, INR 399 crores we have provided.

Sir, which subsidiary, sir? Sorry, sir, I missed it, sir.

Subsidiary, I think it is not advisable to disclose the name of the subsidiary as such. It is only for 1 subsidiary. This I can tell you, yes.

Okay. And sir, this full processing NPA is around -- like though it has come down, but it is still very elevated food processing, gross NPA. So, can you elaborate, please, sir?

You're talking about the gross NPA?

Gross NPA and food processing?

Food processing and gross NPA. If you see my -- this 4.98%, it is the total gross number, but food processing, the number is -- it is a legacy because some of the rice seller, et cetera, I will give you one -- as I told you, new acquisition is not -- it is only on account of the legacy issue from rice seller, food processing which is coming under the food processing.

I'm sorry to interrupt, sir. Mr. Rakesh, could you please fall back in the question queue for further questions. The next question is from the line of Jai Mundhra from ICICI Securities.

Sir, excellent quarter and excellent steady performance on asset quality. Sir, I wanted to check in the opening remarks did you mention that SMA 0 plus 1 plus 2 at the entire bank level was around INR 1 lakh crores. I mean, all ticket size included what was the number?

Yes, you are very much right. It is INR 1,01,883 crore. But INR 5 crores and above, it is INR 1,604 only SMA2, yes.

Correct. So sir, if you were to bifurcate this into SMA 0 because that should be least risky and then...

I will give you. I've understood your question. Out of this INR 1,01,000 crores, INR 77,952 crores in the SMA 0. And I will give you the number of the SMA 0 today also, it is only INR 22,344 crores, INR 50,000 [Foreign Language].

Right. And 1 and 2, sir also?

1 is INR 11,432 crores and SMA 2 is INR 12,499 crores.

Okay. Sir. So sir, SMA2...

INR 12,000 crores number is okay, because there is some of the borrowers who are making the payment at the very last day. Yes, please go ahead.

So I wanted to check, sir, SMA 1 and 2 number, has it increased? Or this is kind of a number is steady because the slippages run rate is very, very low, INR 1,750 crores. So given this SMA book, should the current run rate sustain or you think slippages can go up from here?

[Foreign Language], it will not increase. I'm promising you. If you see last 4, 5 quarters, my slippage is around on the same number. If you see this number, it was INR 1,700 crores, INR 1,800 crores, only INR 2,000 was the number in the March quarter. And I'm just seeing the SMA 1, 2 if only compared with the March '24, even June '23, it is on the same line. It is only -- it has not decreased, it has increased same line.

Okay. Sir, maybe I'll take this offline this number. The performance on asset quality is exceptionally good, even though this SMA 0 plus 1 plus 2 is still an elevated number.

No, no, no, I may correct you also. Elevated only 0. SMA 1 and SMA 2, only less than INR 25,000 crores. If you are adding the book of the INR 10 trillion, INR 25,000 crores borrower will be -- they are making the payment on the very last day, 55 days, 60 days. This is the reason I'm giving more than INR 5 crores SMA 2 number, where there may be a danger for the slippage from the SMA 2 to 1, that is hardly INR 1,604 crores. Even, this slippage of the INR 1,753 crores if I take highest 10 number also, the highest number one is INR 89 crores, the fixed fees is only INR 7 crores.

Yes. Right, no, I heard you sir in your opening remarks. So that is very, very satisfactory. Sir, secondly, in your opening remarks, you mentioned that there will be a time when slippages are lower and then the recovery remains strong, so you would have a reversal of provision, but would you think that, that may be the time to increase the buffer on ECL? Any thought process on contingent provisions to prepare the bank for ECL transition?

You are very much right, and we will think because 95%, 96% is already the PCR. So there is no room available to add something there. So I mean, recovery is sometimes 2x, 3x also. Because ECL maybe last time also I explained, what is the ECL? ECL is how your new underwriting. I have just given the data of the new underwriting where this NPA percentage is 0.3%. So as I said, I'm also not thinking there will be too much of requirement of the ECL also, but definitely if there is too much of the recoveries available provisions, we will not mind. We want to give the strength of the balance. This is the result of the strength of the balance sheet in the last year or the last to last year also. Now, we are getting this. Whatever you are saying, I fully agree. If situation warrant, we will not mind to allocate some of the account of the ECL provision if there is a requirement.

No, sir, have you done any calculation on ECL as to what could be the rough...

That we have not done.

Okay. And sir, lastly, this recovery this quarter and for the full year of INR 18,000 crores. If you can highlight, sir, how much is retail and how much is corporate? Or these are all small ticket or you are also envisaging some large ticket corporate delivery also?

It will be a mix of everything because NCLT I've given the number of around INR 3,000 crore pillar. So that may be from the large account basically. That will be large from the -- but it is very difficult to identify which sector, but major NCLT you can account that entire INR 3,000 crores will be in the corporate because we are having the big junk of the small account also of the less than INR 10 crores -- less than INR 1 crores. So it will be a mix of each segment.

Right. So INR 3,000 crores from corporate and rest maybe INR 15,000 crore from...

No, no, no. Let me cut you, INR 3,000 crores only from the NCLT. NCLT, I'm just seeing, NCLT will be normally is the corporate and this will be the mix of the each and everything. Recovery from the '24-'25, for quarter 1 that is -- you want for quarter 1 or the whole of the year?

No, no, for full year, sir.

Just let me -- for whole of the year, INR 18,000 crores. Whole of the year, I told you INR 3,000 will be NCLT. That INR 3,000, you can apportion for the -- particularly for the corporate. I can give the breakup of the recovery of this current quarter also. So if I see it is retail around INR 449 crores, agri around INR 716 crores, MSME around INR 900 crores, others is the INR 1,156 crores. So same proportion, I can think. So then, if you can bifurcate this INR 3,249 crores, it will remain in the same proportion. Some recovery will come from the MSME, remaining from the corporate.

Sir, could you please fall back in the question queue. [Operator Instructions] The next question is from the line of [ Ankit Bansal from AB India ].

Congratulations for the greatest set of numbers in the history of PNB. This is what we want to see PNB. Very, very congratulations, sir. Very, very congratulations. Number one, we want to see PNB above State Bank of India. Very good numbers, sir. [Foreign Language]. Sir, my question is, sir, how are you seeing the business environment? In which sectors are you disbursing more loans. Economy side, how is your perspective, is the business growing? Are SMEs comfortable in taking loans? What are the sectors, your view, sir?

Ankit, our focus is on the RAM. In last call also I told, if we want to increase this number from 54% to 60%, and there is an increase also, it is more than 55%. So focus will be on the retail, RAM, agri and the MSME because there is a good demand in this sector, not only in the metro, not only in the semi-urban, even I can tell you, there is a good demand in the rural sector also. So there is an opportunity available to the bank to target this segment and we are having 10,000 branches, most of the branches in the rural, so this is one area. As far as the other areas regarding corporate is concerned, so there is a good demand in the infra also. Even in the budget also INR 11.11 lakh crores they have put up in the infrastructure CapEx. And so there is a good demand in the road and we are also providing -- considering who is the best customer. So road, there is a demand. Cement, there is some demand. Some of the corporate borrowers, they're coming for the expansion and even steel also. And also, there is a demand in the NBFC, but NBFC we are very cherry-picking. We are very choosy also. If you see my exposure to the NBFC, the 99% in the A and above and AA and above 98%. So demand is coming from this sector and the focus area is the RAM.

Sir, green energy, sir, how is that going?

Can you repeat, Ankit? Ankit please.

Green energy sector, sir. Green sector.

Green energy, definitely. Green energy, we have the Board-approved policy. We have opened separate department under the risk management department, and we will also -- so they're also doing this solar. Where we are getting the opportunity, we are financing.

Okay. Okay. But sir, this is all for me. And I'm proud now to be a PNB shareholder, sir.

The next question is from the line of Yash from Citi Group.

Sir, wanted to check on the number for agri gold, if you can give? And also second, anything unusual on the slippages because it was significantly lower than the 1Q similar trend which we have seen as well in the past. And also agri slippages have been quite low given the usual run rate which you guided in the last quarter for around 7 billion to 8 billion.

Gold, you're asking about the gold. The gold outstanding is INR 7,767 crores in the agriculture, retail is INR 720 crores. The total outstanding is around INR 8,500 crores.

Okay. Got it, sir. And on the slippages, sir, if you can.

Slippage is around INR 7 crores, yes.

No sir. I just wanted to check on it.

That also we will recover.

And sir, on the corporate recoveries, how do you see the corporate recovery coming from here?

Corporate recovery for this particular last quarter, June quarter?

Yes. And how would that impact the overall recoveries?

I could not understand your question. Can you repeat the question? What do you want?

So for 1Q, what was the corporate recoveries and in coming quarters, how would be the impact?

Okay. Okay. Okay. See, recovery, as I told you, out of the INR 3,249 crores, basically, corporate recovery is around INR 1,159 crores, maybe some part of the MSME INR 923 crores, that is also coming in the corporate also some part. So this is the -- and as I told you earlier also, recovery will come probably all the segment also. The INR 3,000 crore number we are expecting from the NCLT. There is so many other accounts which are coming in the category of the corporate, there also recovery is coming through the [ OTS ], other mode, et cetera, also. So recovery will -- because if you see that around 25% you can easily assume will come from the corporate, remaining from the agri and the retail and the MSME.

The next question is from the line of Ashlesh Sonje from Kotak Securities.

Congratulations on the result. A couple of questions from my side. Firstly, on the -- you have given out the NPA ratio in the preapproved personal loan portfolio, which was at 1.86. Can you also share what was the NPA ratio as on March '24 and a few quarters before that as well?

March '24 in this PAPL, it was around 1.5 to -- between 1.5 to 1.6. I don't have the exact, but it was in the -- between the 1.5 to 1.6. There is no much increase, yes, because I'm monitoring this number every fortnightly.

Okay. Got it, sir. And secondly, what would be the reclassification of income, which you would have done between the interest income line and noninterest income line because of the P&L charge-related regulation from RBI?

That is not implemented as on date.

Okay. Sir, because a few other banks have indicated that it has come into force starting 1st of April.

Okay. Okay. Okay. I'm not aware exact amount. We will give the answer of your query. Yes, that is -- you're right, it was applicable from the 1st of April, yes.

Okay, sure. Sir, and lastly on the capital raise front you have indicated...

Could you please fall back in the queue.

I can give the answer. I've got the number also. Around INR 13 crores, we have booked in the P&L interest, shifted to the P&L charges in the fees and other income.

Thank you. The next question is from the line of Bhavik Shah from Morgan Stanley.

Congrats on good set of numbers. Sir, just 2 questions. So you mentioned that SMA 1 and 2 is INR 23,000 crores. I just wanted to understand how is it broken up between retail, agri, MSME and corporate?

Bhavik, your voice was breaking, you're asking for the slippage?

No, sir, I'm asking for the breakup of SMA 1 and 2, which is INR 23,000 crores.

SMA -- breakup of the SMA 1 and 2, I have the consolidated number as on date regarding -- just a minute I will give you the number also. You want the SMA 2 number or yes, individually SMA because it will be -- it will take time. I can give you the SMA 0. In the retail, it's around INR 20,000 crores. The SMA 1 INR 6,000 crores. Retail, SMA 2 around INR 6,000 crores. Agri, SMA 0 is INR 16,000 crores, SMA 1 around INR 800 crores, then SMA 2 is around INR 900 crores. As far as MSME is concerned, SMA 0 is around INR 800 crores, then INR 4,000 crore plus in the SMA 1 and 5,000 plus is the SMA 2. Others means corporate then INR 22,000 crores in the SMA 0, INR 110 crores in SMA 1 and INR 290 crores SMA 2.

So very clear, sir. And sir, the preapproved personal loans, sir, can you share some light on what is the ticket size and what kind of borrowers are these?

[Foreign Language] there is 2 types of PAPL, one digital mode. Digital mode, this -- the maximum eligibility is around INR 10 lakhs, so average ticket size if we see, it is around sometime between the INR 2 lakh to INR 3 lakh. So as far as other is concerned, other than digital, there is also around INR 10 lakh we are giving. If you -- around the between the INR 4 lakhs to INR 5 lakhs will be the maximum amount, yes.

Okay sir. And sir, do we have the last quarter number for SMA also. So you had given a very detailed breakup. If you can share the last quarter number, it will be very helpful.

Okay. Okay. We will give you no problem. Okay. We will give you.

The next question is from the line of Rakesh Kumar from B&K Securities.

So the CET-I would have increased because market risk rate and including food crop. So if you can tell the CET-I, sir, as on June with these 2 numbers?

CET-I you're asking the June '23 number?

June '24 sir.

June '24 number, CET-I is INR 82,383 crores.

Okay. This is including PAT and the impact of the market risk also?

Let me clarify. Let me clarify you. For the calculation of the capital adequacy ratio, quarterly profit is not added. If notionally we will add, our [ CI ] will be more than 40 basis points above because 1,000 around 13 basis points, it is increasing. So PAT is not included in the CET-I for computation of this capital efficacy ratio, only this revaluation reserve, which I told you INR 373 crores, net of tax was added for the CET-I.

Okay. And sir, just last question, sir, with respect to this credit growth in the fixed loan segment and T bill-related segment. So we have given bifurcation of loans based on lending rates, so where the growth is coming in the fixed rate and T bill-related loans, sir?

Fees, normally the fee 10% is coming from the agriculture also. So you may be aware the loan up to INR 3 lakh rupees, that is fees only 7% basically, the major portion is from the agriculture side.

And T bill, sir?

T bill, naturally this product we are giving for the loan less than 1 year. Suppose somebody is having the CC limit, that 60% has to be kept in the WCTL, so they're asking for the quote, et cetera, but T bill for that. It is less than 1 year.

Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.

Thank you very much. I want to thank each and every who have attended this conference. And I want to place on the record continuous support from all of you because on account of your continued support, we are able to perform better and better also. And you're encouraging us to do further better. Some of the person has told, you should be better than the State Bank of India, that definitely we will keep in the mind also. And somebody has told, this is the best quarter. [Foreign Language]. With this one, once again, I thank you all of you, and I hope whatever the support we are getting from all of you, it will remain continuous. Thank you. Thank you very much.

Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.