Punjab National Bank (PNB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Punjab National Bank Q2 FY '25 Earnings Conference Call hosted by Nuvama Wealth. [Operator Instructions] I now hand the conference over to Ms. Mahrukh Adajania from Nuvama Wealth. Thank you, and over to you, ma'am.

Hello, everyone, and welcome to this earnings call of PNB -- Punjab National Bank. We have with us the entire team of PNB, headed by Mr. Atul Kumar Goel, Managing Director and CEO; Mr. Kalyan Kumar, ED; Mr. Binod Kumar, ED; Mr. Paramasivam, ED; and Mr. Bibhu Prasad Mahapatra, ED. With this brief introduction, I'll hand the floor to the PNB team. Mr. Deepak Singh will read out the disclaimer, after which Mr. Goel will address the conference. Thank you, and welcome again.

Ladies and gentlemen, good day to all. Disclaimer statement. I would like to submit that the statements given herein are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results based or implied by such forward-looking statements. Investors are, therefore, requested to check the information independently, before making any investment or other decisions. Thank you. Over to MD and CEO sir.

Thank you very much, Deepak. Very good afternoon to everybody. I welcome all the team from the analysts for this earnings call as well as the quarterly result for the September 2024 as well as the half year result of the Punjab National Bank. As far as the gross business is concerned, gross business of the bank increased by 11.9% Y-o-Y and stood at INR 25.20 trillion. The combination of the gross business, gross deposits increased by 11.3%, and it stood at INR 14.58 trillion. The gross advances, there was a good growth in advances, 12.8% Y-o-Y and increased from INR 9.41 trillion of the September '23 to INR 10.61 trillion. CD ratio is also very comfortable of the bank, it is 72.81%. As far as saving bank and CASA and the current account is concerned, saving bank also, there is a Y-o-Y growth of 3.7%, and it increased to INR 4.88 trillion, similarly the current accounts. There is also a positive growth of 1.6% Y-o-Y. It was INR 67,038 crores and increased to INR 68,104 crores. CASA of the bank was INR 5.38 trillion in September 2023, which has improved to INR 5.56 trillion with a growth rate of 3.4%. As far as RAM is concerned, the ratio of the RAM to the total advance, which was 55.63% in September '23, and it was 55.46% in the June '24, has further improved to 55.77%. As I told you earlier in the last call also, our endeavor is to increase this ratio to 58% by the end of March '25. And within the range of the 60% to 61% in the 3- to 4-year horizon. As far as the profitability of the bank is concerned, net interest income, which used to be around INR 9,923 crores in the September 2023 quarter, has improved to INR 10,517 crores with a growth rate of 6%. As far as operating profit is concerned, it used to be INR 6,216 crores. In September '23 quarter has increased to INR 6,853 crores with a growth rate of more than 10%. Net profit, which was INR 1,756 crores in September '23 has increased to INR 4,303 crores with a growth rate of 145%. And even you compare quarter-to-quarter, quarter-to-quarter, June '24, it was INR 3,252 crores and there is a growth of around 32%. And I think this is the best number we are presenting in the last 14 quarters. This 3 numbers: Net interest income of INR 10,517 crores; and the operating profit, INR 6,853 crores; and the net profit, INR 4,303 crores is the highest in the 4 to 5 years in the history of the Punjab National Bank. As far as asset quality is concerned, there is a significant improvement in the gross NPA as well as the net NPA. Gross NPA, which was INR 65,563 crores has reduced -- in September '23, has reduced to INR 47,582 crores. And in terms of the percentage, it was 6.96% in September '23, 4.98% it was in June '24, has reduced to 4.48% in the September '24, around 50 basis point reduction from the June quarter. Net NPA, which used to be INR 13,114 crores in September '23, has reduced to INR 4,674 crores. In terms of the percentage, the net NPA was 1.47% in September '23, and 0.60% in June, and it has further improved to 0.46%. As far as this guidance for the gross NPA and net NPA is concerned at the beginning of the year, we have given the guidance, our gross NPA will be around 5% by the end of the March '25, but since -- in the June '24 itself, we have reached to 4.98%, so we have revised our guidance, our gross NPA will be around 4% by the end of the March '25. Since we have now 4.48%. And if you see every quarter, every quarter, there is a reduction of the 50 basis points. So we are further revising our guidance, our gross NPA should be in the range of 3.5% to 3.75% by the March '24 (sic) [ March '25. ] As far as net NPA, that is a very reasonable number. So there is no guidance. 0.5% we have given, that we will maintain. As far as credit cost is concerned, credit costs of the -- this -- it was 1.31% in September '23 quarter and 0.32% in the June '24 quarter, and 0.08% -- it has reduced to 0.08%. So as far as guidance of the credit cost is concerned, at the beginning, we have given the guidance that credit cost will be around 1% for the coming financial year considering it was 1.40% in '23-'24, and 2.03% in the '22-'23. But since we have already reached to 0.32% in the June, so we have revised our guidance for the credit cost from 1% to 0.5%. And if you see this average, average cost of the credit cost is coming for the half year is 0.20%. So we are further revising our credit cost guidance. It will be around 0.25% to 0.30% by the end of the -- for full year, for the March '24-'25. The reason behind that because if you see the recovery is more than the double, and we have already improved our PCR to 97%. So there is a very hardly little requirement for the aging provision, which is coming around 250 every quarter. And as I told you, the recovery is double, so provision will be much more released as compared to the delinquency, which we have seen in the last 4, 5 quarters. So the delinquency has also reduced. I will give one more number as far as delinquency may, what is the -- how the new underwriting is behaving, which I used to give every quarter. This is the number for the 51 month, 4 years, 3 months. It is from 1st of the July '20. See how the new underwriting is behaving from the 1st July '20 to September 30 '24, we have sanctioned INR 9 trillion loan, out of this INR 9 trillion loan, INR 8.19 trillion we have disbursed. The outstanding is, new loan is INR 6.31 trillion, which is more than 50% of my total loan book. Out of this outstanding INR 6.31 trillion, the NPA is hardly INR 2,374 crores, which is coming 0.29% for the new underwriting. I will give a further breakup of this, segment-wise: agri, it is 0.45; MSME, it is 1.44; and retail, it is 0.28. And corporate, it is basically negligible. This is the reason, so we are further revising our credit cost. Even I am seeing, there will be a scenario where the negative credit cost will be there because as I told you, 97% PCR recovery is more than double of the delinquency. Delinquency has also reduced. Delinquency, we are giving the guidance for the slippage 1% that we will maintain. As far as capital is concerned, the total capital of the bank is 16.36% as against 15.79% in the June '24 quarter, and 15.09% in September '23. First time in the history of the Punjab National Bank, we have crossed the capital adequacy more than 16% in the last 5, 10 years, which is a number I'm having. So it used to be around 15% to 16%, but we have not crossed 16%. So first time we have crossed 16% and contribution of the 16% is the QIP, which we have raised the current -- last quarter, September quarter, INR 5,000 crores. And against it, we have achieved a bid of around INR 41,000 crores, which was more than 8x subscribed, around 65 basis points, was the impact of the new capital raise. As far as the CET1 is concerned, it is 11.59% as against the 10.95% in the June '24 quarter and 10.23% in the September '23. As far as plan for the capital is concerned, we were having the approval of the Board for INR 7,000 crores QIP, which we have reduced to INR 5,000 crores, and we have already raised. We are in hand, INR 7,000 crores for the AT1 and INR 3,000 crore for the Tier II. Although as of date, there is no requirement for the capital to be raised in the subsequent quarter, but we will see if rate will be of our choice, so we will not mind to raise part of the AT1 in the current quarter. Current quarter means this December quarter. As far as cost of deposit is concerned, it was 5.08% in June '24 and it has further increased to 5.16% because you all are aware because the deposit on the 1-year deposit or the other deposit has increased substantially in the last quarter. The 1-year deposit is not available as on date even between the 7.73% to 7.80%. As far as NIM is concerned, we have given the guidance for the 2.9% to 3% and we have given guidance that absolute number, our NII will be positive. And if you see the last 12 quarters, every quarter, NII, in absolute number, is more than the earlier quarter. So although we have -- as on date, 2.92% is my global NIM and 3.06% is the domestic NIM. So we will remain on the same guidance 2.9% to 3%. Yield on advances was 8.43% in the June quarter. So similar on the same line, it is 8.42%, and it used to be around 8.23% in the September '23 quarter. As far as cost-to-income ratio is concerned, it was 52% in September '23, and 53.28% in September -- June '24, and it has increased to 54.58% in the September '24 quarter. The reason of the increase in the cost-to-income ratio is on account of the AS-15 provisions. Last quarter, we have made an AS-15 provision for INR 742 crores, but this quarter, September quarter, we have made a provision of INR 2,057 crores. It means additional around INR 1,300 crores, we were required to make more provision for AS-15. Reason behind is because the G-sec in the June 2024 was 7.01%, and it was 6.75% in the September '24, so gave us a reduction of around 26 basis points in the G-sec. So on account of the reduction in G-sec, so as per the actual calculation, we have to provide INR 1,300 crore additional. This was the reason of the improvement in the cost-to-income ratio. Increase in the cost to income ratio, maybe -- if you see the -- as on date, if further there is an increase in the rate of interest in 10-year, which is hovering around 6.85%, so maybe current quarter, December quarter, this requirement will further reduce. As far as advances increase, we have increase in the advance is concerned, so we have given the guidance around 11% to 12%, and we have clocked in 12.8%. So retail, there was a growth of 14.62%. Agri, there was a growth of 11.07%. MSME, there was a growth 8.9%. Reason behind that because some of the MSME accounts, which were classified under MSME, on account of the increase of the turnover or investment limit, they have come out from the purview of the MSME. So otherwise, if -- we will have that account -- particular account, so it is coming more than in double digit. RAM, it is 12.02%; home loan, there is a good growth, 19%; as well as vehicle, it is at 25%. As far as the movement of NPAs is concerned, the opening balance of the gross NPA was INR 51,263 crores and INR 2,181 crores was the addition. I will give the breakup of this. There is a slippage -- was, agri was INR 565 crores, MSME is INR 621 crores, retail INR 415 crores and the other means corporate INR 47 crores. And the cash recovery was INR 1,508 crores and the upgradation was INR 1,407 crores, making the total of the total upgradation and the cash recovery was INR 2,915 crores. And write-off was INR 2,946 crores, so closing figure was INR 5,862 crores -- sorry, INR 47,582 crores. Total recovery, including the recovery in the technical written off and recovery, which we have booked in the interest, so it was INR 4,891 crores, which was INR 3,249 crores from the previous quarter. So if you see the recovery was INR 4,891 crores and slippage was, in this quarter, INR 2,180 crores, so it was more than 2x and the target for the entire is INR 18,000 crores. If you add the June and this September recovery, it is coming around INR 8,000 crores. We are confident because some of the account NCLT is about to resolve in the current quarter or lastly in the last quarter. So INR 18,000 crores, we will -- definitely, we will achieve. As far as SME more than INR 5 crores is concerned, that is hardly INR 2,125 crores. As far as -- because we normally used to ask how much is credit on the MCLR, so MCLR, around 34% on the MCLR. Repo around the external benchmark of 41% and Treasury bill around 8.39%, and fees is around 10%. As far as RAM, as I told you already, 55.77%, and our endeavor is to increase to 60% in times to come like 2 to 3 years. One important thing, total unsecured loan book. Total unsecured loan book of the bank is INR 327,176 crores. Out of which unsecured retail loans, which is normally the worry of the investors also is hardly INR 27,966 crores. The breakup of the INR 27,966 crores: credit cards around INR 1,000 crores, education loan INR 4,333 crores, and pension loan INR 4,513 crores. In pension loan, we are receiving the pension. There is no worry in there. The personal loan amount is INR 18,119 crores. Out of this personal loan the digital PAPL, INR 4,239 crores and nondigital is INR 13,880 crores. Normally, the percentage in the personal loan used to be around 2% and 2.10% because -- and that already been factored at the time of pricing this product and we are also making this -- at the time of the initial, making what should be the pricing. We have also taken the 2% will be the NPA in this product also. As far as the NCLT recovery or the NARCL is concerned, NCLT around 831 accounts we have applied for INR 1.03 trillion. Out of which 797 accounts of the INR 1.01 trillion has already been admitted. 30 accounts of INR 1,835 crores is to be admitted, out of which 275 accounts has already been resolved of INR 47,444 crores and 304 accounts already liquidated INR 35,120 crores. 218 accounts, pending at the various stages, with the amount involved is INR 19,351 crores. As far as asset transfer to the NARCL is concerned, we have transferred 14 accounts of INR 3,778 crores. Against this, we have received cash plus SR, INR 987 crore. 13 accounts is under discussion of INR 2,370 crores. Out of these 13 accounts, in 9 accounts, we have outstanding INR 1,691 crores. NARCL has submitted already their bid, which is under evaluation. So this is my initial remarks about the performance of the bank. Once again, I think, this is the best result we have shown in the last 3 to 4 years. And now the -- I'm open for any questions, clarifications, if you require. I will try to give the answer. Thank you. Thank you very much.

[Operator Instructions] Our first question is from the line of Nitin Aggarwal from Motilal Oswal.

Congrats on a very strong quarter.

Thank you, Nitin. Thank you very much, yes.

And also achieving the milestone of 1% ROA well ahead of the guidance.

Deliberately, I have not touched it in my initial remarks because I want to hear from you. [Foreign Language]. One more thing I can tell you also because we have given the guidance for the 0.8% for the entire year, and we have given the guidance key, it will be 1% at the exit of the current financial year. Since we have already achieved more than 1%, the half year, it is around 0.92%, so we are revising our guidance. It will be around 0.9% to 1% for whole of the year from the 0.8% earlier guidance.

Okay, sir. Noted. And sir, my first question is on the like contingent provisions. This quarter, we have made a small amount, but now that you are indicating that the credit cost, we have already reduced the guidance second time on credit costs now and there is a possibility it will be negative also, as you mentioned. So will we look to make contingent provisions and prepare ourselves for Ind AS transition as and when it starts? So what is the thought on that line?

Nitin, already, we have made a provision of INR 354 crores as a floating provision for the NPA, and you are worried about the ECL, et cetera. So 97% already we are having the PCR. What is the ECL provision? ECL provision is how is your new underwriting behaving. I have already given the 51-month data of the new underwriting, INR 9 trillion, we have sanctioned. INR 8.19 trillion, we have disbursed. INR 6.31 trillion is the outstanding, which is around 60% of my total loan book. And out of this INR 2,374 crores, even if you see the OTR, OTR 1 and OTR 2, INR 170 crores provision we have made additional as against the requirement of the 5% and 10% RBI, we're making 12.5%. So I think there is no need for the further provision also. Already INR 350 crores we have made a provision for the -- floating provision in this quarter, and total is the INR 500 crores.

Right, right, sir. But will this be enough, like when you look at the total ECL provisions, whenever it kicks in, will this much be enough?

No, it will not be appropriately whether it is enough because we have not calculated. I told you we should wait for the final guidance because there is a different method is being used by the different banks. So the moment we will get the guidance, so -- this I can tell you, PNB will not be the outlier. Earlier, there was a worry because we were having the highest NPA, highest gross NPA. And so everybody was worried that in ECL provision, the PNB will be the outlier. So as on date that worry is gone.

Okay. Okay. Sure, sir. And second question is on the credit deposit ratio. If -- look like the PNB has a very good room to expand on that. It is very well positioned to pursue credit growth, but credit deposit ratio over the last 1 year has been in a very narrow range. So why are we not using this lever to expand margins? Because margins is one area wherein we are seeing some softness, which is like similar to the other banks also. So what is your thought on that, like on the credit deposit?

Nitin, margin, I told you also if you see, we have given the guidance 2.9% to 3%, because ultimately it depends which type of underwriting you are doing. We can increase the margin. We can increase the margin, but there is a risk of the slippage also. And moreover, you see what is our AAA, AA, et cetera, also. So this is the reason because there is some transaction because PNB is one of the larger banks. There is some transaction where I'm getting only 1% to 2%. If I have to maintain 3% or more than 3%, you may be happy. So it means I should not do such type of the transaction. This is the reason I'm telling again and again that ratio maybe misleading, we will not give the guidance more than 2.9% to 3%. But in absolute number, in absolute number, if you see the NII every quarter is increasing. I'm not naming the bank, one of the big banks, their number this current quarter, 400 negativity NII number. So this is the reason we are not going to change. Margin, we are saying, but we are saying where we can get more margin also, we are doing that one also. But if there is some account, people -- we are not in a position to make more margin also. But in terms of the percentage, NIM will be reduced, but ultimately, it will add to my absolute number.

Okay, sir. Got it. And the last question is on the OpEx. Wherein Q-on-Q, we have seen a sharp rise in the employee provisions. So what has driven this? And how should we factor in for the coming quarters?

Actually, it is a function of the rate of interest. As I explained in my initial remarks also, the 7.01% was 10-year G-Sec, which has reduced to 6.75%. So there was a reduction of around 26 basis points. Last quarter, we have made INR 742 crores. This year on account of the 26 basis points, so increased INR 2,057 crores. So I do not foresee because if you see as on date also, it is hovering around 6.85%. So definitely, it will remain in the same, so requirement will be very less for the next quarter.

Our next question is from the line of Piran Engineer from CLSA.

Congrats on the quarter and the successful turnaround of Punjab National Bank. Firstly, sir, what is the LCR, our liquidity coverage ratio? And is there scope to further reduce liquidity on balance sheet?

As far as the liquidity of the coverage ratio is concerned, it was around 129%. On account of these revised guideline also, so around there is a difference of around 10 basis points. The requirement of the 100%, so we will be in a position if we maintain more than that also. So we -- although impact will be there on account of the guidelines if it is really implemented, so around 10% to 11% there will be a dip.

And what is the level we are comfortable with?

Actually, we are comfortable, it should be around -- because 100% is the requirement, so between 115% to 120%. But minimum 115%, we would like to have.

Okay. Okay. Sir, then on your Slide 18 in the PPT, there is a CG recap bond, INR 55,000 crore. Sir, what is that?

That is the -- government has injected the capital. That is that. Because they have injected the capital, then we have subscribed the bond also.

Sorry, sir, can you please repeat?

Whatever the government has infused the capital. Suppose they have infused INR 55,000 crores as the capital, so that has increased the capital adequacy ratio. INR 55,000 crores, same amount, we have subscribed to the government bond also.

Okay. So you bought government bonds and then the government infused capital?

Right. Very much right. Right.

And our credit cost guidance for the year, is it 0.5% or 0.25%?

Actually, beginning, it was 1%. Then June, it was 0.5%. As on date, for the half year, it is coming around 0.2%. So we are giving the guidance, it should be around 0.25 to 0.30 basis points.

Our next question is from the line of from [ Gao Zhixuan ] from Schonfeld.

Congratulations on a good quarter. Just 2 data keeping questions. First of all, on the margins. Do we have an impact from reclassification of penal interest into penal fee incomes that impacted some of our peers?

That is definitely there because some of the amount, which we were using as a penal interest, that is not coming under the interest calculation now, that is coming under the other income also.

And do you mind sharing what's the rough quantum of it?

Can you repeat your question?

Do you mind sharing what's the impact on margins this quarter because of this...

Impact will be only 1, 2 basis points, nothing more.

Got it. On gross slippages, there's a slight pickup on a sequential basis, obviously, from a very low level. But just wondering what's driving that? And does that include some of the big corporates that we hear in the news?

You are right. Actually, if you see, we have given the guidance for the 1%. Even as on date, it is less than 1% also. It was INR 2,181 crores. There was one account. One account, which I think, you are trying to ask. That was the around INR 425 crores. Otherwise, the second highest slippage was around INR 35 crores only.

Got it. So INR 430 crores from that one account?

Yes.

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

Good set of numbers. Very good performance, especially on the recovery front, sir. Sir, just on the personal loan, you had given some data point in your opening remarks. What was the gross slippage that we have posted on this personal loan in this quarter, sir?

The personal loan INR 18,119 crores will be total book. Apart from the pension, that is also in the personal loan, that is INR 4,513 crores. There is no issue because pension is coming. Out of this INR 18,000 crores it is around 2%.

Gross NPA?

Yes, gross NPA. Yes.

And sir, slippage in this quarter, sir?

It is on the same line. It is -- it doesn't mean there was a much difference in the last quarter and this quarter also. It is -- it remain in the same range.

Got it. And sir, margin movement is very -- like very peculiar this quarter. So if you look at the Slide #23, we have yield on advances from June quarter to September quarter almost at 8.42%. And cost of fund has slightly gone up by around 8 bps this quarter. But the funding cost number, cost of fund number is flat and yield on fund number is like coming down. So -- but yield on investment is flat. So what is driving lower yield on funds, though the yield on advances number is flat, yield on investment number is flat. So why yield on fund is coming down, sir, from 7.23% to 7.13%?

It is on account of the -- some of the overseas loan book also.

But this will get -- okay. So -- but this slide does not include -- so I'm looking at the global numbers, sir, the global number is 8.42% as compared to 8.43%. And yield on investment is 7.06%. So yields on fund is coming down from 7.23% to 7.13%, so why is that?

Yield on fund is coming from 7.?

7.23% to 7.13%. 10 bps fall is there in the yield on fund. So why was that, sir?

You have to see the composition. Please try to understand what is the composition of the advances? What is the composition of the investments? Because if you see the outstanding of the investment, it has increased in this quarter. This is the reason it is coming down.

Okay. Sir, we will take that offline, sir. Sir, there is a rise in the gross NPA...

There is no need for the offline. I'm trying to -- please understand. What I tell you, what was the advance -- growth in the advance book, what is the growth in the investment book. Growth in the investment book is much more as compared to the investment -- advance book. This is the reason, this is coming down.

Correct, sir. I was also coming to that. Non-SLR growth is very high, especially in the Others category.

Yes, yes.

So what is that, sir? Others in...

That is investment in the CD, et cetera, also. Because sometimes we were having the excess liquidity also, so we have passed that one in the CD of the banks.

Okay. Okay. And sir, fee income. Drop in the fee income, especially in the processing fee in this quarter, sir?

For the processing fee, we used to charge in the first quarter only for the entire year. This is the only reason.

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

Compliments to you, Atul sir, and the entire team of PNB for the fantastic results. In fact, you are improving your performance on all the parameters, quarter after quarter. I think in last -- if you see 10, 12, 15 quarters, continuously, there is improvement. And now I mean we can say that this Punjab National Bank has overcome all the previous negative legacies and everything, and it's on the -- it's firing on all the cylinders. So compliment for the same, sir.

Thank you. Thank you very much.

Having said this, sir, I've got just a couple of few questions and some observations. And sir, on the profitability front, if you look at the -- basically from the noninterest income point of view, there is a major improvement in the -- right from the recovery in the written-off account TWO to handsome treasury income in this quarter, if you compare with the last quarter of INR 1,581 crores as compared to INR 648 crores. That is sale of -- I mean, good profit on sale of investments, good profit on the revaluation of the assets. So my question is that going forward, do we expect in the remaining 2 quarters of the current financial year, the same performance of the treasury so as to assess the correct profitability of the bank for the whole FY '25? That is the first question.

Yes, definitely. Ashok ji, definitely, because as on date also, if you see my total the TWO book, it is INR 92,584 crores. It is the gold mine for the Punjab Bank. So whatever the recovery in the technical written-off, we have made in the last quarter, the same or even the more also we can expect in the current quarter as well as in the last quarter of the current financial year. And treasury income is also we will be in a position because my treasury is very active. Not only the SLR or non-SLR, even we are making the good profit in the equity funding also.

Yes. So that's why basically treasury front, even in the trading book also, I think there seems to be a good profit on that. Sir, a data point, just a calculation of tax. So tax, if you look at this current half year, I think on the profit of INR 11,834 crores, our provision is INR 4,276 crores. It's almost about 36% on the tax front. And we have not discussed this for a couple of quarters on the tax front, DTA and other things. So can we -- can the treasury while...

I understood your question, Ashok ji. Actually, we have not shifted to the new regime. This is the reason, because earlier also, we have explained in the last con call also because we are in the old regime. This is the reason it is coming 36% because we are having some of the claims, which is available if we will shift to the new regime, then we have to forgo it. This is the reason it is a matter of time. When we will shift to the new regime, definitely, there will be around 10 basis points increase in the ROA only from this entry.

How much is the total carryforward benefit and the...

See, not only carry forward, there is some other benefit also MAT, et cetera. So it is not only MAT and there's so many other things also, we will shift to the new, so we have to forego that. This is the reason, it is a matter of time only. The moment we'll be in a position to absorb all our already benefit, then we will go to the new regime also. We have discussed this matter with our consultant. So he advised, immediately, there is no need to shift from the old to new regime.

Point well taken. Sir, on the employee benefit front, you've talked about AS-15. And because of that, there is an increase in the overall employee costs. But similar in this quarter, we have not seen the couple of other banks which have come out with their results, this kind of major impact because of AS-15 in this quarter. So was there something different in our bank on that, even in Bank of Baroda there was hardly any difference in the overall employee cost in this quarter.

I have understood, Ashok ji. Yes. Actually, I have explained to you what is the reason. You're also a Chartered accountant. 7.01 to 6.75. If there is a dip of 26 basis points, so AS-15 is definitely bound to increase also. So we are making on the quarterly basis. I don't know about the other bank also, but I am telling you on account of the decrease in points, this is the reason every quarter, there is a fluctuation in this. Last quarter, it was INR 742 crores. Even in the September '23, it was INR 580 crores. So every quarter, we are making -- I don't know whether the other bank are making of the quarterly basis or the yearly basis also, this may be the reason. But every quarter, we are giving these changes.

Sir, one last question in this round on NCLT, I mean, NARCL and you had given some data points, I think, 14 accounts, INR 3,771 crores, and you said that the cash recovery is INR 987 crores. Isn't it?

No, no, no. INR 987 crores is the, I told you total recovery. Cash filler SR, 15% of the INR 987 crores is the cash recovery.

Our of -- so balance is the guaranteed SR?

Guaranteed by the government.

Yes, which must have been 100% provided for?

Definitely. Because as on date, there is no different treatment given by the regulator for the sale to the NARCL or DRC, although there is a demand, but because the -- once we are transferring the asset to the NARCL, that is 100% provided. This is the reason carrying cost of SR is 0.

No, but it's goes in the benefit. Ultimately, we can assess that this amount in any case is going to come when it is guaranteed and strengthened your book basically. Sir, just if you permit me one more, sir, we have done exceedingly well on the credit front as compared to many of the other peer banks in this quarter, also in overall half year also, if you see. So sir, going forward, if you maintain the same tempo, are you revising your credit growth target also for FY '25? Just like other targets which you have improved, even on the credit growth front also?

See, 11% to 12% we have given. 11% -- between 11% to 12%. And if you see, it is 12.80%. So I can simply say we will be in a position to get 12%. But if opportunity will be available -- Ashok ji, if opportunity will be available, we will not allow opportunities to go, let down from the provisioning of Punjab National Bank because this would be demand also, because corporate to be honest with you, there is no much demand, even as on date I am having the sanctioned limit of the INR 1 trillion, which they are not utilizing.

But you have done very well in MSME front also. I think where in your -- this book MSME and retail, you performed very well. So -- and corporate business also will come. So we can hope that this current 6 months now next 6 months will be better than what you have even achieved in the first half year.

Our next question is from the line of [ Marshall ], who is an individual Investor.

My first question is regarding this employee cost. Mr. Ajmera asked, but like -- but the voice of Mr. Goel was not very clear. So I just want to ask you is that the employee cost has gone up by INR 1,205 crores in this quarter. So is it because of some onetime provision or this kind of number is going to continue in the subsequent quarter also?

No, no, no, no. I will explain also. It is AS-15 provision. It is not the actual outgo. Let me clarify. It is not the actual outgo. It is a provision we have to make based on the actual calculation. The reason behind that was this increase, if you see the 10-year G-Sec, in June, it was 7.01 and September '24, this 10-year G-Sec has reduced to 6.75. On account of this 26 basis point decline in the interest rate, this additional provision has come. So It will not be recurring even the interest rates will become harder in the times to come also, so it may be reversal also. So it is not onetime because if you see the last quarter, it is only INR 742 crores.

No sir, I'm asking regarding employee cost. Employee cost has gone up by INR 1,205 crores.

No, no. Employee cost, it is not what you see. Employee cost -- it is already added in the employee cost.

[Foreign Language] Why it has increased? Because like the increment or all the settlement was already counted for in the March quarter itself. So why it has gone up so drastically this quarter, employee costs?

Let me try you once again. The AS-15 provision was INR 2,057 crores for this quarter. And the June quarter, it was INR 742 crores. If you'll make the difference, it's INR 1,300 crores is the AS-15 provision only. If you see the actual payment of the employee cost, it is on the same line. It is equal. I can give you the number also. The payment of the employees, I will give you. This is INR 3,692 crores for this quarter, and it was INR 3,808 crores in the earlier quarter. So there is a reduction of INR 200 crore.

Whatever provision we are doing, is it over or this provision will still continue? That's my question.

It depends on every quarter. Maybe if rate of interest because as on date, rate of interest is 6.85. So there will be reduction, reduced requirement in the current quarter.

No, no, I am just like -- so it means this kind of provision is going to continue for some more quarters or only 1, 2 quarters this will continue?

No, no, no, it will remain. It is not -- whatever the provision we have made, it is a total provision. It is a cumulative figure. Please try to understand. The provision we have made for this quarter, INR 2,057 crores. So if you will add INR 2,057 crores, it has already been added. The cumulative will remain same. If there is a change of the interest rate in the coming quarter, that cumulative total provision will change.

Only incremental returns. Only incremental return?

Very much right. Now you understood.

Sorry, it means cumulative till this quarter, we have finished all the provision and whatever plus minus can happen only that will happen.

Very much right. Now you understood.

Sir, my second question regarding this other income, which has gone up by INR 1,049 crores. So how much is the recovery in this part INR 987 crores?

Recovery in this particular quarter is INR 1,369 crores.

So like that capital account is already considered there? Or it will come in this quarter or next quarter?

It has already been taken in the September quarter, INR 1,369 crores, already this is a part of the other income.

Okay. So sir, my question is that like this other income, this kind of recovery like it is very good recovery you have made in this quarter. So whether this temperament or this tempo will continue in December and the March quarter also or like this will subside?

Definitely because I am having the TWO book of INR 92,584 crores. It is the gold mine of Punjab National Bank. And if you see INR 1,631 crores in the March quarter also and INR 1,369 crores in the September quarter, June quarter, it was INR 859 crores. So normally, it remains in the range of the INR 1,000 crores to INR 1,500 crores easily. Every quarter, we are making it.

Sir, where can I see this figure of INR 94,000 crores because in the debt, in the PPT, in the Slide 34, I can see only INR 54,472 crores?

That is not in the PPT. I'm telling you, total NPA TWO book is the INR 92,584 crores is TWO book and INR 47,582 crores is the gross NPA. If you will add both, so my total recoverable book is 1,40,166 crores.

Our next question is from the line of Suraj Das from Sundaram AMC.

Congratulations on a good set of numbers. Sir, 2 questions. One, the floating provision that you were doing where does it reside? Is it on the standard provision line item, which is INR 83 crores this quarter? Is it included?

No, no, no. It is an NPA provision. INR 350 crores we have made for this quarter and cumulative provision is the INR 500 crores. It is a part of the NPA provision and it is a part of the CAD cost.

Okay. So it is part of this INR 199 crore number that is...

Yes. Otherwise, if we would not have made a INR 350 crores provision, the credit cost would have been the negative credit cost, yes.

Understood, sir. And sir, on this -- the below line items, standard asset provision INR 83 crores. It seems like, I mean, since we have also restructured book, which is coming down, there is the incremental provision requirement is very less on the standard assets. So how long this can continue, sir, I mean, what kind of headroom still you have in terms of...

See it depends on the June 2019 surplus. Some of the account which they have come out from this category also. So there might be some reversal also. There might be some additional provision for the other account. It depends on the exposure of that particular account is much more for a particular limit. But since our SMA is more than INR 5 crore is very less INR 2,125 crores. So I do not foresee any issue, which will be requiring us to make more provision for these standard assets because it depends on the banking and that not only the Punjab National Bank. If some individual is having the exposure of more than INR 2,000 crores, then only we have to make this provision for the June 2019, yes, INR 1,500 crores.

Okay, sure. And sir, one last question. In terms of this quarter growth, if I look at both on deposit and advances, the overseas segment has contributed very favorably. So anything specific that is happening there? Or is it just one quarter phenomenon?

In last quarter also -- last quarter was the same growth as far as credit is concerned. But definitely this quarter, some growth in the deposit is better as compared to the last quarter.

Okay. So this quarter, I think the advances growth on the overseas is something like 14% Q-o-Q. Anything -- any particular segment that is driving that?

Our guidance is 12% for the whole of the year.

Our next question is from the line of Yash Darak from RSPN Ventures.

First of all, congratulations for a good set of numbers. Most of my questions were answered. I just had a couple of bookkeeping questions. So first question is that, we observed in our peers that a big PSU telecom company has -- is facing some stress. So do we have any exposure in that?

Definitely, we are having the exposure in that. Already been recognized in this INR 2,100 crores something already recognized. The exposure INR 434 crores.

Okay. INR 434 crores. We have already provided for?

Yes, yes, already recognized, and it is in the figure of the INR 2,100 slippage, yes.

Okay. Okay, sir. Second question is, sir, on the deposit repricing. We were observing from last few quarters that the deposits were being repriced. So has that scenario been over now and the NIM guidance that you maintained considers the scenario that deposit pricing has been completed?

I fully agree with you. I think deposit rate has, in my opinion, deposit rate has already reached on the peak. So we do not foresee any further increase in the deposit. So whatever the guidance for the NIM 2.9% to 3%, I think we will be in a position to maintain it.

Okay. Okay. Sir, just one final question, if I can squeeze in. This is in regarding that RBI has recently introduced some rules, regulations regarding the infrastructure loan book and provisions on infrastructure loans and against which the banks has made some representation to the statutes. So has there been any development in this scenario?

As on date, we have not yet. Whatever the draft guidelines have come, that is still. We have not issued any final guidelines, yet.

Our next question is from the line of Kunal Shah from Citigroup.

Most of the questions have been answered. One thing with respect to PNB Housing, this entire new draft circular, which has been there which talks about the group company. Obviously, it's an associate, but still the group entity, which says that it cannot carry on the business similar to that of a bank. So would -- maybe in terms of hiving of stake in that subsidiary, we can maybe prepone that taking into account that draft circular? Or what would be our overall stance on the holding in PNB Housing Finance?

See as on date, there is no plan. We are reviewing whatever the draft guideline is coming. We will discuss it, but as on date, we have not decided, yes.

Our next question is from the line of Jai Mundhra from ICICI Securities.

Congratulations on a 1% ROA. Sir, my first question is, you mentioned that the central PSU account in telecom that you have already recognized as an NPA. Just wanted to check, sir, what could be the provisions here that we would have made?

Provision, I think it is not appropriate. Otherwise, we have made a good provision. Actually, I think individual account, we should not discuss.

And secondly, sir, you would have the other stretched still PSU account that is still in SMA or what is the status? Or that has -- you think that will be resolved? How should we...

That is the SMA with the other bank, but as on date, because there is a working capital with me, so my account is okay. But we have to see in totality.

And sir, what would be your total SMA 1 and 2, including below INR 5 crore accounts also, I mean, you...

Total SMA 1 is INR 14,688 crores and SMA 2 is INR 13,509 crores for a whole book.

And if you have the SMA 0 number also sir?

Zero Number is INR 1,02,728 crores. But as on date, if you ask me because there is an accounting issue because some of the installment is doing in the first week. So it is coming on Monday, is coming as SMA 0. So as on date, the SMA 0 has reduced from the INR 1,02,728 crores to INR 21,599 crores.

And last question sir, we look at revaluation of investment income, right? And because RBI has permitted that the banks can accrue the national gain also. Is there any -- I mean, so we have -- and I think if I remember right, we have done around the treasury -- of the treasury, the income is around INR 700 crores. Would you believe that this number will stay? Or I mean, what is this number linked to? I mean, what could drive this number lower or higher this quarter? Is it like equity M2M or bonds M2M or what is it?

INR 761 crores is the trading profit. Let me clarify you, Jai Mundhra, INR 761 crores is the real profit, which is the profit from the G-Sec, which is the profit from the non-SLR and the profit from the equity also. In addition to that, because the -- on account of the change of the new guidelines of the valuation, there was another INR 731 crores added in the P&L for the devaluation in this time. So because our treasury is very active, so we are hopeful because if you see the last quarter we have made INR 325 crores. So it depends on the yield, et cetera. So ours treasuries are active, so we will be in a position to make good profit in the times to come also. No issues.

Our next question is from the line of Saurabh from JPMorgan.

Sir, just 2 questions. So one is historically on your written-off book, what's the recovery rate that you get? So that's the first one. And secondly, what is the total magnitude of AFS results that you have right now?

Actually, INR 92,584 crores is the TWO book, normally within the range of the INR 1,000 crores to INR 1,500 crore, we are recovering every quarter. And the AFS book is INR 1,09,615 crores, which is around 23.3% of the total investment book.

No, sir, I was asking, normally like over a cycle of the INR 90,000 crores, how much will be a recovery? Is it 10% or 15%? How much should it be?

Around INR 5,000 crores, we are recovering every year. So you can think it is around 5% to 6%.

Our next question is from the line of Anand Dama from Emkay Global.

I think Suraj has asked the question related to your overseas loan book that you're expanding at a very fast pace. What is the reason? What are the kind of loans that you are giving to, what kind of corporates are there in favor that you can give?

Actually, Anand, it is a combination of all, it's the RAM. There is a growth in the RAM also. So I will give you some of the number of the RAM, if you see the retail. This number was the INR 5,44,954 crores in the June '24. So it has increased to INR 5,64,000 crores. So INR 20,000 crores -- more than INR 25,000 crores increase in RAM. Even retail also, retail around INR 15,000 crores is increased another is the corporate. There is also increase in the NBFC side. And there is an increase in the some of the renewable projects, solar, et cetera. So it is a combination of all. The main in the RAM, RAM is the focus area. There is some increase in the NBFC also, but all are basically AAA and third is the other corporate advances. Yes. The major part is the road and the another is the solar, renewable energy.

My question was specifically related to overseas loans.

Anand, can you repeat?

My question is related to overseas loan book, which is expanding.

So overseas basically most of the exposure is on the bank, our buyer's credit, yes.

Okay. But BC, also, sir, because that book to some extent, is dragging your margins down. Why?

Our margin is less, yes.

Is it basically that you can cut down the exposure to overseas any time soon like or you'll see...

Why there is the need of the cut down of the exposure also because ultimately, we have to see whether we are earning or not. As I told you in my initial remarks also in some of the transactions, if we are getting 1%, 2% or the EBIT less than 1%, why we should allow that opportunity should go down from the Punjab National Bank because we are not concerned about the 3% NIM. We are concerned with the absolute number of the net interest income.

Sir, is it possible to share what is the LCR for this quarter?

LCR, I told you 129%. In draft guidance there is a dip of around 10% to 11%.

Okay. If the new draft guidelines come, it will come down by 10% to 11%.

Next is a follow-up question from the line of Rakesh Kumar from B&K Securities.

Sir, just I was coming back to the same question on the change in the yield on funds. So I was looking at cash investment and advances composition as a percentage to your deposit and borrowing. So I find that there is a decrease in the cash balances number as a percentage of deposits and borrowings. And also, there is a decrease in the advances number and increase in the investment number. And some of the gap has been funded by the equity around INR 4,200 crores. But still the margin is coming down. So the margin fall, what we have seen in this quarter is like should we see this as a kind of a regular thing going ahead also? Or what is that? Because probably we have used the QIP money, I think, in this quarter.

Cash maybe on account of the QIP money. It is not intended because I told you some time if we are having the liquidity, where we will pass the liquidity either in the short-term investment opportunity available, where the yield is there. So this is the only reason which I explained to you also. But it is not for a long period also, very short period also.

Our next follow-up is from the line of [ Marshall ], who is an individual investor.

Sir, my question was that this quarter, provision has also reduced by INR 1,024 crores. So are we going to -- like whether this provision will sustain to this level what it was there in the September quarter or it can also be spike in the subsequent quarters?

Provision, there is 3, 4 provisions, which provision -- as far as credit cost is concerned, we have already revised our guidelines. So the provision for the NPA will further reduce and these standard assets also. I do not foresee there will be any increase in the provision. And OTR 1, OTR 2, we have already made 170% additional provision, which I told you. The only provision for the income tax will be the main provision and other I do not think that there will be any increase in the other provision also.

Okay. And sir, like we also made a floating provision of INR 350 crores. So what is the purpose for this floating provision can be utilized?

This floating provision is permitted by the regulator. INR 350 crores we have made for this quarter. Cumulative provision is INR 500 crore. INR 150 crores we have made earlier also, so this will help to reduce and to maintain our net NPA number.

Understand. But what I'm saying like because in the other banks, I was reading through that, like they mentioned that this floating provision can't be utilized without the prior approval of regulator. So like for what type of thing this can be utilized?

Yes, with the permission of the -- in the bad time, if there is a requirement to use this proposal, then we have to take the permission from the regulator.

Okay. So my last question regarding the CASA. So what special steps the bank is taking to increase the number of current accounts, sir?

Point number one, I will give you the saving as well as the current account. CASA is definitely a challenge, not for the Punjab National Bank, for the entire industry, but we are having 10,000 -- more than 10,000 branches, more than 20 crore customer, and we have provided all the branches with the tap banking. So time for opening of the new account has already been reduced. Last year, we have opened more than 1 crore saving bank account. In the first quarter, we have opened more than 60 lakhs account, so the money will come in this account. Your specific question about the current account. So last year, we have opened 2.68 lakh accounts. In first half, we have already opened 1.21 lakhs. We have also provided this corporate mobile app, which was not available earlier, which we have launched in the last month only. So by using this corporate mobile app, so definitely, we are hopeful that there will be increase in the current account opening as well as the balance in this current account.

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

Congratulations on a very strong quarter. First question is on the slippages side. If I look at the agri slippages, they've gone up quite sharply on a Y-o-Y basis. Any reason for that?

Slippage, you are asking about the slippage Y-o-Y?

Agri slippage.

INR 1,826 crores to INR 2,181 crores.

Sir, the agri part, agri slippages for the quarter, which is about INR 570 crores.

You are asking about the agri?

Correct.

Yes. INR 565 crore is about the agri. Normally, if you keep within the INR 500 crore, INR 600 crores, we are having the book of the more than INR 1 trillion. So sometimes INR 500 crores, sometimes INR 600 crores, there is no much difference here.

Okay, sir. Sir, and secondly, on the PSU account which has slipped this quarter, are there any other PSU -- large PSU accounts, which are sitting in the SMA book for you?

You do not worry. Only one account was only in the SMA that we have already recognized. As I told you in my -- as on date, I do not find, yes.

[Operator Instructions] As there are no further questions, I request Mr. Atul Kumar Goel for any closing comments.

Thank you very much once again. I think this was one of the best quarter as far as Punjab National Bank is concerned. And whatever the guidance we have given, I think, we have achieved most of the guidance except the CASA and the most important was the ROA also, although we have given the guidance, we will be in a position 1% by the exit of the current financial year, but we have achieved. So I think with the support of all my investors also and the analysts also and I assure you whatever the number we have shown in the coming quarter, and coming to next, last quarter of the current financial year, we will be in a position to show the better performance, whatever we have shown in this quarter.

On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.