Analyst Meet / AGM - Analyst Meet

06-Feb-2019, 04:41
Punjab National Bank conducted an analyst meet on 06 January 2019 to discuss its financial results for the quarter ended December 2018. Sunil Mehta, MD&CEO of the bank addressed the meet:

Highlights:

• The bank has made full provisions for a fraud detected at Brady house Mumbai Branch involving certain accounts under Gems & Jewellery sector amounting to Rs 14356.84 crore in Q4FY2018 with balance provisions of Rs 2014.04 crore in Q3FY2019.
• As per the bank, the government has attached assets worth Rs 6000 crore relating fraud, of which recovery of atleast Rs 3000-4000 crore can be done.
• After this one-off event caused by people risk, the bank has taken number of steps strengthen the bank. The bank has switched all transactions to CBS, created centralized back office for trade finance at Delhi and Chennai, classified loans into 3 categories to mitigate credit risk in people, Rs 50 crore and above loans transferred to large corporate branches.
• The bank has also accepted strong credit practices for retail and MSME loans.
• The bank has continuously motivated its huge staff base of 70000 employees. In FY2018, entire promotion process for all categories of staff was completed before year end in March and the same would be repeated in FY2019.
• The bank has rebounded to profit of Rs 247 crore in Q3FY2019 from significant losses in the previous quarter implementing the 6R strategy 1. Recovery of bad loans of Rs 16000 crore in nine months of FY19, 2. RWAs reduced by Rs 89000 crore over a year ago, 3. Retail credit growth of 15%, 4. Reinforcing from staff trust with 90% subscription for ESPS, 5. Relationship adding 33 lakh saving accounts in 9MFY19 and 6. Resilience with 100% provision of Rs 14356 crore for one-off event.
• The strong recoveries of NPAs was achieved through creation of Stressed Asset Management Vertical (SAMV), portals for SARFAESI, OTS and DRT for better monitoring and expediting the process. The bank also recognized and rewarded employees for recovery performance. The bank as deployed 4 general managers and 2600 staff in SAMV.
• On credit growth front, the bank has posted 7% growth in domestic loan book on high base of 21% growth end December 2017.
• The domestic credit RWA density has been reduced by 1100 bps to 52.2%, while 84% of new sanctions are towards A and above category loans.
• Share of Small Ticket Advances stood at 54.4% as on December 2018.
• The bank has maintained strong CASA deposit ratio of above 43% end December 2018.
• The bank has consistently reduced GNPA ratio to 16.33% end December 2018 from 18.38% end March 20018. NNPA ratio declined to 8.22% in December 2018 from 11.24% end March 2018.
• The bank has substantially improved Provision Coverage Ratio by 1043 bps to 68.85% end December 2018 over March 2018.
• Bank is at the 2nd position amongst PSBs for maximum in-principle approval of MSME customers through the portal www.psbloansin59minutes.com
• The bank has rationalized 65 domestic branches by way of merger or relocation, while overseas 3 representative offices closed and 1 branch merged.
• The bank has consistently reduced fresh slippages of loans, while GNPA declined by Rs 8887 crore over March 2018 and NNPA dipped by Rs 13009 crore over March 2018. Overall stressed assets reduced by 265 bps over March 2018.
• The bank has overall exposure of Rs 36367 crore to NCLT with 75.1% provisions end December 2018.
• The bank is expecting resolution of 2 accounts relating to Bhushan Power and Steel and Essar Steel with the exposure of 6000 crore, which is expected to lead to interest income recognition of Rs 600 crore and provisions write-back of Rs 1200 crore in Q4FY2019.
• Further, the bank is also targeting recoveries and upgradations of Rs 4000 crore of small loans in Q4FY2019. Thus, the bank is targeting overall NPA recovery of Rs 10000 crore in Q4FY2019 and Rs 26000 crore of NPAs in FY2019.
• The outstanding stressed assets of the bank have declined to Rs 2400 crore end December 2018 from Rs 5000 crore end September 2018.
• The bank expects slippages to be under control going forward. The bank has limited exposure to Essel group, IL&FS group and DHFL. The bank do not see DHFL account as a concern as of now. The exposure to Essel group is standard as of now. Of the exposure to 9 account of IL&FS group, the bank has classified exposure of Rs 313 crore as NPA and balance exposure is insignificant and its toward self cash generating accounts.
• The bank has already classified exposure to IL&FS group as NPA and made 100% provision.
• The bank expects better earnings performance ahead, as it has already made full provision for one-off fraud incident, slippages of loans is expected to decline and proceeds are expected from sale of non-core assets.
• The loan growth is expected to be in double digit for FY2019 and its expected to accelerate to high-teens in FY2020.

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