Ladies and gentlemen, good day and welcome to Punjab National Bank Q4 FY25 earnings conference call hosted by Elara Securities India Pvt., Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Palak Shah. Thank you, and over to you, ma'am.
Yeah. Hello everyone, and welcome to Q4 FY25 earnings conference call of Punjab National Bank. Today we have with us the entire management of Punjab National Bank, headed by Mr. Ashok Chandra, MD and CEO, Mr. Kalyan Kumar, Executive Director, Mr. M. Paramasivan, Executive Director, Mr. Bibhu Prasad Mahapatra, Executive Director, and Mr. D. Surendran, Executive Director. With this brief introduction, I would like to hand over the call to Mr. Ajay Singh, General Manager, to read out the disclaimer statement, post which MD sir will address the conference call. Thank you, and over to you, sir.
Good afternoon, everybody. The disclaimer of this representation contains certain forward-looking statements apart from historical information. These forward-looking statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Punjab National Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the present date. Thank you.
Good afternoon. I am Ashok Chandra, MD and CEO of Punjab National Bank. I will just give the snapshot of our performance for financial year 2024-25. First, I will touch the business performance. Global gross business of the bank stood at INR 26.83 trillion as of March 2025, with a yearly growth rate of 14%. The global gross deposit stood at INR 15.66 trillion, with a YOY growth rate of 14.4%, and global advances stood at INR 11.17 trillion, with a YOY growth rate of 13.6%. We are well above our guidance for deposit as well as the credit growth rate, which was 9%-10% for deposit and 11%-12% for credit. CD ratio of the bank is comparable level at 71.28% as of March 2025. Profitability performance, coming to the profitability numbers, the net interest income stood at INR 42,782 crores, with a YOY growth of 6.7% for financial year 2024-25.
NII has reflected a marginal dip in Q4 on account of immediate impact of policy rate cuts on the asset side. Our domestic NIM is at 3.08% for financial year 25, whereas the global NIM stood at 2.93%. We are in line with our guidance for NIM at 2.9-3% for financial year 24-25. The operating profit for the financial year 24-25 is INR 26,831 crores, which has improved from INR 24,931 crores in financial year 23-24, with a growth rate of 7.6%. Our quarterly operating profit is INR 6,776 crores, which has improved from INR 6,416 crores in the same period last year, with a growth rate of 5.6%. The net profit for the financial year 24-25 is INR 16,630 crores, recording a YOY growth of 101.7% compared to FY23-24 at INR 8,245 crores.
For the March quarter, net profit stood at 4,567 crores against 3,010 crores in Q4 FY24, with a YOY growth rate of 51.7%. Key ratios: return on asset stood at 1.02% for Q4 financial year 2025 and 0.97% for financial year 2025, achieving the guidance for financial year 2025. Return on equity is 19.23% for Q4 financial year 2025 and 19.33% for FY 2025. Highlights of our asset quality: the bank has done very well under the entire NPA management and the preventing of fresh slippages. As far as asset quality is concerned, our gross NPA has reduced from 5.73% in March 2024 to 3.95% in March 2025. Similarly, the net NPA percentage, which was 0.73% in March 2024, has improved to 0.40% in March 2025. Guidance for net NPA was 0.05% for 2024-2025, and we have crossed that guidance.
The PCR of 95.39% in March 2024 was improved to 96.82% in March 2025, which is well above our guidance of more than 95% for FY25. Total gross slippages during FY25 were 6,761 crores and 3,001 crores in Q4. Our guidance for slippages ratio was to remain below 1% in FY2025. We are within the guidance, and it is at 0.73%. The total recovery stood at 4,733 crores for Q4 FY2025 and 14,336 crores for FY2025. The credit cost stood at 0.21% for FY2025 and 0.19% for FY25, achieving our guidance of credit cost, which is below 0.25%-0.3% for current financial year. Capital performance highlights of about our capital. As far as the capital is concerned, the capital adequacy is 17.01% as of 31-03-2025, compared to 15.97% as of 31-03-2024.
During Q2, FY25, the bank raised equity capital of 5,000 crores through QIP, which increased the CET1 and CRAR by 65 basis points, which are subscribed by 8.3 times. During Q3, FY25, the bank raised T2 bonds of 3,000 crores, and the Government of India's shareholding remains above 70%. Our CET1, as of today, is 12.33%, AT1 is 1.72%, and T2 is 2.96%. We have also taken the board approval for raising Basel III-compliant AT1 bonds and T2 bonds for 4,000 crores each. Highlights of our digital performance: the bank is doing extremely well in all the areas of banking, and we have improved a lot of digital penetration in all the critical areas. The bank is focusing on building digital capabilities under the domain of AI/ML and analytics-based business generation, the same has yielded tremendous results for the bank.
94% of the transactions are getting conducted in the digital mode in our bank. The number of activated PNB One mobile app users stood at 2.14 crores as of March 2025, as against 1.74 crores as of March 2024. The number of WhatsApp banking users has grown by 115% from 31 March 2024 to 61.6 lakh as of 31 March 2025. Sanctions under the digital lending journeys were more than INR 23,169 crore, and every fifth loan is getting sanctioned through the digital mode in our bank. We have onboarded 4.29 lakh CBDC customers and 62.93 lakh transactions done through the CBDC app till date. Further mobile launched through corporate mobile banking app for the business people, we have added more than 99,000 customers on the app now.
Almost all the digital lending platforms, digital credit lending platforms, we have brought the AI/ML piece, like PM Vishwakarma, PM SVANidhi, PM Surya Ghar , and we are getting the good traction in almost all the critical areas of the lending. If I touch the HR front, the bank has adopted the new HR ecosystem driven by Project Udaan, and in our bank, a lot of steps have been taken to bring the transparency in the transfer, in the performance of results, and overall in the ecosystem of the HR management. Last point which I would like to touch is that the officer or the employee who joins in our bank, their entire life cycle, we are mapping up, and good leadership development programs are in place. International coaching federations, 35 coaches are there. They are also giving coaching to our senior executives of the bank.
So, a lot of improvements and things in the transparency which we have brought in the HRMS side now. Finally, if I can conclude, the focus area of the bank this year will be on the customer centricity and enhancing the ease of banking for customers, focus on the ambience of branches and the ATMs, strengthening our presence in the top 100 districts, having 66% of the CASA of the country, focus on product and process improvements across the sector, strengthening market share in the RAM, boosting non-interest income, optimizing costs, strengthening technology and setting up efficient data analytics centers, robust cybersecurity framework, and making organizations ready for ESG and climate risk. Compliance and good conduct will be the core for the growth, transparency in human resources, which I have already touched, and maximization of recovery and preventing the fresh slippages.
These are the core areas on which the bank is going to work in the financial year 2024-2025-2026. Thank you very much, and I'm ready for any discussion or any question, any clarity. If any of the parameters, if it is required, I am there, and my entire top management team is with me now. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mahrukh Adajania from Nuvama. Please proceed.
Yeah, hello, good evening, sir. Sir, I had a couple of questions. Firstly, if you see your slippage, then it's higher than what we've seen since Q1 FY24. So now, will this be the normalized rate of slippage, or were there any run-offs? That was my first question, and I have a few others.
Yeah, good evening, madam. The overall slippages, if I can talk about, it is 0.73%, and the guidance which we had given for 24-25 was below 1%. So we are well within the guidelines. Of course, we have seen some slippages happening in the Q4, which is above normal, and mostly we have analyzed those slippages, and that has happened in the agri and the MSME segment. And in the agri and MSME segment also, the slippages which have happened, it is below 10 lakh segment. So we have strengthened our system now, and already in this particular month, April itself, we have made a recovery of around 288 crores out of those fresh slippages which have happened in the Q4. So I think definitely we will be maintaining the slippages ratio which we have given the guidance this year that below 1% will be the slippages ratio.
The INR 3,000 crores slippages which have happened in the Q4, definitely that was an outlier, and going forward, we are expecting that quarterly our slippages will be in the range of around INR 1,500 to INR 1,700 crores.
Okay, sir. Sir, and my other question is that a lot of banks have given many details about one big loan transfer to NARCL. So how did that get affected in our book? What were the entries, like ICICI has? All of them have given details on how much has been reversed through provisions, if there was anything in interest income that has been taken, the amount, etc. So if you could just explain, because that's a lumpy account, right? And it's public. Everyone knows which account has been transferred to NARCL that way.
Correct, madam. See, what happened in the financial year 2024-25, through NARCL, we have made a recovery of 458 crores in the last quarter and in the Q4, which is the account which you are talking about, and 863 crores total recovery which we have made through the NARCL.
Okay, but so that has been shown as a reversal of provision?
Yes, yes, yes, madam.
Has anything gone via the?
That is the reason, madam. If you see, our recovery in the technical write-off is in this quarter. Q4 is INR 1,800 crores. And if you see our recovery in the Q3, it was INR 763 crores. So there has been significant improvement in the TW recovery in the last quarter, and it is because of that one big account recovery.
Okay, but that was, you said it's only INR 458 crores that way, right?
Yes, yes, yes.
Okay.
Correct.
Okay. And that has what has gone through the other income line?
Yes, madam, yes, madam.
Nothing has gone through the interest income line, right? NII line, right?
NII, the total, the NPA recovery through that NII route is around INR 700 crores.
Okay. And last quarter, it was how much, sir?
Last quarter, also, see, every quarter, around INR 600-700 crores, it goes in the interest income through that recovery channel.
Okay, sir. Sir, and I have just one last question on margins. So our margins did decline a lot in this quarter for reasons explained, right? But there was a repo rate cut. But also, sir, the deposit cost has gone up a lot. Would that be because of your special deposit schemes? What explains the rise in deposit cost, like the deposit cost that you show in the preso?
Yes, yes. I think that was one of the reasons. We had one special deposit scheme. But what I feel now, with the declining scenario of the deposits and the credit, I think definitely the cost of deposit, which has already it is reached at the peak level. I think we are going to bring it down now because already we have withdrawn that special deposit scheme which was there, and the different segment also, we are going to revisit our deposit rate, and maybe some corrections we will be making in the deposit front. So I am expecting that from the Q3 onwards, definitely that impact will be visible on the NII and the NIM front.
Got it. But in Q1, it's likely that NII, NIM can fall. That way?
We will not fall. We will remain in the same level because the deposit cost is almost bottomed out now, and going forward, I don't see any rise in the cost of deposit. Rather, the deposit cost will come down, so Q1, mostly, we will be at the same level, but definitely, going forward, Q2, Q3 onwards, we see improvement in our NII as well as the NIM.
Okay, sir. Thank you. Thanks a lot.
Thank you, madam.
Thank you. The next question is from the line of Ashok Ajmera from Ajcon. Please proceed.
Good afternoon, sir, and congrats to you, Ashok and the entire team of PNB. You are firing on all the cylinders because the business growth is phenomenal. 14% looking at if you compare with the other banks, and especially the credit and deposit growth, of course, which has led to the higher business growth. Your deposits are 4.47, which is, I think, growth is one of the highest, and even the credit growth is also 14.6%. So in this quarter, it is only 0.6%. On the whole, fantastic on all these things. Now, having said most of the public sector banks, also including even State Bank, have also declared the results, and everywhere we have seen that there may be, first of all, they have moderated their targets for the credit.
Like the largest bank has also reduced the credit target from 14%-16% to 12% now in FY26.
Yeah.
You are going very strong. So going forward, sir, for FY26, and especially in this quarter, which is going to be, I mean, a lean quarter, even just now we finished Bank of Baroda analyst call also in the morning. So there seems to be some pressure, especially in this quarter also, the current quarter. So sir, going forward, where do we stand, sir, in PNB? Because excellent performance and I think all past legacy, all negative things have gone, and the banks have started performing very well on all fronts. So this is the first question, sir, that how do you see going forward the business growth, deposit credit growth, and from where it is going to come?
Thank you, thank you, Ajmera sir, and if you can talk about the growth, see, credit growth. Already we have given the direction that 25-26, also we are going to grow at a rate of around 11%-12% in the credit, and deposit also around 10% growth, which we are envisaging, and definitely we are going to achieve that. Rather, we will cross the projection which we are giving now, and why I am talking about the growth, the reason is that INR 115,000 crore sanctions are already there with us. There are disbursements which are going to happen for the loan sanctioned in 24-25 is around INR 85,000 crore. And in this financial year, like from 1st April till today, we have given a sanction of 28,000 in the corporate book. And this I am talking about the corporate book only, where we have given the sanction.
And the 28,000 crore which we have given the sanction, that disbursements are also pending now. So I am expecting that 115,000 crore of sanction which is already there, definitely that disbursements are going to happen in the Q1, Q2, and Q3 onwards. Then there are another 21,000 crore of the new business group proposal, NBG we call it. Already we have given the approval, and for that, we are waiting for the proposals to come, and then we will give the sanction. So we have 135,000 crore of corporate book in place, and I am expecting with this, at least 50% disbursements are going to happen. With that itself, we will be able to grow at a speed of more than 10%.
Now, second initiative which a bank has taken about the retail agri and MSME segment, and if you can recall that a lot of initiative banks had taken in the month of February. We had 6th and 7th of February, we had launched an outreach campaign for the housing loan and the retail activity. 13th of February for the MSME and 1st of March, which we had done for the SHG and the agri. And all those things have done very well, and because of that, if you see our RAM sector has also grown at a speed of 16%-17% in different segments. We are going to push this RAM segment very high now, and I think there also the growth in all the retail agri and MSME. I'm expecting that there will be a growth of more than 15%-16%.
So all things put together, I am expecting that the entire credit growth in the bank will be in the range of more than 12%.
Point well taken, sir. Sir, you are the master of recovery, especially in one of the, I mean, your parent bank. You did excellently, I mean, performed. So on the recovery front, sir, normal recovery and recovery from return of accounts. Would you like to see some color on that for FIs, synthetics, and especially in this coming one or two quarters? And coupled with the decision of the Supreme Court on the Bhushan Power and Steel, how do you see it affecting those recoveries which have already taken place? And where do you stand on that, sir?
See, overall recovery in the Q4, if you see, we have more than 4,700 crore of recovery, and in that, 1,800 crore has come from the technical write-off. If you can recall during the analyst meet in the month of last quarter, I had already indicated that there will be around 15 to 16 hundred crore of technical write-off recovery will happen. Our overall recovery in the Q4 also, we had projected that 4,000 to 5,000 crore of recovery will happen, and that we have done it now. Team has made it possible. Going forward also, I can give you the color for that, around 16,000 crore of recovery I am expecting in the financial year 25-26. In that, the technical write-off recovery, every quarter, I am expecting that minimum 1,500 crore will happen.
So these are the projections which I am giving, and that is in line with the guidance which we have given to the analyst.
What is the total write-off book, sir?
Total write-off book, it is around INR 92,000 crore.
92,000 crore. So we expect about INR 6,000 crore. So about 6%-7% of the total book, maybe 5.5%-6.5%. That's very good, sir.
This is a minimum which I am talking about as the minimum recovery that is going to happen. See, this INR 91,000-92,000, the book which we are holding it, in that, there are very, very crude effects also there where we are not going to expect much recovery in that. Yeah. There are things where which has gone in the liquidation also. So all put together, it is INR 91,000 crore. But actual recovery which is going to happen is almost out of 50% of that only the recovery is going to happen. And there we are going to recover around INR 6,000 crore.
Yeah, but 10%. Yeah. So sir, next is on the NARCL, like SR issued by NARCL, which is government guaranteed. Now, the RBI directive, you can value it at the fair value. So how much profit have we taken on that, on SR issued by NARCL till date for the last quarter?
Yeah, it is around INR 1,200 crore.
Which has gone straight to the bottom line, sir?
Yeah, yeah. And that has been neutralized with the MTM which we have done in the treasury.
Okay, okay. So earlier, whatever MTM was done.
Yeah.
And last question, sir, on the treasury front, now since the treasury is giving phenomenal income and now also at least two rate cuts, everybody is agreeing up to 50 basis points coming from RBI. So going forward, we will have a phenomenal, I mean, tremendous income from treasury book. So any color on the treasury operations for FY 26 and with this kind of windfall which will come in, how do you look at it and how good it will affect the profitability?
I think, see, understanding the rate transition which was going to happen in the month of March and in June, we have built up a good treasury book now, both SLR and non-SLR book also. And we are going to get good dividends out of this investment which we have made in the treasury now.
Sir, how much end-to-end profit has gone from the FS book, which has gone directly to the reserve?
Just one minute. CEO is here.
No, he's talking about the original valuation given.
AFS market profit from AFS book, which now as per RBI valuation norms, revised valuation norm goes to reserve, AFS reserve. What is that figure, sir?
Just one minute. We'll give you. So we have created two things. One is about the general reserve, which is INR 2,098 crore, and AFS reserve, we have done INR 379 crore.
379 crore.
Will you repeat that second number, sir? 300?
First number is INR 2,098 crore in the beginning and started from transition, and for during the entire year, we have done in AFS reserve, INR 379 crore.
379 crore.
For the entire year.
Okay. Okay, sir. Thanks a lot. Any time permit, I will come back again, sir.
Thank you, sir. Thank you and all the best, sir.
Thank you. Thank you, Andrew.
Thank you. The next question is from the line of Jai Mundhra from ICICI Securities. Please proceed. Hello, sir.
Hello. Yeah, hi. Am I audible now?
Yes, yes, Mr. Jai.
Yes, hi. Good evening, sir. I wanted to check what is the amount of wholesale deposits that we have?
Whole full.
Wholesale deposit.
Wholesale deposit, sir.
Wholesale deposit.
Yeah.
Aha. Okay.
Total amount is.
More than three crore.
More than 3 crore.
219 crore.
Huh?
219 crore.
2 lakh.
280,000 crore.
Yeah. Including CD, it is INR 280,000 crore.
Right. So sir, in your entire deposits of 15 lakh crore, right, roughly it will take, let's say, 3 lakh crore is such which will reprice on a faster basis, right, which is only 20% of the overall deposits. Whereas on your loan book, you have very high proportion which at least, let's say, the loans which have been to EBLR and T-Bill, which is roughly 50% or over 50% book which will reprice or which have already started repricing. Right? So in that context, you could have significant margin pressure, right? I mean, this quarter margin, I mean, the margin for this quarter ending is 2.81 global margins. And we are saying that full year, we should be around 2.8, 2.9. So it looks like that may be very optimistic aspirations.
See, the total term deposit also which we are holding, there is a percentage of the deposit for more than one year is also not very high. So we are expecting that the deposit which is there for three months' time, most of our deposits are in the range of six months to nine months. And that is the reason I am, in fact, I am telling also that our pressure on the cost of deposit will bottom out or it will come down from Q3, Q4 onwards. So till Q2, definitely there is going to be some pressure. But at the same time, the cost of deposit which is there as of now, that is not going to be up now because that is the highest level we have reached now.
Now, under no circumstances is this level going to go up because the deposit rate scenario is already down now, and we are expecting that whatever the new acquisition that is happening in the system is far below the rate which was prevailing earlier. So keeping that in mind and the long-term impact of the deposit which is there in our system, I don't see that in the long run we will have any pressure on our NII and the NIM.
Okay. So sir, actually, let me ask you, we have already passed on the repo rate cuts, right? I mean, so this quarter till March end, you would have passed on some impact of the February 4 repo rate cut on the loan side, right? So now, sir, let us say if in cumulative there are 100 basis points of rate cut, what is your sense that your yield, your blended yield on advances, how much should it decline? Should it decline by, let's say, 60 basis points from, let's say, fourth quarter to maybe fourth quarter, by that time 100 basis points? I mean, so 100 basis points of repo rate cut, what should be the blended decline in your loan yields, assuming everything is more or less static?
I think we need to go deep into that, and we need to do some calculation for that, and generally, I can throw the figure to you because we will have to factor those things, and generally, we can calculate, so I think we can discuss with you separately, and we can give you the entire calculation. What are the RLLRs there, MCLRs there, and how it is going to be if the further 50 basis point rate cut happens, how it happens now? I think we can have a one-to-one discussion, and I can share all those details to you.
Sure, sure, sir. And sir, is there any strategic discount that you offer to your customer which contractually you can reduce that? Is there such mechanism, or you think more or less the EBLR linked loans will have a complete pass-through?
No, I didn't get that question.
Let's say I'm saying, sir, on your loans which are linked to EBLR. So far RBI has cut by 50 basis points. Let us say RBI also cuts by another 50 basis points, so there is a 100 basis point cumulative cut. Do you have any contractual mechanism wherein you may choose to pass on only 75 basis points, saying that you are increasing the spread or you are reducing the strategic discount that you would have offered to those customers? Or it will be simply more or less 100 basis points pass-through to at least the EBLR customer? MCLR and all those things may change.
See, more or less, where it is straightaway, the rates are fixed with the EBLR. Definitely, we need to pass on when we are passing on that benefit. But there are certain schemes in the retail segment like housing loan is there and vehicle loan is there, where we have given some strategic discount. There we can revisit if the further rate cut happens. Then the strategic discount which we have given because of some campaigns we are launching it. So we are giving further discount in our RLLR. There we will revisit and we will find out what best improvement can be done now. But wherever the straightaway methods are there, where RLLR-based lendings are there, definitely when we are reducing the RLLR because of the repo rate, we have to pass on this benefit to all these people.
Right. Understood. And lastly, sir, I could not understand the security receipts treatment. So we had INR 1,200-1,300 crores of security receipts which were above the book value of INR 1,200-1,300 crores. So that should have been in P&L, right? You said that you have utilized that gain by MTM. So if you can just explain.
Ask my CFO to explain it to you.
I think you are correctly observed, but we have taken the entire benefit of this in the revaluation of this entire SRS. We have either released the provision or we have revalued the NAV value. So this amount is 1,326. But what impact we have given, we have another securities where we have some MTM losses as well. So those we have provided, especially one of the big investments we have. So the net result is reflected in 182 crore positive in the P&L, sir
Okay. Understood. Thank you and all the very best, sir. And I'll engage you, sir, separately for this yield sensitive.
Definitely. We will come out. Yeah, yes.
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please proceed.
Yeah. Hi. Sorry. So again, to clarify on this SRS, this 182, which is the profit on revaluation of investments, that is the net amount which is getting reflected after 1,030 crores of credit coming from the government-guaranteed SRS. So there would have been some knock-off 1,100 odd crores which would have been taken, 1,150 odd crores on M2M on other SRS. So that's right?
Yes. Yes, yes, yes. Absolutely.
Okay. Okay. Perfect. Got it. And secondly, coming on to this deposit question again, so you mentioned this were largely the special deposit schemes which have now been withdrawn. But what was the tenor of these deposits? And I think maybe just prior to the rate cut, we have contracted them at a very high rate. So what is the average tenor of particularly the special deposit schemes, special deposit rates which were afforded?
It was 400 days deposit at.
So that will at least take like one year to reflect.
Yeah. That's the reason I'm telling that in fact of this rate cut in the deposit, we'll take at least Q3 onwards, Q4 onwards, only we will see the impact.
Yeah, yeah. Got it. But still, maybe for 400 days, so it will be almost like more than a year. And given that this was on for almost like last four months, it will take a slightly longer period as well. Yeah.
Yes.
Yeah. And getting on to the SME slippages as well as Agri, so no doubt you indicated, but there is a sharp increase which is there in both of that when we look at it on a nine months and the full year number, particularly Agri also sharp as an SME. These are like less than 10 lakh rupee loans as you indicated. But any color in terms of where this is flowing from, is it like the area of stress and the initiatives which we are taking to manage this going forward? And this will not repeat or this will be contained at the current level?
No, I'm very confident that the level which you have seen, I think that is the maximum level it has touched. It won't cross the limit which has happened in the Q4 because in agriculture, if you see the March quarter itself, it was 1,400 crore. And that is the highest it has happened in the last one and a half years. And there is a maximum it has happened because.
Which product segments, particularly this INR 1,400 crores which will be within Agri, which is this product segment which is contributing to the maximum pain?
These are all the KCC loans, and in that, there were some repeated restructured loans were also there. So we also didn't allow to do anything in that. So we allowed to flip it, and then we can do the recovery measures also. And in the first month of the 25, 26 itself, we have made a recovery of around 288 crore. And that is the highest level it has happened. It is not going to happen in the Q1 or Q2 onwards now. And this quarter, I have already given the direction that it will be around 1,500-1,600 crore with the total slippages going to happen now.
Okay. Okay. Got it. Perfect. Yeah. Okay. Thanks and all the best. Yeah.
Thank you.
Thank you. The next question is from the line of Vineet Jain, an individual investor. Please proceed.
Hello.
Yes, Vineet.
Good evening, sir. So how are you?
Good evening.
[Foreign language] Yes, yes. Question. So tell me, sir, Bhushan Steel ka jo Supreme Court ne denial kiya hua hai JSW Steel ne jo uska acquisition kiya tha. Sir, isi ke bare mein mujhe janna hai, sir. Iska sir kya impact hua hai PNB ke upar? Will in Quarter 2 or Quarter 3 mein usko sir discount karna padega jo bhi humne NIM mein cover kiya hua ho, sir. Uske bare mein janna hai, sir.
[Foreign language] Nahi, abhi so, iske upar do-teen din ke bheetar jitne bhi lender aaye around 32 lenders iske bheetar hai. So wo saare lenders COC ke ek meeting hone wali hai do-teen din ke bheetar. Then future course of action jo bhi the law of the land hai uske bheetar jo bhi solution hai, ham iske upar vichar karenge. Jo bhi best solution hoga uske upar ham kaam karenge. The asset is in the working condition. I don't see any challenge in the future also any recovery mechanism.
Thank you, sir. Thank you.
Thank you. The next question is from the line of Ashlesh Sonje from Kotak Securities. Please proceed.
Hi sir. Good evening. The first question is on asset quality, especially on the recovery part. You indicated your guidance for a recovery amount of about 16,000 crores for next year against a recovery of about 14,300 crore which you have done in this year. So what changes next year, sir, that you are confident about a higher recovery?
See, one thing which is if you can see in the recovery in the Q4, where we put a lot of focus and the drive happened across the bank, and we have seen the recovery of INR 4,700 crore, which is highest in all the four quarters. In the recovery under the technical write-off itself is around INR 1,800 crore. So that gives a lot of strength to us that if we can put focus and the head office and the circle office and our regional office, if they start monitoring the account on a regular basis, connecting with the NPA borrowers, I think definitely this number is achievable and we are going to achieve that.
Okay. Just a follow-up. You are not assuming any big chunky recoveries from yet, right?
Chunky assets are not there now. I think all the recovery will be in the range of around smaller accounts, definitely. There are a lot of accounts there. Around in the range of 25-50 crore, plenty of recoveries are going to happen.
Okay, so secondly, on the margin front, on the housing loan front, you seem to be growing that book quite well, and it seems like PNB is offering a rate of interest of about 8%. Given the expected pressure on yields due to the repo rate cut, is it possible that you might consider a hike in the interest rate on the housing loans?
This rate, as of now, what we are giving, we will continue for that, and then we will see what further repo rate cut happens, and then the discount which we have given over the RLLR, I think we'll revisit that. We'll see that. As of now, we don't have any plan to do that. See, housing loan, generally, we give this rate with a provision that the team of our bank will connect with the people, and along with the housing loan, a lot of other things also come into kitty. Their personal account also come, and once that personal account comes, then a lot of other lending activity also happens, so this is not the standalone we should see the interest rate in the housing loan.
Just one clarification. When do you expect the MCLRs to decline for the bank?
MCLR one cut we have already given, and 10 basis points cut has already happened.
Okay, sir.
That is from 1st of May. 1st of May.
Sorry. One more question. On the tax rate change, when do you anticipate that? Anything in the pipeline?
Which one?
On the tax rate.
Tax rate.
Shift to the new tax regime. Yeah.
This financial year, definitely, we are going to adopt the new tax rule now.
Okay, sir. Perfect. Thank you.
Mostly by Q1 or Q2. By Q2, definitely, the new tax regime will be in place.
Thank you, sir.
Thank you.
Thank you. The next question is from the line of Rakesh Kumar from Valentis Advisors. Please proceed.
Yeah. Hi. Thanks, sir. So a couple of questions, sir. Firstly, you were discussing on the deposit cost number that there is an acceleration because of a special deposit scheme. But if I look at your reported deposit cost number, it was close to 5.1% in first quarter. Increase was 8 basis points in the second quarter and then 6 basis points. And then all of a sudden in this quarter, 12 basis points. So it doesn't seem that it is just because of a special deposit scheme what we had and what stands withdrawn right now. But still, we have seen 12 basis points increase in the deposit cost. So is that there is a large mobilization that we did in third quarter? Is that the reason? Or there is some other reason why the deposit cost has increased by around 12 basis points this quarter?
Yeah, yeah. That is also one of the reasons. So there was some bulk deposit and the CD was mobilized in the third quarter. And that impact also we have seen. But we have reduced the CD in this particular quarter. Almost around 10-12 thousand crore of CD we have reduced in this particular quarter itself. And that is one of the reasons if you see the quarter-to-quarter deposit growth is slightly lower than the earlier quarter now. So we are mindful of taking the deposit at a reasonable cost. And I don't see going forward any further improvement increase will be there in the deposit cost of deposit.
It looks very contrary, sir, that we have a credit growth of 0.6%. There is no credit growth actually in the domestic credit growth on a sequential basis. And as you said that we have kind of shed some high-cost, maybe the bulk deposits. If we are shedding the high-cost bulk deposits, actually the reverse would have happened on the deposit cost number. But still, with this kind of balance sheet it goes, we are reporting with a 13 basis points increase in the deposit cost, margin decline of around 12 basis points. Numbers are not fitting in completely, so I don't know what is missing here.
No, no. No, no. In the deposit, see, any impact. Suppose we have mobilized some low-cost deposit in the month of February and March. The impact of that deposit cost of deposit will be visible only after Q2 and Q3 onwards. Because there are deposits which we are fixed for one-year period, nine-month period. So actual impact will be in the Q2 and Q3 itself. Because all the low-cost deposit which we have mobilized in the March and the now also, that actual impact will be happening only after the Q3.
Okay. And sir, if you look at total accumulated provision number, we had around 66,000 crore in the March 2021. Now we have accumulated provision of around 40,000 crore. Return of loan outstanding remains the same. So obviously, the propensity or the resources what we have to do the recovery from here on, that has come down drastically. So one thing is that what is the interest income accrual that we have done from NPA recovery and TWO recovery in this quarter and this year, and how that number will pan out in 2026? Because the recoverable pool has come down quite sizably. So if you can show some like.
The technical write-off recovery in Q4, it was INR 1,800 crore. And overall total recovery in the Q4 was INR 4,700 crore. That is the total recovery we have done.
I was asking, sir, of the total recovery, NPA recovery or TWO recovery, what is the interest accrual that we have done?
I'm telling you.
Because.
Hi, I'm telling you. So INR 1,800 crore is a technical write-off. Other than that, INR 700 crore every quarter. INR 600-700 crore recovery goes in the interest. So any recovery which we are doing it in every quarter in the NPA account, around 600-700 goes to the NII.
Okay.
We are also projecting that going forward also, minimum INR 1,500 crore of technical recovery will happen in every quarter. We are projecting that total recovery will be around INR 16,000 crore in the entire year in 2025-2026.
Got it. And the interest income accrual ratio will be the same kind of?
That is the same. That is the trend which we are seeing it for the almost last six, seven quarters. 600-700 crore it goes in the interest income.
Considering that the provision that we have taken for employee expenses this quarter and for this year, what is the discount rate assumption that we are working with now?
Let me talk about this. As a government bond rate, mainly what is available to the public is 6.57%. But it is closed on 31st March 2025. That was the base to detail all this. 6.57.
6.57.
This is by our CFO, Mr. Jain .
Okay. Got it. Got it. For gratuity pension both?
Yeah. Yeah. It is a base rate that is actually based on the rate decided on the FIMMDA and everything. We will let we.
Okay. And the PBO and the plan asset numbers are broadly same for pension?
We get the PBO number and then any difference we provide for the current quarter.
Got it. Thank you, sir.
Sufficient provision has been made in all the pension and gratuity. It will leave a profitable.
No, that is good. I am also quite delighted that what you said or the previous MD said, that kind of provisioning they were doing for AS-15. We did not see any jump in that number in Q4. So that is quite commendable.
Yeah. We planned for the entire year and then you could have seen that we are doing it very proportionately in that. We foreseen all these changes and then we have provided. It doesn't make any big hit in any particular quarter.
Got it. Thank you. Thank you, sir. All the best, sir.
Okay.
Thank you. The next question is from the line of Gaurav Kochar from Mirae Asset. Please proceed.
Yeah. Hi, sir. Good evening. Am I audible?
Yeah. Good evening.
Yeah. Sir, I have two questions. First is, again, sorry, you're harping on margins. Sir, you mentioned that in the first half, at least, there would be some pressure on margins. You exited the year at 2.81 in the fourth quarter. So is it fair to assume that in H1, your margins will be lower than this? And in the second half, you may recoup back to this 2.81 number that you reported in the fourth quarter.
First half, we will be in the range of 2.8%-2.9%. And going forward, definitely, we will be trying to reach between 2.9%-3%.
Okay. So, sir, assuming that we have only passed 25 basis points in this quarter and that too from February when the rate cut happened, there would be further pricing of that, plus the additional April month 25 basis points repo rate cut that we will be seeing. These are the two right now which we have already seen. But if there are further rate cuts, that will also have impact on the NIM sort of. And as you mentioned, sir, your deposit repricing will happen with a lag. So what will result in NIM expansion from here? So 2.81, if you're saying we'll maintain this, what will offset the pressure on the yield?
Slightly, definitely, yield will further it will come down because with the downward interest rate scenario, definitely, yield will come down. But at the same time, I am expecting that my deposit rate and the cost of deposit will also come down. We have already revisited our deposit rate. And going forward also, we will study the market because liquidity is enough in the system now. And if any further rate cut happens, I think we will review our deposit rates once again. And we will make some corrections in our deposit rate. And all these things, the impact we will be able to see from the Q3 quarter onwards.
Okay. Okay. Got it. And just my second question was with respect to the overall ROA guidance. You mentioned that 26, you want to make ROA of more than 1%. Just trying to understand, based on your guidance, the margins will fall by around 10 basis point. And this year, we had revaluation of investment, SR recovery, etc., which may not recur in the next financial year. Also, the credit cost this year was 19 basis point. And you mentioned for next year, you are seeing less than 50 basis point. So therefore, there could be some increase in credit cost. And this year, we made ROA of 0.97. So assuming your sort of numbers, that also keeps the ROA lower, less than 0.9. So what will drive the ROA expansion from here? Is there anything else that you believe could drive ROA from here?
Always, always, there will be something in the PD which we are going to help now. One is recovery from the technical write-off, which we are going to drive it in a very, very big way. Last year, the technical write-off recovery which we have made. This year already we are projecting that every quarter we are going to make a recovery through the technical write-off. It is quarterly. It will be 1,500 crore. So with this itself, we are going to raise around 6,000 crore, which is going to directly to my operating profit. Second, our investment book and treasury has become very, very strong. We were understanding that the rates are going to come down. So we have built a good volume and good book of the SLR and non-SLR, and the recent OMO operation, which is happening, in every OMO operation, we are making good profit now.
So the treasury income and the recovery through the technical write-off, I think that is going to play an important role. Overall recovery also, since our total, the provision coverage ratio is more than 97%, and the tangible PCR is also more than 90%. So today, other than TWO also, whatever recovery we do, it is going to help us in the right backup provision. So these are the things which are going to help us in this financial year in improving my ROA.
Understood. Understood. Thank you, sir. That's all from my side. All the best.
Thank you. The next question is from the line of Bhavik Shah from InCred Capital. Please proceed.
Yes, it is okay, ma'am.
May I take the next question?
Yes, ma'am, please.
Okay. The next question is from the line of Apurva from MS. Please proceed.
Hi. Thanks for taking my question. So just a data-keeping question on if you could help me with the SMA 1+2 loans below 5 crore?
SMA book?
Yes.
You want the 5 crore and above?
Less than 5 crore. If you could help me with the SMA 1+2 loan?
Less than five crore in percentage terms.
6.79 total.
Total it is there. What is the percentage? 6%?
6.79 total.
6.79%.
Total SMA by total gross credit is 6.79%.
6.7% is our total percentage for all the loans put together.
Okay. And what will be the SMA 1+2 number?
SMA 1. 22,828.
One and two, Figure, Madam ? SMA 1 is 22,828.
Percentage?
Percentage, I have to calculate.
No problem. The number was. So, SMA 1 is 22,828.
SMA 1 is 22,828 crore. SMA 0 is 49,889, and SMA 2 is 3,279.
Okay. Thank you so much, sir.
Thank you. The next question is from the line of Piran Engineer from CLSA. Please proceed.
Yeah. Hi, sir. I'm right on the quarter. Just a couple of questions. You mentioned that 1,300 crore SR, you mentioned some breakup, 458 crores and 863. Can you just once again repeat what is 458 and what is 863?
See, INR 1,325 crore, the SR we got it to our book now. And there was one account where we need to make the MPM provision. So that amount was around INR 1,100 crore. So we have netted from INR 1,300 crore to INR 1,100 crore, and that is the net impact we have given in our income.
That I got, which is INR 182 crores. But Apne 458 crore ka number diya, right? 863 crore ka number bhi diya. I think one went into other income and one went into. I think 863 went into.
That is the recovery through the NARCL. NARCL. Recovery through NARCL on the Q4 was INR 458 crore. And overall, in the entire financial year, recovery was INR 863 crore. That I was talking about.
Okay. Okay, but this is not to do with that one large account that we are all referring to.
Yes. Yes. Yes.
Okay. Okay. Understood, sir. And also, what sort of OpEx growth are we expecting for FY26 versus FY25?
Guidance is that.
Yeah. Guidance. Like OpEx growth for FY26.
See, I can tell you we have given that a guidance for our 14 parameters. Okay. So credit growth, we are expecting around 11%-12%. Deposit growth, we are expecting 9%-10%. And if I come to the operating profit, that is 8%-9% we are expecting. Net interest income 7%. NIM 2.8%-2.9%. NPA percentage-wise, if I can tell you, gross NPA we are projecting below 3%. And net NPA 0.3%. PCR, already we are at around 96%, so we will be maintaining this level. Credit cost below 0.5%. And ROA above 1%. Slippages ratio below 1%.
Okay, so this was very useful. Thank you so much, and wish you all the best.
Thank you. Thank you.
Thank you. The next question is from the line of Nalin Shah from NVS Brokerage. Please proceed.
Hello. Actually, it's Kriti Tripathi from NVS Brokerage.
Yes, ma'am.
Yes. First of all, congratulations on the supplementary FY25 performance. Just wanted to ask two questions. First is that given such strong performance in FY25, and although you have been given conservative guidance, but the performance has been exceptional throughout the year. So can we expect an ambitious target for FY26 as well in the similar lines or so? And the second question is on the dividend front. So while the payout is appreciated, can we expect a more liberal dividend policy going forward given the strong years like FY25? So just two. Thank you.
Yeah. One is that guidance which we are given. We always feel that whatever guidance we give to the analyst and to the outside stakeholders, I think definitely we should be able to cross that guidelines. So that is one of the reasons we are giving the conservative guidelines. And we are very mindful of these guidelines, and we are going to cross this guidance this year also. Last year also, we were given 11%-12% guidance in the credit, and we have crossed almost around 14% growth. Deposit also, we had given 9%-10%, and we have crossed 15%. This year also, we are giving the same guidance, but I am 100% sure that we are going to cross this guidance. Now, to your question of the dividend, this year also, if you see, with the share of INR 2, we have given INR 2.90.
Last year, it was 1.5. So almost this year, we have doubled. So we are expecting that next year again, we will be showing a good performance. And definitely, all the stakeholders will be rewarded.
Okay, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Ankit from Antique Stock Broking. Please proceed.
Hello?
Yeah. Hello.
Yeah. Yeah. Hello, sir.
Good evening, sir.
Sir, my question is, sir, provisions are on very high side, and also the fresh slippages. Sir, can you explain what will be the reason?
Provisions are not on the very high side. I mean, the slippages also, it is overall slippages is only 0.73% the entire financial year. And provision also, you see, we are already at 97% under the PCR. So the credit cost, if you see, it is already very, very minimal.
Sir, it has risen from 3.9 to 5.9 according to the results, no? I think it's quarter and quarter or YOY? Quarter and quarter. And slippage is also from 1,700 crores to 3,000 crores.
That is correct. See, one particular quarter, this is Q4, there has been some slippages have happened in the agriculture, particularly agriculture segment, and some MSME segment, some slippages have happened. And that is almost outlier. It will not happen in every quarter now. Because last two years, if you see, quarter to quarter, we have maintained the slippages in the range of 1,700 to 1,800 crore. And that is the thing which we are expecting in the Q1 onwards also. So that is one quarter where it has happened because of some legacy, some accounts where there are some four, five years back, some, I think, agriculture structured, repeated restructured accounts where they are. So those accounts have slipped in this particular quarter. And in this slippage, it's already around 288 crore of recovery has already happened out of these slippages.
Okay. Sir, okay, sir, are you seeing any stress in the economy? Likewise, according to these four, five-year slippages, or any new loans, are you seeing any stress environment? How is the environment in the business community?
No, no, no. I am not seeing any further stress in the system. And today, if you see my SMA book, none of the corporate accounts are appearing even in the SMA 0 also, especially for the INR 50 crore and above accounts. We don't have any such account in that particular bracket. There is another one study which we have done from accounts which was sanctioned from 1st July 2020 till today. And what is the NPA that has happened? Almost around 9 lakh crore sanction has happened from 1st July 2020 to 31st March 2025. Total disbursement is INR 99 crore.
Hello?
Yeah. I can give you. Are you connected now?
Sir, actually, the participant line has been disconnected.
You can connect him? He wanted some clarification.
Yeah. Give me a moment.
Sir, actually, that participant is no longer in the queue.
Okay.
So shall I proceed or take that as the line?
Yes. Yes, sir. Yeah.
Okay. The next question is from the line of Aditi Naval from RSPN Ventures. Please proceed.
Yeah. Hi, sir. Thanks for taking my question. I just have one data-keeping question. So if I look at the OpEx number for this quarter, especially the other expenses, so that is slightly on the higher side sequentially. So is there any one-off or is there any expense that you want to specifically call out?
No, no. Which part you are talking about? Which area?
Operating expenses.
Operating expenses. Okay. So you are talking about other operating expenses?
Yes.
No.
So you are seeing from QOQ or?
Both, actually, sequentially as well as year on year. So 2,500 odd crores going to around 2,900 odd crores.
Sequentially. 25.
Some business initiative. It is not any normal things which are happening. It is the usual expenses that is there in the system. That is the thing which has happened. Not any unusual or any other thing which is there in the system.
So it's a normal BAU expense?
Yeah. Yeah.
So this can be like the 400 going forward?
No, it will remain like this only. There will not be any much fluctuation, and this is only a normal course of things. See, INR 400 crore in a year increase is not a very, very big thing for an organization like ours.
But even sequentially, there's a 400-odd crore jumper.
No, no. See, the Q4 of FY24, it was 2,565 crores, right? And Q4 of 25, it is 2,900 crores. So YOY variation is 339 crores.
Right.
Yeah. It is YOY variation.
And my point was that even in Q3 , the other operating expenses were around 2,560 odd crores. So sequentially, there's around 350.
See, also, you are telling that INR 2,560 crore-INR 2,900 crore.
100.
But overall, things also, it is almost in the same range. And it is not of any unusual injury. It is the business cost and business running things which is there.
Got it. Thank you so much.
Thank you. Ladies and gentlemen, I take that as the last question. And I would now like to hand the conference over to management for closing comments. Over to you, sir.
So thank you very much to all the well-wishers of our bank and all the stakeholders of our bank. Please repose the faith in our bank. And on behalf of the entire PNB team, I can assure you that going forward also, we will see the same momentum in all the business areas of the bank. And there will be qualitative improvement in all the ratios. So thank you very much once again.
On behalf of Elara Securities India Private Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.