Encouraged by strong Q3 performance, Punjab National Bank (PNB) has revised upwards its profit guidance for current fiscal to ₹7,000-7,500 crore. 

This will be higher than the ₹6,000 crore net profit guided earlier by the bank at the time of its September 2023 quarter results, Atul Kumar Goel, Managing Director and CEO, PNB said here on Thursday. 

Aided by lower provisioning for bad loans and better operating performance, PNB on Thursday reported a 253 per cent increase in standalone net profit for the third quarter ended December 31, 2023 at ₹2,223 crore (₹629 crore).

The latest bottomline of country’s second largest public sector bank was 26.6 per cent higher than the net profit of ₹ 1,756 crore recorded in September 2023 quarter.

For the nine months period ended December 31, 2023, PNB has recorded a net profit of ₹5,234 crore, up 288 per cent over net profit of ₹1,349 crore in the same period in previous year. In entire 2022-23, PNB had reported a net profit of ₹3,348. 45 crore.

“We had earlier guided profits of ₹6,000 crore for 2023-24. Now in nine months itself, we have achieved net profit of ₹5,234 crore. So you can easily take that we will close this fiscal with a net profit of ₹7,000-7,500 crore this fiscal,” Goel told businessline, when asked if he was revising the profit guidance of the bank in the wake of robust Q3 performance.

Meanwhile, PNB’s operating profit for the third quarter ended December 31, 2023 stood at ₹6330.71 crore (₹5715.90 crore). 

Total income for the third quarter ended December 31, 2023 was at ₹ 29961.65 crore (₹ 25,722.40 crore).

Goel attributed multiple factors for the strong Q3 financial performance. These include higher operating profits, lower provisioning for bad loans and better recoveries.

For the first time, net NPA of the bank has come below 1 per cent in the December 2023 quarter itself, much ahead of earlier set target of achieving 1 per cent net NPA by end March 2024, Goel said. He also expressed confidence in achieving the target of bringing down gross NPA (as percentage of advances) to 6 per cent by end March 2024.

Capital Raising

Goel said that the bank was well capitalised, but may go in for further tier-1 capital raising during the current quarter.

Of the ₹12,000 crore capital raising approved by the PNB Board for current fiscal, as much as ₹ 7,000 crore was for Tier-I capital and ₹ 5,000 crore was for Tier-II capital. 

As against the level of ₹7,000 crore, PNB has already raised ₹4,153 crore as tier-I capital. “We will see in the current quarter if the rates are good. Then we will not mind raising further Tier-I capital in current quarter itself. There is no further need for raising Tier-II capital,” he added.

PNB has already received board approval for capital raising of ₹ 7,500 crore for 2024-25.

Asked for guidance on credit growth for next fiscal, Goel said this guidance would be given in next quarter. As for the current fiscal, advances are growing at 12.9 per cent, he said.

For the current fiscal, PNB has given a net interest margin (NIM) guidance of 3 per cent given the increase in deposit rates in the market.

Asked if PNB is facing any challenges in raising deposits, Goel replied in the negative. “We have network of 10,000 branches. There is no issue at all for us in raising deposits although it is a challenge in the industry. For us, 95 per cent of deposits has already been repriced,” he said.

Goel also said that bank had made recovery of ₹1,831 crore through NCLT in the December 2023 quarter. For the current March 2024 quarter, the aim is to effect a recovery of ₹1,200 crore through NCLT, he added.