Punjab National Bank’s quarter profit continued to soar and the lender is looking to recover bad loans worth Rs 17,000 crore this fiscal, with about one-third expected to flow in from the exit quarter after a slowdown in the three months ended December 2024.

The country’s second-largest state-run bank by assets more than doubled its net profit to Rs 4,508 crore for the quarter ended December compared to Rs 2,223 crore a year ago, while bad loans declined and core income increased.

The lender expects to recover Rs 5,000 crore to Rs 6,000 crore in the fourth quarter of FY25, mainly  from certain large corporate loan accounts that were written off. The recovery process would be largely through insolvency proceedings and one-time settlements.

In the third quarter ended December, bad loan recoveries were slower at Rs 3,400 crore. For the first nine months of the current financial year, this figure stood at Rs 11,552 crore as delays in the resolution of stressed assets through the National Company Law Tribunal (NCLT) and the National Asset Reconstruction Company Ltd. (NARCL) impacted the target. 

The New Dehi-based bank had set the recovery of bad loans target for FY25 at Rs 18,000 crore. In 2023-24, recovery was higher at Rs 20,100.64 crore.

Punjab National Bank was hit by a corporate bad loan cycle between 2011 and 2019 and then came the Covid-19 pandemic. During the last two years, the lender has improved its asset quality. 

The bank’s gross non-performing asset ratio improved to 4.09% at December-end, from 4.48% three months earlier and 6.24% a year ago.

Net NPA ratio declined to 0.41% from 0.46% a quarter ago and 0.96% at the end of the third quarter last fiscal.

Provisions for bad loans fell to Rs 318 crore during the December quarter from Rs 2,994 crore a year ago.

Net interest income (NII) grew 7.2% to Rs 11,032 crore in the December quarter, from Rs 10,293 crore a year ago.

Net interest margin (NIM) is expected to be in the range of 2.9-3% in this fiscal, compared with 3.09% in the December quarter.

Provision coverage ratio improved to 96.77% as on 31 December 2024 from 94.28% a year ago and 96.7% a quarter ago. 

Total business grew 15.25% to Rs 26,39,991 crore from Rs 22,90,742 crore a year ago.

The bank’s deposits grew 15.6% year-on-year to Rs 15.30 lakh crore  as of 31 December 2024.

CASA (current account savings account) deposits grew 2.7% year-on-year to Rs 5. 62 lakh crore.

Savings deposits grew 2.8% to Rs 4.92 lakh crore while current deposits increased to Rs 70,018 crore, a rise of 2%.

 The CASA share in total deposits stood at 38.12% as on 31 December 2024.

Term deposits grew 24.7% to Rs 9.68 lakh crore.

Global advances rose 14.79% to Rs 11.10 lakh crore from Rs 9.67 lakh crore a year ago.

The RAM (retail, agriculture and MSME) loan segment grew 16.43% year-on-year to to Rs 5.96 crore as on 31 December 2024.

Total retail credit increased by 22.6% year-on-year to Rs 2.63 lakh crore. 

The bank’s core retail advances recorded 17.3% year-on-year growth. Within this, housing loans grew 17.3% to Rs 1.11 lakh crore and vehicle credit posted a growth of 26.8% to Rs 24,663 crore.

Agriculture advances grew by 13.2% year-on-year to Rs 1.74 lakh crore and MSME loans by 10.7% to Rs 1.59 lakh crore.

Credit-deposit ratio stood at 69.95% from 69.24% last year and 69.91% in September.

PNB raised its loan growth target for FY25 to 13%-14%, from 11%-12% earlier, and that for deposit growth to 12%-13% from 9%-10%.

The state-run bank has an outstanding corporate loan book pipeline of Rs 1.15 lakh crore but continues to see challenges on loan pricing.

Meanwhile, PNB has raised its marginal cost of funds-based lending rate (MCLR) by 5 basis points across all tenors.

The new rates would be effective from 1 February, PNB said in a regulatory filing.