Punjab National Bank (PNB) posted a net profit of Rs 1,158.61 crore in the fiscal fourth quarter ended March 2023, up 474.7% from Rs 201.6 crore a year ago, on the back of improved underwriting standards, better asset quality and growth in advances.

The state-owned bank’s net interest income (NII) surged 30% to Rs 9,498.7 crore, from Rs 7,304.1 crore a year ago. 

“This is one of the best quarters for the bank in the last 12 quarters. The strong bottom-line performance is due to better recoveries from non-performing loans. We could report higher recoveries in every quarter of FY23 while slippages fell. We are looking at a full-year profit of Rs 4,000 crore for the fiscal 2023-24,” said PNB managing director and CEO.

Speaking to reporters, Goel said PNB has set a recovery target of Rs 22,000 crore in FY24. In the previous fiscal, the bank recovered Rs 29,000 crore while setting a target of Rs 32,000 crore.

Gross non-performing assets (NPAs) ratio improved to 8.74% in the March 2023 quarter, from 11.78% a year ago and 9.76% a quarter ago. Net NPAs declined to 2.72% from 3.30% in the preceding quarter and 4.80% in the year-ago quarter.

Goel said gross NPAs should moderate to below 7% and the aim is to bring net NPAs down to below 2% by the end of March 2024.

The lender’s net interest margin (NIM) improved by 48 basis points to 3.24% in Q4 FY23 from 2.76% in the same quarter a year ago.

For the current fiscal, the bank anticipates the NIM to be in the range of 2.9-3% as there is pressure on deposit rates to grow the liability franchise.

Provisions for loan losses fell 20% to Rs 3,624.7 crore for the quarter under review, compared to Rs 4,563.6 crore a year ago. 

The bank's board has recommended a dividend of Rs 0.65 per share or 32.5% of face value of Rs 2 each for FY23.

The lender's loan book rose 14% to Rs 8.30 lakh crore at the end of March quarter, from Rs 7.28 lakh crore a year ago. 

PNB expects its credit growth during the current fiscal year to be in the region of 12–13%. Goal said the bank will focus this financial year in growing its gold loan portfolio. Agri-gold loans will be a thrust area for the bank this year, he added.

Deposits grew 12% to Rs 12.8 lakh crore as of March 2023, compared with Rs 11.46 lakh crore in the March 2022 quarter.

The bank expects deposits to grow at 10-11% in FY24. “Interest rates have peaked and could come down after a while. I don’t see deposit rates going up,” Goel said.

The capital adequacy ratio increased from 14.50% to 15.50%, including CET-1 ratio of 11.22 for the quarter under review. 

The bank has got board approval to raise Rs 12,000 crore. This will consist of Rs 7,000 crore of Tier 1 capital and Rs 5,000 crore of Tier II capital.

For the full-fiscal, PNB's net profit fell 27% to Rs 2,507 crore versus Rs 3,457 crore in fiscal 2022. NII for FY23 stood at Rs 34,492 crore.

On the expected credit loss (ECL) provisioning, Goel said that this was only at the draft stage and one would have to wait for such a framework to be implemented by the regulator. “But since we have incorporated strong underwriting standards, we do not foresee much losses,” Goel added.