Punjab National Bank Q2 Results: Profit Surges Fourfold On Lower Provisions

Its operating expenses declined 21% year-on-year to Rs 6,734 crore during the period, primarily due to a drawdown in employee costs to the tune of Rs 100 crore.

PNB's domestic deposits grew 9.4% year-on-year to Rs 11.6 lakh crore during the quarter. Its domestic advances rose 13.6% year-on-year to Rs 7.9 lakh crore in July-September. The CASA ratio stood at 42.15% as of Sept. 30.

Cumulative rate hikes by the Reserve Bank of India of 250 basis points led to an increase in cost of deposits to 4.78%, Atul Kumar Goel, managing director and chief executive officer of the bank, told reporters in a post-earnings call.

"Around 85% of deposits have been repriced, but 15% or Rs 1 lakh crore of deposits are still to be repriced. This will increase cost of deposits going forward by 10-15 bps," Goel said.

Despite this, the bank is confident of maintaining its net interest income around 2.9-3% in the coming quarters, Goel said. The management sees a credit growth of 12-13%, particularly from retail, agriculture, and micro, small and medium enterprises.

The asset quality improved, with the gross non-performing assets ratio at 6.96% as of Sept. 30 from 7.73% in the previous quarter. Net NPA ratio fell by 51 basis points, to 1.47% on a sequential basis.

In terms of unsecured lending portfolio, Goel said the bank is not worried of any stress in the segment as it has little exposure to personal loans.

"We are monitoring our portfolio fortnightly," he added. "If we are seeing any signs of stress, we are making root cause analysis on personal loans. We are very cautious about it."

Provisions for the quarter fell to Rs 3,444 crore from Rs 4,906 crore in the previous year. The provision coverage ratio of the bank was at 91.91% as of Sept. 30

PNB reported its capital adequacy ratio at 15.09%, up 35 basis points from the previous year. Its CET-1 ratio came in at 10.23% as of Sept. 30. Going forward, the bank has "no immediate requirement of capital", Goel said, beyond the board approval to raise Rs 12,000 crore through a combination of AT-1 bonds and Tier- II bonds.

Out of the total amount, the bank has already raised Rs 6,900 crore this year so far, he said.