Punjab National Bank

NSE:PNB

Earnings Call Transcript 2024-Q1

[Anand Dama, analyst]

Welcome, everyone, to Punjab National Bank's First Quarter FY '24 Results Call. We have with us the entire Punjab National Bank top management; Sri Atul Kumar Goel, Managing Director and CEO; and we have the Executive Directors, Mr. Vijay Dube, Mr. Kalyan Kumar, Mr. Binod Kumar and Mr. Parmasivam.

First, I would request Mr. Deepak to read out the disclaimer statement and, thereafter, would request Atul sir to give our opening remarks and talk about the growth margins, asset quality, particularly during the current quarter, and also provide a brief out, which will actually set the context of the call.

Over to you, Deepak sir.

[Deepak Singh, executive]

Yes. Thank you, Anand. Just a disclaimer statement I am reading out. I would like to submit that the statements given herein are not guarantees of future performance, and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Investors are, therefore, requested to check the information independently before making any investments or other decisions. Thank you.

Over to MD sir.

[Atul Goel, executive]

Thank you very much, Deepak, and thank you, Anand, also, and good afternoon to everybody. I welcome all the analysts and the financial analysts in this con call for the Punjab National Bank for the first quarter, June 2023. I'm happy to present the results for the first quarter. The results for the first quarter, whatever the guidance we have given in the last, March '23 quarterly and as well as the yearly results for the current financial year, I think we are achieving all the guidance which we have given. So I will give the brief about the financials, then profitability, then asset quality. And then I will take your questions also.

So this is a good quarter. First, I would like to tell you this is a very good quarter for the Punjab National Bank. The gross business grew by 14.34% at INR 22.14 lakh crores Y-o-Y. Similarly, the gross deposit of the bank grew by 14.18% to INR 12.97 lakh crores Y-o-Y. Similarly, the gross advance grew by 14.58% at INR 9.16 lakh crores. As far as savings is concerned, in saving there is also a growth of the YoY 3.74%, and the saving has increased to INR 4.64 lakh crores.

As far as CASA is concerned, CASA was at 42.98% in March 2023, which has marginally declined to 41.90%. The reason for the decline in the CASA is because there is a wide gap between the saving bank interest as well as the term deposit interest, so some of the customers who are having their liquid fund, they have shifted from the saving bank to term deposits. Another thing is also because to finance the growth also, because the increase in the growth is the 14.18% as against our guidance for the 12% to 13%. So we have taken some bank deposit also. This is the reason of the decline in the CASA.

And as far as profitability of the bank is concerned, this net interest income increased by 26% Y-o-Y from this INR 7,543 crores to INR 9,504 crores. And I'm happy to see this NII growth and the NII number, which we have achieved INR 9,504 crores, it is the highest in the history of the Punjab National Bank in last 12 quarterly results. Similarly, the operating profit also increased by 10.95% from the INR 5,379 crores to INR 5,968 crores.

Net profit. Net profit, there is an increase of 307%. The net profit for the June '22 quarter was INR 308 crores. And now we have closed our net profit at INR 1,255 crores, with a growth of 307%. I'm happy to share this net profit, INR 1,255 crores, is the highest quarterly net profit in the last 12 quarters of the bank.

Now coming to the assets quality. GNPA, if you see, there is a -- in terms of the amount, the gross NPA of the bank was INR 90,167 crores in June 2022, which reduced to INR 77,328 crores in March '23, and there is a further decline of INR 70,889 crores in June '23. As far as percentage of the GNPA is concerned, the GNPA of the bank was 11.27% in June 2022, which has reduced to 8.74% in March '23, and there is a reduction of more than 100 basis points. 7.73% was the number of the gross NPA.

And last time, you may be remembering, I have given the guidance, by March '24, we will be in a position to reduce the gross NPA number to 7%. Since we have already achieved 7.73%, I'm revising my guidance. So now instead of this 7%, we are targeting the gross NPA number will be around 6.5% by March '24. Similarly, if you see the net NPA also, there is very much reduction in the net NPA. Net NPA was INR 31,744 crores in June '22, which reduced to INR 22,585 crores by the end of March '23. And there is a further decline to INR 17,129 crores. And now net NPA, which was 4.28% in the June '22 quarter, then 2.72% in March '23 quarter, has reduced to 1.98%. So there is around more than 75 basis point reduction in the net NPA. And the net NPA guidance we have given that by the end of the March '24, our net NPA numbers would be in the range of 2%. Since we have already achieved in the first quarter itself 1.98%, so we are further revising our guidance for the net NPA number also. Now we are targeting that our net NPA number should be around 1% or below 1% by the end of March '24.

As far as PCR is concerned, there is a substantial increase in the PCR also. It was 83.04% in June '22, which improved to 86.90%. And I have given the target that we will improve to PCR around 90%. And so June '23, it is around 89.83%, so we have already achieved 90%.

As far as credit cost is concerned, if you see the provision, provision for the NPA was INR 4,374 crores for this quarter as against the figure of INR 4,814 crores in June '22 quarter. Although there is a reduction in the provision of the NPA, if you compare from the June '22 to June '23 quarter. In June '22, the credit cost was 2.46%, and this quarter credit cost is 1.99%. But if we compare from March '23, then little bit provision has increased. In March it was around INR 3,624 crores, and credit cost was 1.72%.

Last time, I have given the guidance that our credit cost will be around 1.5% to 1.75%. Although this quarter, it is a little bit on the higher side, 1.98%, but still I am maintaining my guidance for whole of the year. For whole of the year, '22, '23, '24, our credit cost definitely will be in the range of 1.5% to 1.75%. Why I'm giving this statement? Because on account of increase my PCR, which is around 90%, my aging provision for the NPA has reduced drastically. So I am maintaining my earlier guidance also for the credit cost.

As far as capital adequacy is concerned, the Tier 1 capital is 12.29% as against the requirement of the 9.5%, and total CRAR is 15.54% and against the 11.5%. And if you compare this from the June '22 quarter, it was 14.82%, and in March '23, it was 15.5%. So we are adequately capitalized. So as on date, there is no immediate need for the capital, either for the growth or the other purpose also. And we are already having the approval of the Board for INR 12,000 crores to raise in this current financial year, INR 7,000 crores by way of AT1 and INR 5,000 crores by way of Tier 2.

So I'm happy to share in this current quarter itself as against the INR 5,000 crores Tier 2, we have already raised INR 3,094 crores at a very competitive rate in current quarter. As far as AT1 is concerned, as I told you, immediately, there is no immediate need of the capital. So we are just watching the market. At an appropriate time when we will be finding rate of interest in our favor, we will hit the market. So this is about the capital adequacy.

And when it comes to cost-to-income ratio, cost-to-income ratio, if you see, it is 53.87%, which is less than the 54.59% in the March '23 quarter. But if you compare with the June '22 quarter, it is on the higher side because in June '22, it was 46.63%. So what is the reason for this increase in the cost-to-income ratio? If you see, last time also I explained, November '22, there is a date where the wage revision is due of all the employees.

So in this current quarter, we have provided INR 283 crores for the wage revision. In the last quarter of March '23, also we have made the provision of the similar amount and some little amount has been provided for the 2 months in the December quarter. And on account of this wage revision and the impact of the wage revision on the PSN also.

So this is on account of that AS-15 provision, we have made INR 1,240 crores in this current quarter for the AS-15 provision on account of the pension, et cetera, because there is a little bit change in the yield also, because you are aware, AS-15 based on the movement of the yield. In March '23, the yield was 7.31% and June '23, it has declined to 7.11%. So there is a decline of 20 basis points. The moment interest rate will fall, AS-15 provision will be increased. So this is about the exposure of the cost-to-income ratio.

As far as cost of deposit is concerned, it was 4.54% in the March quarter, which has increased to 4.71% as against the 3.85% in the June '22 quarter. And I have given in my earlier last call also that on account of the repricing, repricing of some of the deposit, which has not happened, cost of deposit is bound to increase. This is the reason I have given the guidance for the NIM also between 2.9% and between 3%. And I'm still maintaining 2.9% to 3%. Although the current quarter, the global NIM is 3.08% as against the 3.24% in the March quarter. So we are maintaining 2.9% to 3% because still some of the deposit has to be repriced.

Yield of advance has also increased from the 8.05% to 8.13% from the March '23 quarter to June '23 quarter. But it is substantially increased from the June '22 quarter, which was 6.6%.

As far as recovery from the written off accounts is concerned, so first quarter we made a recovery of around INR 1,022 crores from the recovery in the written off account. One more thing I would like to tell you, last time also I have given that whole of the year, '22-'23, in every quarter, addition was much below than the recovery number. Again, at the cost of the repetition, if you see the June '22, my recovery was INR 7,057 crores, where the addition was only INR 6,468 crores. In September '22 quarter, recovery has further increased to INR 8,565 crores, and the addition was INR 5,979 crores. In the third quarter, recovery was INR 6,035 crores, and the addition was INR 4,072 crores. And the fourth quarter recovery was INR 7,439 crores, and the addition was INR 3,996 crores.

So recovery -- addition is declining quarter-by-quarter. So every quarter, recovery was much more than the addition. And we have set a target for the current financial year, INR 22,000 crores, which we have given the guidance in the last con call. INR 22,000 crores recovery for the whole of the year, if you divide by 4, so INR 5,500 crores per quarter. Again, the INR 5,500 crores, we have already achieved INR 5,417 crores recovery in the current quarter, where the addition is INR 2,394 crores. So this year, our target is our recovery should be double than the addition in the current financial year. So this is about the recovery as well as the addition in the last year as well as the current financial year.

Another thing is the slippage. Slippage, as just I told was INR 2,390 crores. The breakup of the slippage is segment-wise: Agri, it is INR 360 crores; MSME, it is INR 879 crores; Retail, it is INR 601 crores; and others is INR 418 crores. Others is corporate, et cetera, and existing accounts NPA is INR 132 crores, so it is INR 2,390 crores.

One more important thing I want to highlight to all of you, even last call I have also advised, we are working -- how -- what is the reason for the improvement in the recovery and what is the reason for decline in the addition also, because we have worked on both the sides. Plan is how to improve the underwriting standard. Another is how to improve the collection efficiency. So in underwriting standard, I would give you 1 data. Every month we are monitoring from the 1st of July '20 to 30th June 2023. It means it is a data of around 3 years how our new underwriting is behaving.

In last 3 years, we have sanctioned around INR 6.16 lakh crores. Out of this INR 6.16 lakh crores, disbursement was INR 5.63 lakh crores. And against which the outstanding as on date is INR 4.40 lakh crores. And NPA in this new underwriting is hardly INR 1,259 crores, which is coming 0.22% of the new underwriting. And I will further give you the segment-wise data. In Agri, it is 0.20%; the MSME, it is 1.56%; in Retail, it is 0.18%; and other, other means corporate, it is coming 0.01%. So this will give the comfort how the bank is doing. A lot of steps have been taken for the underwriting also, and a lot of steps have been taken to improve the collection efficiency.

As far as NCLT recovery is concerned, last year, we have made INR 6,093 crores in the first quarter, INR 778 crores in the second quarter, INR 730 crores in the third quarter, INR 1,003 crores in the fourth quarter. So in first quarter of the current financial year, the recovery from the NCLT account is INR 566 crores. And the second quarter, we are expecting INR 1,356 crores. Third quarter, we are expecting INR 438 crores. And fourth quarter, we are expecting INR 1,302 crores.

So as on date, as far as total number is concerned, 565 accounts of INR 64,839 crores is in the NCLT, of which 22 accounts of INR 2,902 crores have been approved by the NCLT, which is under the process of the implementation, and 252 accounts of amount of INR 26,730 crores is under liquidation and remaining 291 accounts of INR 31,220 crores are pending for the resolution. So this is about the NCLT.

As far as NARCL is concerned, the 35 accounts of NARCL under discussion of an amount of INR 12,546 crores, of which 1 account resolved of INR 447 crores, 2 accounts under final stage of the transfer of INR 307 crores, 9 accounts under various stages of INR 2,225 crores, and 23 accounts of INR 9,567 crores where bid has to be received. So this is about the NARCL.

And as far as RAM percentage is concerned, RAM percentage, it was 52.57% in June 2022, which has improved to 54.74% in June '23. Now this is our definitely focus area. And as far as investment is concerned, as on date, the SLR to NPL is 24.81% as against the required of the 18%. It means around 6% we are having the excess SLR, and modified duration of the AFS and HFT is 3.33% in June 2023. And another thing is this segment-wise NPA, in Retail it is 2.86%; in Housing, it is 3.72%; and car, it is 1.22%. So I think I have covered most of the part as far as guidance is concerned.

Credit growth, we have given the guidance of 12% to 13%. Although we have achieved 14.58%, but we are still holding our guidance for the 12% to 13%. Deposit, we have given guidance 10% to 11% for the current year, although 14.18% we have achieved in the first quarter, but still we will stick to our guidance for the 10% to 11%.

CASA, although there is a decline, but 43% to 44% we have given the guidance. So I think we may think around 43%. We will try to -- because why I'm giving this statement. Last year, around 84.74 lakh accounts, 84 lakh accounts we have opened, saving bank accounts. And in first quarter, we have opened 22 lakh accounts. And current accounts, last year we have opened 2.09 lakhs. In first quarter, we have opened 72,614. So I'm still hopeful there is a further change to increase the CASA also. So 43% we are maintaining. We will see how we'll behave, because on account of this difference in the interest, some of the money definitely is to be transferred from the savings bank to the term deposit.

Operating profit, we are maintaining the same, 10% to 12%. Net interest income, we have given the guidance for the 10% whole of the year. NIM, we will remain 2.9% to 3%, but gross NPA, as I told you, earlier guidance 7% to 6.5%, and net NPA from 2% to less than 1% we are giving the guidance. PCR, around 90% we have given the guidance, so around 90% we have achieved. And credit cost -- once again, at the cost of repetition, credit costs, although it was 1.99% in the current quarter, but still we are confident and hopeful that it will remain within the 1.5% to 1.75% whole of the year. Total recovery INR 22,000 crores, out of which INR 5,416 crores we already. So this is the guidance versus the actual, which we have given in the last con call.

Now I think I have covered most of the points. I will answer to any query from your side also. Thank you very much.

[Anand Dama, analyst]

Before we open up the queue for questions, sir, I had one question. I mean if you can just give guidance on your ROA as well for FY '24, number one.

And number two is that if you can just tell us what's the treatment on the ECLGS front that we have renewed, because if you -- I mean, there is Bandhan Bank, which said that post the RBI circular, they had to recognize NPAs from the ECLGS tool. So what is that we have done over there?

And third, when we look at the Canara Bank results, they tell us that they have had a very significant PSLC fees during the first quarter. I don't see that kind of fees at least for Punjab National Bank. So why is that we are not pursuing the PSLC route basically to generate fees. Yes. And then we can take up the questions from others.

[Atul Goel, executive]

Yes. Anand, your first question is about the return on assets. So whatever the profitability we have earned last year, although in the last call I told that we will be earning INR 4,000 crores. So I am telling whatever the profit we have, it will be double. It will be double what we earn. So this is my guidance for the return on assets.

As far as ECLGS is concerned, as on date, we have not made any provision for the ECL because it is in draft guidelines of the RBI. We are waiting the final guidance, but...

[Anand Dama, analyst]

Sir, sorry, but I'm talking about ECLGS. Basically, that is GECL that you would know.

[Atul Goel, executive]

Oh, okay, okay, GECL, I can give you the data. So in GECL, total amount we have sanctioned INR 21,935 crores, out of which INR 19,274 crores was disbursed and outstanding as on date is around INR 10,053 crores, against which INR 963 crores is the NPA, which is coming 4.39%. I'm telling you, already INR 963 crore is the NPA, which is 4.39% in the GECL. There is not much that you can see in this account. So this is about the ECGL.

Third is the PSLC. Definitely, we are talking to all of our branches also, so that whatever the Canara Bank is doing, because they are very strong as far as gold loan is concerned. Although we are in the initial stage, because even if you see, we have started from 0 to INR 2,500 crores we have already achieved. And we have set a target of around INR 10,000 crores for the current financial year. The moment we will be in a position to achieve this, so definitely our position will also be stronger. But definitely, I agree with you that Canara Bank, I am aware, INR 1,500 crore they have earned from this 1 segment only, because they have the portfolio of more than INR 1 lakh crore of the agri gold.

[Anand Dama, analyst]

So it's only about the agri gold that they tend to sell? Or like there are other crop loans and other also which basically you can sell?

[Atul Goel, executive]

I'm not fully aware, but mostly what I am aware is they are selling only the agri gold because there is a good margin also. Even if we are purchasing, we are also exercising some of the segment, so we are also selling that also.

[Anand Dama, analyst]

Sure, sir. Great. Sure. So now we will take the first question from Mahrukh.

[Mahrukh Adajania, analyst]

Sir, congratulations.

[Atul Goel, executive]

Thank you very much, Mahrukh. Thank you.

[Mahrukh Adajania, analyst]

Sir, sorry, first of all, I have questions, but I missed the ROA guidance. What would that be, sorry.

[Atul Goel, executive]

ROA, I told you whatever the profit we have earned last year, double of the profit will be earning this year. So you can -- what was the ROA last year, it will be double, yes.

[Mahrukh Adajania, analyst]

Okay. Got it, sir. Got it. And sir, just in terms of deposit growth, obviously, most PSU banks have excess liquidity because their LDRs are lower than private banks. But most of the excess LDR or excess liquidity would be used up by now. So how do you think about deposit mobilization from here on? And what will be the impact of that on margins, right? Means do you think that incremental deposit mobilization will put pressure on margins? And also of the rate hikes that have happened so far, now has the full deposit repricing happened or you will still see pending rise in deposit cost in the next few quarters?

[Atul Goel, executive]

Yes, okay, Mahrukh, I will give you the answer as far as deposit mobilization is concerned. First, I would like to tell all of you, we are having 16 crore customers in our fold. And last year also, as I have just given the data that more than 84 lakh accounts we have opened in the savings bank, 2 lakh accounts we have opened in the current account. So as far as mobilization of deposits is concerned, there is not a problem in the Punjab National Bank. Although we have given the guidance of the 10% to 11%, but if you see the actual guidance of the -- actual Y-o-Y growth was 14.18%. So still we are maintaining 10% to 11%.

Now your second question, deposit repricing. Last time also I had told, NIM will be impacted on account of the repricing of the deposit because entirely deposit has not been repriced. Because if you see last year, there was an increase of around 250 basis point in the deposit rate. So definitely, as on date also, the entire deposit has not been repriced. Some of the deposit has to be repriced at the time of their maturity.

[Mahrukh Adajania, analyst]

Got it, sir. But what will be the incremental impact on margins? Will margins fall from here as well? Or how do we view margins from here on, from first quarter...

[Atul Goel, executive]

A little bit may be impacted, madam. This is the result. Last time also I have given the guidance for the NIM for the 2.9% to 3%. If you see, as on date, domestic NIM is 3.21%, and global NIM is 3.08%. So I'm still maintaining 2.9% to 3%. Definitely, the deposit which has not been repriced, definitely, there will be a little bit impact in the NIM. But what we are trying, our NIM in the absolute number NII, net interest income, if you see the net interest income of our bank, whatever we have earned in the last quarter also, it is only projected side. So absolute number, we will try to maintain the net interest income. But sometimes this is misleading also. So we are not giving the guidance of more than 2.9% to 3%. But absolute number, we will try to maintain.

[Anand Dama, analyst]

The next question we have from Mr. Ashok Ajmera.

[Ashok Ajmera, analyst]

Congratulations to you, sir, all of you sitting there for yet another good quarter of good performance. And many of the questions have been answered by your initial remarks and some of the questions asked by my colleague. I have just -- might be some repetition. One is that when your advances in this quarter grew by 3.84% as compared to the last quarter, which in other banks it is not so. I mean, some of the banks we have seen the results, the growth -- in this quarter, credit growth was muted. So why still our overall credit growth target still you are maintaining so low only?

[Atul Goel, executive]

Ajmera ji, your voice is breaking, and now we are not in a position to hear you. Up to the gross...

[Ashok Ajmera, analyst]

What I'm asking is...

[Atul Goel, executive]

We are not able to hear you.

[Ashok Ajmera, analyst]

Okay. Am I clear now?

[Atul Goel, executive]

Yes, now it is okay.

[Ashok Ajmera, analyst]

My question is that we have given a good credit growth in this quarter of, I think, 3.84%, which in other banks [indiscernible] growth is almost [indiscernible]. good credit growth in first quarter itself, still we are keeping the target so low for the overall...

[Atul Goel, executive]

Ajmera ji, I will give answer to your question also, although your voice is breaking, but I have understood your question.

Your question is very clear that we have given the guidance for 10% to 11%. As against the 10% to 11%, we have already achieved 14.18%. Why we are maintaining -- as of date we are maintaining our earlier guidance also, 10% to 11%. If there is a need of the revision of the guidance, so I will not revise the guidance in this quarter. Let us wait for another more quarter. Then we will be in a position to see what is the real growth in the advances here.

[Ashok Ajmera, analyst]

Okay. Point well taken, sir. Now my second is on [indiscernible] for recovery in return of accounts also as well as overall in this quarter. So our recovery target...

[Atul Goel, executive]

Your voice is breaking, sir, again.

[Deepak Singh, executive]

Yes, Mr. Ajmera, please join the queue. Your voice is breaking.

[Ashok Ajmera, analyst]

We'll be in a position to [indiscernible] on the recovery front, sir.

[Atul Goel, executive]

Recovery I can give, although I have not heard your question also, I've understood you want to know about the recovery. In recovery, Ajmera ji, I've already given that last year the recovery was more than the slippage in each and every quarter. For this year, INR 22,000 crores is the target, against which we have already achieved INR 5,417 crores, which is as per the guidance, because quarter number is coming INR 5,500 crores. And this time, the addition is hardly INR 2,390 crores. So we are trying that this year recovery will be double of the addition.

[Anand Dama, analyst]

I think Mr. Ajmera has -- I think he is on mute. Yes, we can take next question from Saurabh.

Sir, we have not been able to hear Saurabh as well. Ashwin, can you ask the question?

[Unknown Analyst]

Yes. My question relates to your stake in PNB Housing Finance. So the recent rights issue, you had infused about INR 500 crores, and your stake had marginally come down. So just wanted to know, going forward, what is the thought process in terms of your stake in this entity? Are you, over the long run, looking to divest the stake in the entity or you'll continue to maintain it at these levels? Is there any sort of regulatory direction also in this direction, or you will continue to maintain it? And I mean related question, given that you also have like a brand sharing agreement with PNB Housing Finance, so how will that evolve considering that PNB Housing also raises deposits, which probably is helped by the PNB brand name?

[Atul Goel, executive]

You are very much right, Ashwin, as far as our stand is concerned. We will remain as a promoter in the PNB Housing Finance. There is no, as on date, a plan to disinvestment this stake which we are having in the PNB. Because there is regulatory guidelines. We were having more than 30% earlier. After rights issue, we have invested INR 500 crores in the rights issue, so that we have brought down our investment in the PNB housing less than 30%. As on date, it is 28.15%. So there is no plan as on date to go below that 26%, not even sale of any stake which we are having. So we will remain in the category of the promoter. Our regulatory guidelines, whatever it is, we have already reached the regulatory guidance of less than 30%. So we will remain as a promoter category.

[Anand Dama, analyst]

Yes, Saurabh, can you unmute yourself and ask the question? Saurabh, we're not able to hear you. We can take questions from Mr. Ashwin Kumar. Next question we can take from Mr. Sushil Choksey.

[Sushil Choksey, analyst]

Sir, congratulations on a very stable result on quarter on quarter and your guidance. My first question is what is your outlook on your all the subsidiaries and associated companies and your international business?

[Atul Goel, executive]

As far as our subsidiaries is concerned, we are having one subsidiary in the PNBIL in London also. That subsidiary is doing very good also. We are having another joint venture in Bhutan also. That is also doing very good. We are having another joint venture in Nepal also. So all the 3, 1 subsidiary, 2 joint ventures are working very well. As far as our overseas operation is concerned, we are having 2 branches. As on date, we are having 1 branch in Dubai. Another branch is having in the GIFT City. So they are also performing well, both the branches. So as on date, there is no plan for opening any new branches. Yes.

[Sushil Choksey, analyst]

And your outlook on treasury, sir?

[Atul Goel, executive]

Outlook on treasury, basically, it is a function of the rate of interest. If you see, as I just told you, March '23, it was 7.31%. Then as on June, it was 7.11%, so already 20 basis points down in the interest rate. And as on date also if you see, it is hovering around 7.7% to 7.8%. So as far as our modified duration is concerned, we are very comfortable, 3.33% in June 2023. And I think we have reached the peak also. As far as interest rate is concerned, we have reached the peak, so we are just waiting if there will be further decline in the interest rate, because whatever the amount we have shifted from the HFT to AFS, so we are just waiting at the appropriate time to book some profit also. So we are very optimistic in the treasury operation.

[Sushil Choksey, analyst]

So do you estimate the second half would support the bank's income in a larger way from treasury compared to the first half?

[Atul Goel, executive]

First half -- definitely, first half, there was no BM. As I told you, even after shifting of the amount, we have not moved much of the amount because INR 308 crores was the total profit from the treasury also. So definitely, although not immediately, but we will see how the movement of the interest rate -- we are just watching. We are talking to our dealer also what is their view on the interest rate. So they will say it is the right time to book the profit, then only we will tell them to book the profit. .

[Sushil Choksey, analyst]

Sir, the next question is on your asset monetization and human resource and digital capability, which PNB would aspire to do over the next 2, 3 years. So what is the CapEx plan? What is the human resource development plan? Because most of the banks have to become enabler in talent, and that is becoming a problem for most of the public sector or private sector, and the poaching is happening. So now to build your next level of banking, how are we spending money? And what kind of digitalization and human resource capability we're building?

[Atul Goel, executive]

Okay, as far as digital is concerned, in last 1 year, around more than 50 products of service we have launched. And if you talk about this, my PNB mobile app, PNB ONE, the rating of the PNB mobile app was 2.3, 1 year back. Today, it is 4.3, I think, which is the highest in the industry. Even I will tell you about when you're talking about the digital, as I told you 50, I will give example only of 1 product, PAPL, preapproved personal loan. We have revamped this product. In June 2022, the outstanding was mere INR 58 crores. But after revamping this product, we have disbursed more than INR 4,000 crores in the last 1 year, and outstanding is more than INR 3,700 crores and around 2 lakh customers have used this product, and delinquency is around only 200 to 200-odd account.

And as far as HR is concerned, we have onboarded the concerned head also. We have got the approval from the Board. The name Udaan. In this a lot of things we are doing. It is marketing target for each branches, clarity of the roles, expectations from each employee, clear tracking measurements and visibility of the performance metrics. By putting this, we will be in a position to make the difference between the performer and the nonperformer. By using this HR transformation system, I think we will be in a position to provide the incentive mechanism also, because as on date, as per the guidance of the government, 3% of the profit can be used for the distribution for this. So we are on the very advanced stage of the HR transformation and digital, both.

As far as CapEx plan is concerned, INR 2,800 crores is the IT investment for the current financial year.

You are raising hand. You can go ahead. You are raising hand, please.

[Sushil Choksey, analyst]

Sir, I was asking, human resource talent management training more -- so digital spending INR 2,800 crores, I noted, but thousands of PNB officials which need to be trained for next level and generation...

[Atul Goel, executive]

That is part of the HR transformation. Even we have already started giving the training for the soft skills for scale 5 and above each and every employee. And we are giving the coach also. We are giving the mentor also. The training has to be given each and every digital part of the HR transformation.

[Sushil Choksey, analyst]

Sir, secondly, how much of asset monetization are you expecting other than recovery?

[Atul Goel, executive]

Asset monetization is relating to the subsidiary, et cetera. As on date, we don't have any plan to monetize any assets. .

[Sushil Choksey, analyst]

No, but other than subsidiaries, any other asset monetization plan?

[Atul Goel, executive]

Some of the assets, some of the assets, on account of the merger, we are -- but that is not a very big amount. Last quarter also around INR 40 crores, INR 50 crores, some of the assets we have monetized, which were not in our use also. So sometimes a small amount here and there every quarter we are monetizing. But that is not a very big amount. .

[Sushil Choksey, analyst]

Sir, you have the largest number of customers -- among the largest customer base in your bank. How many products are we able to sell on a cross-selling basis?

[Atul Goel, executive]

As I told you, we are having 16 crores customers. The average of our target is, at least we should be in a position to sell 2 products to each customer also. So we are trying to get also -- on account of this, we have established one marketing department in the form of BARM, business acquisitions relations and management. So all it is being monitored by the CGM in the head office, and we have given all the -- presently this department in the circle offices and zonal offices. So this will definitely help to increase the cross-selling to the existing as well as onboarding new customers.

[Sushil Choksey, analyst]

Sir, if I take fee income number of the current quarter and then try to aspire with a 2-year vision or a 3-year vision somewhere in FY '25 or '26, how many fold do you expect that fee income will grow because of mutual fund, broking, insurance, or any other product which you are distributing from third party or -- any kind of a vision document or a thinking to...

[Atul Goel, executive]

Yes. That is very much there. As on date, we are having one partner, MetLife, where we are having 30% stake, so we are the bank insurance agent also. Even now each and every product, whether it is a mutual fund, whether it is a CL, whether it's other LIC policy, that is available on the digital mode. You can use my mobile app and you can purchase any type of the mutual fund and CS, et cetera, also where we are getting the commission from the partner which we have onboarded.

And we are trying to increase noninterest income by way of the BG commission, LC, and we are targeting to increase the income from the ForEx also, because that is one of the area where we can increase substantial increase even from the government business. So 4, 5 areas we are targeting. And definitely, it is our focus area how to improve the other income of the bank.

[Sushil Choksey, analyst]

Sir, my last question, you just mentioned ForEx. How much of NRI deposits are we able to [indiscernible]?

[Atul Goel, executive]

As I told you, this is the reason, because the marketing was the only [indiscernible].

[Sushil Choksey, analyst]

Sir, I was asking on NRI deposit.

[Atul Goel, executive]

That is our target, Sushil ji, because we want to target the NRI account. So we are having 10,000 branches also. Each and every branch is able to get the NRI accounts. And we are making some seminars, et cetera, also where the Pravasi Diwas is also there where we are going to make these seminars, et cetera, on the Pravasi Day also.

[Anand Dama, analyst]

Next question we have from Ashlesh. But reminder to everyone, if you have a question, please raise your hand, and then you can ask the question. .

[Ashlesh Sonje, analyst]

Team, congratulations. Sir, 3 questions from my side. Firstly, can you just repeat the NPA numbers on the retail segments, housing and car? I missed those numbers.

[Atul Goel, executive]

Ashlesh, can you repeat your question?

[Ashlesh Sonje, analyst]

Sir, can you repeat the retail segmental NPA numbers on housing and car loans?

[Atul Goel, executive]

Okay, definitely. Retail, it is 2.86% and housing 3.72%. Car, it is 1.20%, and personal 1.22%.

[Ashlesh Sonje, analyst]

Okay. Perfect, sir. And secondly, I see that our slippages have declined quite meaningfully quarter-on-quarter. Especially, this seems to be coming from the agri book. So can you explain -- can you give some detail whether this was something seasonal or something more structural that we have been able to achieve?

[Atul Goel, executive]

No, no, no. No structural reasoning. Everything has been recognized. Quarter-by-quarter, I think I'm hopeful, whatever the number we have, INR 2,390 crores, even in the next quarter also, we are hopeful it will further decline, because I have given you the data for the last 3 years. From 1st of July '20, how the new underwriting is behaving. And if you see the share of the agri, it is hardly INR 360 crore also, only INR 360 crore in the current quarter as against normally it used to be sometime INR 1,000 crore, INR 2,000 crore. As on date, there is no issue as on date in the retail book, either on the agriculture or the MSME. So this slippage is bound to reduce quarter-by-quarter. .

[Ashlesh Sonje, analyst]

Understood, sir. Sir, and lastly, on the OpEx front, a couple of questions there. This AS-15 provision for the last 3 quarters has come out to be in the range of INR 12 billion to INR 13 billion per quarter. What do you expect the run rate to be on this one? That is first question.

And secondly, if I look at our cost ratios and compare them with our peers, the cost ratios, whether it's the cost-income ratio or cost-to-assets ratio, that seems to be slightly higher. And mainly this seems to be coming from the staff cost side. So why do you think that is? And if that can probably decline in the future?

[Atul Goel, executive]

You are right, and we are aware of this also, because this AS-15 provision is built on the movement of the yield. And movement of yield, which I just told you, 7.31% to 7.11% as compared to March to June. So what was the requirement? We have provided as per the [indiscernible] we have provided. So I think if tomorrow -- you are asking what is my takeaway in the future also. If I am hopeful if rate of interest, whatever as on date, if they will remain same, my requirement will be very less in the -- I think it will be in the range of the INR 400 crore only in the subsequent quarter if rate of interest will remain same.

If there is a further decline in the rate of interest also, then I'm not saying -- otherwise, whatever INR 1,200 crore we have provided in the last 3 quarters. So in the subsequent quarter, definitely, if yield will remain same, so I think I will not be in the position to provide more than INR 400 crore to INR 500 crores.

[Ashlesh Sonje, analyst]

So INR 400 crore to INR 500 crore you are saying for the AS-15 provision?

[Atul Goel, executive]

Yes, yes. But INR 283 crores, which we are providing for the revision, that will remain constant. We are providing at 10%, then we have to see the actual after the wage revision has been settled.

[Anand Dama, analyst]

The next question we'll take from Jai. .

[Jai Prakash Mundhra, analyst]

Sir, I have a couple of questions. One is, you have a retail book which is INR 2 lakh crores, right? And you have a core retail which is INR 1.4 lakh crore, right? So essentially, there is a INR 60,000 crore noncore retail book. If you can share why do you call that noncore. And what goes into that INR 60,000 crore book?

[Atul Goel, executive]

Jai Mundhra, in this there is 2. The core means which business is being generated by the branches, which is we are taking in the core. What is difference, because sometimes we are purchasing the pool also. So pool, we are giving in the 1 or 2, 3, 4 branches, just like maybe Mumbai or Chennai, et cetera, so pool of IBPC, which we are purchasing that we are not taking in the core retail.

[Jai Prakash Mundhra, analyst]

Okay. So sir, the pool outstanding, the number is right, right? I mean the total retail is INR 205,000 crore, and core retail is INR 140 lakh crores. So around INR 60,000 crores is pool outstanding.

[Atul Goel, executive]

Pool as well as the IBPC also. Suppose we are taking the IBPC for the retail. So it is a combination of both.

[Jai Prakash Mundhra, analyst]

Right. And sir, so what would be this portfolio? Will this be housing loan or it could be a mix of everything?

[Atul Goel, executive]

It is a mix. Sometimes it is mostly of the housing and mostly of this sometimes in the personal loan also. Sometimes it is LAP also. It is a mix of each and everything. .

[Jai Prakash Mundhra, analyst]

Okay. Understood. And sir, secondly, on corporate, right? So Slide 8, that shows that our corporate and others have grown from INR 380,000 crores in round figure to 4 lakh crore, whereas the corporate infra, steel, even NBFC has not grown quarter-on-quarter. So where is the growth coming from quarter-on-quarter basis? I see infra has declined. Metals has declined. Other industries has actually gone up. But where is the growth coming from?

[Atul Goel, executive]

The growth is coming from the NBFC, although you are saying in March it is INR 135 crore to INR 129 crore also. So growth is coming, some of the steel industries, we are giving. So there is a lot of demand in the road also. Road also, there is a very good demand. And in some other industries also like textile and some of the gas pipeline companies, and some of the oil companies also, they are raising. So it is a mix of that. Basically, demand is coming from the road infra basically, and the demand is also coming from some of the cement industry, they are going for the expansion, even the steel and some petroleum company also, and gas pipeline also, gas pipeline, yes. .

[Jai Prakash Mundhra, analyst]

Okay. And sir, you said that the credit growth is 12%, 13%, and you are having excess liquidity of 600 basis points, and so I wanted to understand your thought that why do you need to grow deposits at 10%, 11%? Ideally, you should not be growing deposit only, at least in the near term?

[Atul Goel, executive]

Jai Mundhra, this is the reason I told you that our guidance for the growth of the deposit 10% to 11%, although the actual growth was 14.18%. You're very much right. There is no need for increase the unnecessary growth also. I have to see what rate I have to pay on the deposit and what I'm earning on the investment. If I'm giving lesser rate on the deposit, whatever I'm earning in the investment, then there is a sense keeping the amount in the investment. So this is the reason I'm giving 10% to 11%. So it is a combination of both, because saving bank as well as the current account, definitely we want to improve, because it is improvement for the NII results.

[Jai Prakash Mundhra, analyst]

Okay. And lastly, sir, if you can quantify, of your corporate loans or the loans which are on the MCLR, how much are going to get repriced in second quarter itself, right? So yes, that will help us understand the level of repricing which is pending in the book. So how much of the MCLR book are yet to reprice?

[Atul Goel, executive]

I will give the broad guidelines, Mundhra. The 37.12% in the MCLR, RLLR 27.20%, RLLR Elite 11%, TBLLR 10%. The loan book which is RLLR, RLLR Elite, TBLLR, that has been repriced very next day. To your specific question, the 37%, which we are having the MCLR, most of the part has already been repriced. But still some of the accounts where the term of the -- suppose we have given one year MCLR, so some of this definitely is to be repriced. .

[Jai Prakash Mundhra, analyst]

Great. Okay. Sure, sir. And anything on the term deposit side, you mentioned that some of the deposits are yet to be repriced. But if you can quantify, sir, I mean, 1 lakh crore, 2 lakh crore, 3 lakh crore, how much...

[Atul Goel, executive]

Whatever the deposit is, around 20% to 25% is still to be repriced. .

[Jai Prakash Mundhra, analyst]

Of the total deposits?

[Atul Goel, executive]

Of the total deposits, of the term deposits, because there is no repricing in -- I'm talking about 25%, not of the total deposit, only the 25%.

[Jai Prakash Mundhra, analyst]

Right. So 25% of the total term deposits are yet to reprice; 60%, 70% has already repriced.

[Atul Goel, executive]

Yes, yes.

[Anand Dama, analyst]

Our next question, we'll take from Yash.

[Unknown Analyst]

Sir, I just wanted to check one question on the restructured book value. Overall restructured book seems to have declined. The OTR 1 has seen slightly increase on a sequential basis. So I just wanted to check if I'm looking at it correctly.

And secondly, how is the restructured book behaving overall? And if there are any slippages in the current quarter?

[Atul Goel, executive]

I will give you the exact data as on date. OTR 1 is INR 5,247 crore is the outstanding. Out of this INR 3,231 crore is the standard, INR 2,016 crore is the NPA. If you see the OTR 2, the outstanding is INR 9,911 crore, out of which standard book is INR 7,323 crore, NPA is INR 2,588 crore. And we have already made the provision on this restructured book around 10% as per the regulatory guidelines. It is declining quarter-by-quarter, declining and 10% provision is already had on the entire book. .

[Unknown Analyst]

Okay. So the slight increase in OTR 1 is just a part of it, I mean.

[Atul Goel, executive]

The increase from part of it. If you compare from the March number, it is declining. It is total implemented was INR 7,328 crore. Outstanding is INR 5,247 crores.

[Anand Dama, analyst]

Our next question, we'll take from Mohit.

[Mohit Surana, analyst]

Sir, just one question. While our slippage numbers have gone down on a quarter-on-quarter basis, if I'm looking at the SMA-2 number, that has increased when comparing with March '23. Is it because of seasonal factors? Or if not, sir, what can be the possible reasons for that?

[Atul Goel, executive]

No, no, no. Mohit, there is a base calculation. Because on account of February, so in 90 days account is not coming 1st of the April. If you see the other quarter also, the number is declining, quarter-by-quarter it is declining, but if you're comparing from March, that is on account of the 90 days calculation, yes.

[Mohit Surana, analyst]

Understood, understood. So you're saying in March quarter, because of February month, it's not [indiscernible].

[Atul Goel, executive]

Yes, yes, yes. So this impact is coming on the 1st or the 2nd April, yes.

[Anand Dama, analyst]

The next question, we'll take from Rakesh. That will be our last question.

[Rakesh Kumar, analyst]

So first question was, sir, on the non-PSL agri, it's a pretty sizable number for us. So what is the status in terms of yield and asset quality, sir, non-PSL agri loan.

[Atul Goel, executive]

Non-PSL loan, there is no challenge. Non-PSL to the very good corporate.

[Rakesh Kumar, analyst]

No, no. So non-PSL agri is corporate, you are saying?

[Atul Goel, executive]

Yes. Corporate basically. I can give an area like agriculture sector also, yes.

[Rakesh Kumar, analyst]

Okay. So that is on, sir, like -- so what is the yield that we generate on that book, sir?

[Atul Goel, executive]

Yield, because both the things we cannot maintain. If we have to maintain the credit quality, we have to little bit compromise on the yield also.

[Anand Dama, analyst]

So we'll now wind up the call. If you have any closing remarks to make, over to you, sir.

[Atul Goel, executive]

Anand, if anybody has any query also, they can send to my Investor Relations department also. We will love to reply any query if they have not -- on account of any reason, they could not ask the question also.

[Anand Dama, analyst]

Sure, sir. Sure. That's great, sir. So you have any closing remarks?

[Atul Goel, executive]

Thank you. Thank you, Anand. I want to assure to all my analysts and the investors also, this last quarter was also very good. This quarter is also very good. You must have seen the improvement in the assets quality, which is normally the challenges and the question from the analyst side also. So now we are revising our guidance also. This 1% over the net NPA and 6.5% for the gross NPA number.

The bank is doing very good because -- there are so many other things like digital transformation, HR transformation, which is not reflecting in the number, reflecting in the number by improvement only. A lot of steps we are taking for the digital transformation, HR transformation. On account of result of this, this number is coming. Even as far as asset quality, we have taken a lot of improvement for the underwriting as well as the collection efficiency. Collection efficiency, each and every account, if we are giving for the retail loan, either NACH is mandatory, either there is standing instructions for the link account.

On account of this, our SMA is reducing, our collection efficiency has improved, yield of advance has also been increased. And the recovery also, because we are having the -- that is my gold mine. Whatever the recovery we are having, more than INR 70,000 crores in the -- and apart from that, we are having around more than INR 90,000 crore TWO book. Our focus is on the recovery. The moment we are in a position to recover more amount also, so it will increase our profitability, it will increase our operating profit. It is helping us to increase the NII.

So bank is on the right track, and the bank has been on right track for the -- and the profit also I told you, instead of the INR 4000 crore profit, at least it will be double from the last year what we have earned. Thank you. Thank you very much, Anand.

[Anand Dama, analyst]

Thank you, sir. And best wishes to you and all participants. Yes, that's all for today. Thank you.

[Deepak Singh, executive]

Thank you, Anand, and thank you all analysts and investors.