Punjab National Bank

NSE:PNB

Earnings Call Transcript 2024-Q4

[Deepak Singh, executive]

Good afternoon, ladies and gentlemen. I, Deepak Singh, DGM Strategic Management, welcome you to the Punjab National Bank's Earnings Conference call for the period ended 31st March 2024. The bank is represented by the Managing Director and CEO, Shri Atul Kumar Goel sir; Executive Directors, Shri Kalyan Kumar, Shri Binod Kumar, Shri M Paramasivam and Shri Bibhu Prasad Mahapatra and other senior members of the top management. The structure of the concourse that include an operating statement by MD and CEO, sir, and then the floor will be open for interactions.

Before getting into the con call, I will read out visual disclaimer statement. I would like to submit that the statements given here in 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. Over to MD and CEO sir.

[Atul Goel, executive]

Good afternoon to everybody. I welcome all the analysts and the investors attending this conference call also. And it is my pleasure to present the quarterly as well as the yearly result of the Punjab National Bank for the financial year March 2023, '24. This quarter as well as the financial year was one of the best quarter in the year for the Punjab National Bank as well as financial result of the bank is concerned. And I think whatever I have promised to all the analysts and the investors in the last quarter or the previous quarter also, I think we are in a position to deliver the same number, whether it is NII, we have projected around 10% growth. Similarly, the operating profit, we have projected the growth of around 10%, and we have given the guidance key -- gross NPE will be less than 6%, it is 5.73%. And we have given the guidance, net NPA will be less than 1%. And PCR will be more than 90%, that is 95%.

So I think we have tried our level best to come up to the expectations of the all the analysts also and we definitely need your support also.

I will give my opening remarks. As far as gross business of the bank is concerned, it is INR 23.53 trillion with a growth rate of 8.6%. The composition of this growth business in the gross deposit, it is INR 13.69 trillion at the end of March '24, with a growth rate of 6.9%. As far as advances or credit is concerned, there is a good growth of around 11.2% Y-o-Y, and it stood at INR 9.83 trillion. CD ratio is very comfortable 71.79%. Saving, there was a growth of around 3.5% and it is stood INR 4.80 trillion. And CASA, total CASA is the INR 5.38 trillion as of March '23, increased to INR 5.52 trillion with a growth rate of 2.7%. The CASA percentage was 41.44% as of March '24. And our guidance for the CASA for the next financial year '24-'25 around 42%.

As far as the RAM is concerned, RAM is around 55.18%. It is INR 5.20 trillion out of the total advances of 9.83%. And we want to increase the RAM to the 60% in 2 to 3 years spend. As far as company profitability number, the net interest income, there was a growth of 9.1% in quarter-to-quarter, Y-o-Y, INR 9,499 crores was the number of the NII March '23 quarter, which has increased to INR 10,363 crores. If you see the whole of the year, the whole of the year, '22 to '23, the NII was INR 24,492 crores, which has increased to INR 40,083 crores with a growth of 16.2%. The quarterly Y-o-Y was 9.1% and yearly growth is 16.2%.

Similarly, the operating profit for the quarter ended March '23, it was INR 5,866 crores, which has improved to INR 6,416 crores March '24 quarter with a growth rate of 9.4%. If you see the operating profit for the whole of the year. It was INR 22,529 crores for the financial year '22, '23, which has improved to INR 24,930 crores with a growth rate of 10.7% and the guidance of around 10%. As far as net profit is concerned, there is a jump in the net profit, the net profit of the quarter for 2022-33 means March '23, was INR 1,159 crores, which has increased to INR 3,010 crores in March '24 quarter with a growth rate of 159.7%. And the profit of the whole of year '22, '23 INR 2,507 crores, which has increased to INR 8,245 crores in '23, '24 with a growth rate of INR 228 crores.

I would like to tell the net profit of whole of the year in '22, '23 was INR 2,507 crores. In the last quarter itself, we have crossed this benchmark and the net profit of the last quarter of the '23, '24 was more than INR 2,500 crores, it was INR 3,010 crores. So whole of the quarter, we have achieved in the last quarter of the current financial year that is '23, '24. And as far as -- one more thing I would like to tell you the operating profit number, which I have told you INR 6,799 crores and the NII INR 10,363 crores, operating profit INR 6,416 crores as well as net profit INR 3,010 crores, the three numbers for the last quarter of the financial year '23, '24 means March '24 quarter is the highest in the last 16 quarters of the Punjab National Bank. As far as GNPA number is concerned, the GNPA, which used to be around INR 77,328 crores has reduced to INR 56,343 crores and percentage has reduced 6.82% to 5.73% from March '23 to March '24. Similarly, the net NPA, which used to be INR 22,585 crores March '23 has reduced to INR 6,799 crores, or less than 700 -- INR 7,000 crores, 2.72 was the percentage of the net NPA March '23 and reduced 0.73%, and our guidance was it should be less than 1%. We have also achieved this guidance. The PCR, 86.90% was March '23, has improved to more than 95%, 95.39% March '24. Most important is the credit cost. If you see the credit cost, the credit cost for the last quarter of the '23, '24, INR 1,957 crores, we have provided provision for the NPA, which is coming 0.81%.

As against December '23 quarter, 1.26% and if you see the full of the year, it was 1.40% credit cost as against 2.03% in '22-'23. And our guidance for the next year '24-'25, it will be less than 1% the credit cost. So credit cost and the slippage ratio also. Slippage ratio if you see -- last quarter slippage ratio was 0.98% and slippage ratio for the whole of the year, '23-'24, it was 0.72% as against the '22-'23 as against the last year 2.31%. Our guidance for the next year '24-'25, the slippage ratio will be less than 1%.

As far as capital is concerned, the capital adequacy has been improved from 14.63% in December '23 to 15.97%, 14.63% to 15.97% , this is on account of the profitability of the whole of the year, as I told you, INR 8,245 crores of the total profit and after the dividend part, which I will also expedite though, it has been increased and last quarter also we have raised also around INR 1,800 crores. So on account of this, capital adequacy ratio has increased to 15.97% as against the requirement of 11.5%.

Cost of deposit, if you see, it was 5.454% in the March '23, which was 4.94% in the December '23, has increased to 5.06%, you are aware on account of the increase in the deposit rate this cost of deposit was bound to increase. Similarly, the yield of advance, which was 8.05% in March '23. December '23, it was 8.54% and it is flat, 8.54% in March '24 quarter.

As far as the NIM is concerned, NIM for last quarter of the last financial year, March '23, it was 3.38%, domestically. It was 3.25% for the last quarter, March '24. And NIM global, it was 3.24% in the March '23 third quarter, which is 3.10% for the March '24. If you see the whole of the year, whole of the year it was 3.23% domestic and 3.09% is for the global. Last time we have given the guidance our NIM will be around 2.923% that we have achieved and next year also guidance to 2.923%, although we are giving the guidance a little whatever we have got the NIM, but our effort will be there. Last time also I advised you, our effort will be like this every quarter by quarter net interest income, so increase the absolute number.

So as far as fresh addition is concerned, the last year, March '23 quarter, the addition was INR 3,996 crores, which has reduced to INR 2,206 crores in the quarter, March '24. And if you see the whole of the year, the '22-'23 total addition was INR 16,029 crores, which has reduced to INR 5,826 crores. The two things I think we were able to contain the slippage, we were able to reduce the credit cost. This was the one of the factors to increase the profitability of the bank. And since we have already improved our PCR 95% I am hopeful in times to come there will be a scenario, there will be reversal of the NPA provision. As far as total recovery because -- if you see the movement of the NPA, which you must have seen the position because the recovery in the TWA account because we are having the good kitty of the TWA around INR 90,000 crores, that is not reflecting in the movement of the NPA. The total recovery of the bank including TWO as well as the recognized interest. '22-'23, it was INR 29,095 crores as against INR 32,000 crores. If you adjust the recovery and the addition of the same year, that it will be INR 24,576 crores. And this number we have given for the current financial year '23-'24, it was INR 22,000 crores was our target, a total recovery was INR 22,530 crores. So you can see fresh addition was INR 5,826 crores against this total recovery was INR 22,530 crores including the recovery from the write-off account.

One more thing I want to like to clarify, if you see our establishment cost has increased because that is only on account of one thing, AS-15 provision. AS-15 provision for the March '24 quarter was INR 2,396 crores as against INR 1,244 crores in March '23, and only INR 333 crores in December '23. The reason for the increase of the AS-15 on account of 3, 4 reasons.

First is as per the new settlement, leave encashment, which was 240 has increased to 255. So additional leave encashment will be available to the employee at the time of the entire 15 days at the enhanced salary. 15 days and enhanced salary for the entire 255, this was the one of the reason. And G-SEC rate, which was 7.18% in the December '23, has reduced to 7.05% on account of the change of the yield on the reduction side -- reduction requirement has been increased.

The third is the pension requirement, AS-15 has increased on account of the increase of the wage revision, which was 17%. The one more thing because ex gratia also introduced first time in the new settlement, it has also impacted the AS-15 provision. So on account of this, INR 2,396 crores we have provided in the March '24 quarter, this was the reason. Otherwise, if you reduce this from the establishment cost, payment to the wage revision is only more or less on the quarterly basis same, point number one.

The another thing is the credit cost I have already discussed with you also, it was 0.81% and 1.4% for the whole year, and it will be less than 1% of the next financial year.

Sector-wise slippage in Agri, it was INR 804 crores, MSME INR 666 crores, Retail INR 422 crores, Others INR 187 crores and INR 128 crores was increase in the existing out, this was the break up of INR 2,206 crores.

As far as you normally, you ask about what is the floating rate on the credit side. As on date, MCLR 35%, Repo around 40%, TBLR 10%, fixed 9%, other is base rate 2%. This is the -- about the composition of the interest rate on the floating and the fixed also. The one more thing I would like to tell you our new underwriting, which normally, I give you every quarter, how the new underwriting behaving because you may be asking why there is a reduction in the slippage.

So we have taken a lot of initiatives how to improve the underwriting standard as well how to improve the collection efficiency. So we have done a lot of work on this. On account of this, I will give you the data from the first of July '20. So it is a data of more than 40 -- more than 3.5 years. So in new underwriting, INR 7.87 trillion, we have sanctioned, INR 7.10 trillion we have disbursed, outstanding INR 5.53 trillion. And NPA in this new underwriting is more than 3.5 years, INR 1,775 crores, which is coming only 0.25% of the new one. This is one of the reason for containment of the slippage. And I can give you further breakup segment-wise, in this 0.25%. Agri it 0.38% only; MSME, it is 1.42%; Retail 0.21%, and others was corporate it is negligible. As far as capital adequacy is concerned, we are adequately capitalized because our capital ratio is 15.97% as against the requirement of the 11.50%, even CET1 is 11.04% as against the requirement of 8%, more than 3% we are having. Similarly, the AT1 2.13% as against the requirement of the 1.5% and tier 2 is the 2.8%.

And as far as our capital raising plan is concerned, although we are not immediate need of the capital because we are already 15.97%. We have got the approval of the Board for raising 7,500 QIP in the coming financial year, '24-'25. In addition to that, we have already had the approval of the Board for INR 7,081 crores and INR 3,000 crores for Tier-2. The total we are having in place Board approval for the INR 17,500 crores. So this is the capital plan. One more thing I would like to highlight you, What is the position of the NCLT, which you normally ask. NCLT, 805 accounts we have applied for INR 1.03 trillion, out of which 776 account of INR 1.02 trillion has already been admitted, 24 account of INR 1,737 crores is still to be admitted. As far as recovery in NCLT is concerned, INR 3603 crores recovery we have made in the last financial year, '24 -- '23-'24. Quarter-wise recovery, first quarter, INR 566 crores, INR 556 in the second quarter, quarter 3, INR 1,831 crores and the fourth quarter is INR 648 crores. This is from the NCLT. And we hope around more than INR 30,000 crores around within the range of INR 3,000 crores or INR 3,200 crorens. We should be in a position to recover from the NCLT route in the coming year '24-'25.

As far as asset to NERCL is concerned, last year, we have transferred around 12 account to the NERCL of outstanding of INR 3,524 crores. I think I have tried my level to cover all these things also. So I will stop myself if it is my initial remarks. We will be happy to answer you any question, any query you are having in mind. Once again, I court the support which we are getting from all of you and to improve the performance of the bank. Thank you very much.

[Rakesh Kumar, analyst]

Thank you, sir. Thanks a lot for the elaborate opening remarks. Very good set of performance for this fourth quarter number. So just to start with, sir, like there are a couple of PSU banks which have already announced their numbers. And RBI circular -- draft circular has also come on this provisioning requirement on this project finance issue. So would like to get your opinion and what is the exposure that we have? And would there be any impact on our bank or not?

[Atul Goel, executive]

I Rakesh, I think this is a question we were thinking you're asking in each and every analyst meet, in each every media. So okay, I think from the regulatory point of side, point number one, it is draft guidelines. The RBI has given the draft guidelines, it is for the consultation to all the stakeholders, whether it is on the borrower side, whether it is from the bear side, I think we should not be panic. It is from the regulator point risk perception. The regulator is thinking if there is more risk, this would be more provision. And this is true. They are trying to bring in the discipline. This will not be a time lag whatever the DCCO they are willing. And this timely completion of the project. So from the regulatory point, I think it is -- there's a merit on this also.

Now your question will be 5% they are saying earlier, we are making 0.40%. Now we have to make 5% then 7.5% where the DCCO increasing, then it will come down to 2.5% for the operation of project and 1% for the -- after the cash flow has been paid 20% after the TCU. This may be the point of discussion whether it is educate or not, this is a consolidating process because the RBI has given the time line for 15th of June of 2024. We will discuss this matter what should be the provision requirements would be. And one more thing I would like to tell you, Rakesh, because if you see a lot of clarification is also required. In my personal opinion, this draft guide is applicable to all types of the infra project, non-infra project also, project loan, even it is applicable for the small amount also whether it be INR 50 lakhs or INR 1 crore.

So we will also take the clarification whether it will be applicable to all or we will take up. Whether there should be some limit also this will be applicable. I mean you are asking for what is your exposure also because this actually guidance is applicable to where the this issue. I have given so many loans, which I'm [indiscernible] let us take the example of the InvIT. I have given the loan to the so many InvIT, they are operational project. I will classify in the infra, moment, I will give you this is the amount. So that is not applicable out of the purview of the circular. I think we should wait for a little bit, we should think and we should take up the matter. But the question will be what should be the provision requirement, I think bank is -- and as any bank is very healthy balance sheet also. And provision is normally required when the position is healthy.

So I think from the regulator point of view, I think it is appropriate guidelines. So I will not panic as far as -- even if we are required to provide also, we are very comfortable. We will be easily in a position to whatever the requirement of the regulator will come, we will abide by that. This is my opening remarks for this.

[Rakesh Kumar, analyst]

Got it, sir. Got it. sir. Mahrukh, you can unmute yourself and go ahead.

[Mahrukh Adajania, analyst]

Good afternoon. Thank you for your comprehensive opening remarks. So I have a few questions. Firstly, you can help us on what the monthly wage will be or quarterly wage will be built will be from next year, that will be helpful. Secondly, if you could give us some outlook on loan growth and margins, right? Because fourth quarter anyway, margins look a little better than previous quarters because of higher recovery income. So if you could call out the recovery income separately in the fourth quarter and third quarter and also talk about sustainable margins for the whole of FY '25. That would be helpful.

[Atul Goel, executive]

Mahrukh, as I have clarified INR 2,396 crores we have made a wage provision. If you see my total payment to the employee for the last quarter is INR 5,630 crores, so if you reduce INR 2,600 crores, it is coming around INR 3,300 plus crores. But our average will be around INR 3,500 crores because if you see the wage arrear. In December '23, we have made 800 provision. But March quarter because we have provided sufficient in the earlier quarter also, so there was no requirement to make the provision for wage revision in the March '24 quarter, which was INR 150. So this is the reason actual payment is coming on the lesser side. So in my opinion, wage revision should be around INR 3,500 crores INR to 6,600 crores as far as wage bill is concerned, apart from the AS-15 provision.

Your second question about the margin also. Margin, as I told you, Mahrukh, if you see my NII, the 3.25% for the last quarter is domestic and 3.10% for the global. Last year also we have given the guidance, it will be 2.9% to 3% and 2.9% to 3%, it is sustainable. This is the reason we are giving last time also you were telling it should be more than 3%, so we have given 2.9% to 3%. It is a really sustainable also. And one more thing. If you see every quarter, last time I also told you whatever guidance we are giving for the NIM, but our endeavor is like this quarter by quarter, by net interest income in afloat numbers would increase. And if you see the last 8 quarters, every quarter, it is increasing.

[Mahrukh Adajania, analyst]

Got it, sir. So I just have a comment on what you said about the draft circular. So your point is very well taken that the bank has good provisioning now. So they are in a comfort -- you are in a comfortable position to take any higher provision. But sir, that on the back book or on the existing book, you will be able to take the provisions that are due, right? And you will also have a lot of operational projects. So to that extent, your provisions will be lower. But the point is that each incremental loan in CapEx, say that guidelines are applicable from today and you're doing new CapEx today. Each incremental loan will come with a 5% burden for 3 years at least because that's the operator -- that is the time to construct any basic project, right?

I mean, these loans may be loss making or maybe very, very costly for at least 3 years after which the pool stabilizes. And that's the concern that it will hurt CapEx, and therefore, it will hurt overall banking loan growth because people were very optimistic that with CapEx, loan growth in the banking system will improve.

[Atul Goel, executive]

Mahrukh, to some extent, you are right. As I told you from the regulatory perspective. And my -- again, request to all of you, it is draft guidelines, whether it is come in to implement is over 5%. The regulator has given this paper for the consultation. It will be -- everybody, every stakeholder will give their views also, if you are thinking the promoter if it will hurt them, they will give the look at for reduction also even from the banker side also. So from -- I'm just telling from the risk point of view. If there is a risk in any project or the implementation is, definitely, from debt money it looks good. But definitely, it will definitely hurt to the bank if you are required to make the project and the promoter also. So it is [indiscernible].

So let us wait for the final guidelines. 15 June is the time. We should wait for the final guidelines how the regulator is taking. So this is my view on that. Because you are saying if 5% has to be implemented. It has to be -- if suppose we are -- for a minute suppose we are thinking it has been implemented, definitely, 5% has to be implemented. So definitely, we will try to pass on also because ultimately profitability will be little less than capital requirement of the bank will be. Even for the NBFC, but for the NBFC also, regulators increased the RWA on the NBFC. And we are in a position to pass on that whatever the additional pricing we have, I think, more than 80%, 90% borrower has already agreed. So even in this case also, if there is some need of the increase of the pricing also, we will pass on that, some we will bear, some the promoter will bear.

[Mahrukh Adajania, analyst]

Okay, sir. Thanks so much. Thank you, and all the best.

[Rakesh Kumar, analyst]

Jai, please go ahead with your questions. Jai, you can go ahead with your question and unmute yourself and go ahead with your question.

Kindly unmute yourself and go ahead with your question.

Ankit. Kindly unmute yourself and go ahead with your question.

[Jai Prakash Mundhra, analyst]

Sir, I have just a couple of questions. Firstly, on the LDR side, sir, like LDR has reduced this quarter -- like what is the target LDR that we would like to keep like for FY '25 basically?

[Atul Goel, executive]

Loan to deposit ratio, it has not -- it was 69.05% in March '23. If you compare March '23, it has improved 71.79%. And if we compare definitely on the last quarter, it was 73%. So I think we are on the lower side also. We will try to improve 73% to 75%. This was the reason if you ask me why there is not growth in the deposit ratio. Your question should be why the deposit -- growth in the deposit 6.9%. Because I don't require deposit, my CD ratio is very comfortable even if the CD ratio, I am having the SLR of more than INR 1 lakh crores.

[Rakesh Kumar, analyst]

Okay, Ankit. Please go ahead.

[Unknown Analyst]

Sir, congratulations for the great set of numbers among all the PSU banks. Sir, my first question is after performing this much, sir, what is the future trajectory? And sir, from which segment, queries for loans are coming that you are seeing the -- how the economic conditions are prevailing. Sir, which sector are you more confident for distributing the loan?

[Atul Goel, executive]

Ankit, two, three points I would like to tell. There is a good demand in the RAM sector, whether it is in retail, particularly for the housing loan, particularly for the vehicle loan. So RAM, if you see my percentage of the total loan to the RAM is around 55%. And we want to increase this number to 60% in times to come. So this will be our focus area. For second, we are the one of the largest bank of the country. If really we want to support the economic growth of the country, definitely, we want to give the loan to the corporate also. So what trend I'm seeing. Earlier, they were not using the working capital to the extent they have already got the sanction because maybe on account of the profit earning was also good of the corporate also, now they have started utilizing also. Even if you see lot of CapEx has not come in last year from the private side also.

Now I am seeing the traction also. Some of the steel industries, some of the cement industry because on account of the infra, there is a lot of demand from this sector also. Some of the corporate now they are approaching us for the expansion in their steel production as well as in the cement also. And there is a lot of demand in the road product side also. We have financed a lot of road projects also in the last year, and there is a good demand even the current year also, current year also for the road. I'm seeing the demand from the retail, RAM sector, infrastructure sector, particularly road, et cetera, even the gas pipeline, et cetera. And there is a CapEx in the steel and the cement. This is my take.

[Unknown Analyst]

Sir, okay, sir, recently, you have been tied up with IREDA. Are you seeing any traction in that green projects there? Why you have tied up? Any comment on that.

[Atul Goel, executive]

We have tied up with the IREDA. We are tied up with the REC also, and we are going to tie up with one more of the infrastructure financing company. The purpose is only this because sometimes they are getting the project for more appetite, which they are having. So they can pass on some of the part of debt to us also. This was the only purpose to tie-up with them also. So because they having the expertise, they are the expertise of the financing, the project of the infra like IFCL, [indiscernible] or the REC et cetera, even the PFC also for the power project. So they have the expertise. So if they are not in a position to take the entire loan for that particular, we are participating in that, that is the only purpose. .

[Unknown Analyst]

Okay, sir, slippages quarter-on-quarter have increased. Any concerns, sir?

[Atul Goel, executive]

No concern. We are having the book of around INR 9 lakh -- more than INR 9 trillion. So very hardly about if you see the INR 2,206 million. Last year, last quarter, it was INR 1,700 crores. The INR 200 crores to INR 300 crores, if you see the last 8 quarters, every quarter is reducing this slippage. But there should be some benchmark also. Every quarter by quarter in reducing. So there is no -- even the -- I have given -- I will give the sector-wise slippage also, Agri INR 804 crores, MSME INR 666 crores, Retail INR 422 crores, Others INR 187 crores. Out of only one amount of around INR 100 crores, INR 110 crores. So there is no worry at all. And if the slippage in there, we will recovery, if you see the -- our recovery -- recovery is more than 2x of the slippage.

[Unknown Analyst]

Okay. Sir, last question, sir. Why the dividend is now so low...

[Rakesh Kumar, analyst]

Ankit, there are other people on the queue. I will request.

[Unknown Analyst]

Last question, sir, please, please, please.

[Atul Goel, executive]

You are asking about the dividend.

[Unknown Analyst]

Yes sir, why it is so low?

[Atul Goel, executive]

Last year, we have declared the dividend 32.5%. It was 65p per share. We are having the share of INR 2. This time, Board has recommended subject to approval of the shareholder, 75%, INR 1.5 per share of INR 2 and total payout of the profits is 20.03%.

[Unknown Analyst]

But other PSUs are giving a lot that now you are profiting a lot. [Foreign Language]

[Atul Goel, executive]

Can you repeat, Ankit. Can you repeat what..

[Unknown Analyst]

I'm saying, sir, now you are very profitable. Other PSU banks are giving a lot more than your face value like you have given 75%. Canara Bank has given a lot, I think double. Sir, please, sir, about associate...

[Atul Goel, executive]

Ankit, I have given more than double. You are telling Canara Bank has given. I have given more than double, 32% to 75%, it is coming against 64% and I have given 75%.

[Rakesh Kumar, analyst]

Jai can you unmute yourself and go ahead with your question?

[Jai Prakash Mundhra, analyst]

I Sir, I wanted to check on CD ratio, right? So we had said that our focus is to improve net interest income in absolute amount and that we have been doing for the last few quarters, right? Our CD ratio to start with was already low, right? Now in this quarter, we -- the loan growth is not very high. It's only 1%, 2%. So what happened? I mean we had excess liquidity. We could liquidate some excess SLR also. So what actually happened that our LDR actually declined? And we could have improved even further if the growth was low, we could have improved.

[Atul Goel, executive]

If Jai, you see -- yes, I will give the answer of your question. 73% was the CD ratio in December '23, definitely, it has declined to a little bit 71.79%. So definitely, if we will not raise further deposit because there is no need for the deposit. So automatically, it will improve. As I told you for next year, the -- our guidance for the growth is 11% to 12%. And this is the reason we have not raised the bulk deposit because bulk deposit is not available less than 7.5% or [indiscernible].

[Jai Prakash Mundhra, analyst]

No, I understand about future sir, I'm asking the March quarter, why did our CD ratio decline? I mean you -- if in future, we want to improve or increase CD ratio..

[Atul Goel, executive]

Simple answer -- it is a simple answer, Mundhra. The credit growth -- deposit growth was much more in this particular quarter as compared to the credit growth. It was the only reason, nothing else.

[Jai Prakash Mundhra, analyst]

And would that change, sir? Because at system level, there may not be any change, but would it change for your bank that now credit growth will be higher and deposit growth will be slower.

[Atul Goel, executive]

Jai, as I told you, I am having the one lakh extra SLR also. Then we will see whether -- if deposit is cheaper and higher FD and other avenues also to deploy that fund in the more remunerative manner. Then we will raise the deposit. Otherwise, not. If I do not have the opportunity to gain the -- on the deposit side also deployment. Otherwise, we will not because we are having -- and we have to see at what rate we are getting the deposit what I'm getting on the yield on the investment.

[Jai Prakash Mundhra, analyst]

Okay. Right. And sir, on your -- I mean we have a guidance of INR 18,000 crores of recovery, right? for full year. Is there any definite exposure or [indiscernible] exposure out of this, let's say, how much -- where do you have a visibility of more than, let's say, INR 500 crores. Are there any -- some of those assets? Or this is likely to be granular only?

[Atul Goel, executive]

Jai, it is our gold mine. INR 90,000 crores, we are having the TWO and around INR 55,000 crores we are having the gross NPA, INR 145,000 crores, we have just made analysis that how much we are in a position to recover. Even we think 40% of the total -- 40% to 50% of the total. So every year, we will be in a position to recover easily around INR 15,000 crores too INR 20,000 crores easily. Even if you're asking for the some bulky account also, we have made analysis, key parts would be the recovery from the basically NCLT. So NCLT last year, we have recovered around INR 3,600 crores and we have made a quarter-wise analysis. Even we are thinking around INR 3,000 crores to INR 3,300 crore will be recovery from the NCLT in the next financial year. And definitely, we are also giving the focus on the small account also because we are having the very good amount in the NPA in the smaller account also and some of the accounts where we are having the sole banking or we have the collateral security also. There will be a mix of all .

[Jai Prakash Mundhra, analyst]

Right. So out of this, let's say, INR 3,000 crores to INR 3,300 crores is going to be the NCLT related and rest would be granular only, right? Below INR 100 crores, right?

[Atul Goel, executive]

It may be much more -- because it is a recovery amount, which I told you. Sometimes we have to take the haircut also. It maybe -- account may be more than INR 100 crores, but you are getting less than INR 100 crores also.

[Jai Prakash Mundhra, analyst]

Right. Okay. And sir, on credit growth, we are saying 11% to 12%, which is lower than last year's 12% to 13% guidance. Our net NPA has improved. Our capital has improved. Our profitability is also improving. So why 11%, 12%, sir? And within that, how much could be corporate credit growth?

[Atul Goel, executive]

Jai, if you see my credit growth in the June quarter, September quarter, and the December quarter. If you see the growth was more than the guidance 12% to 13%. June quarter, it was 14.6%. September quarter, it was 13.4%. December quarter, it was 12.9%. But last quarter, 11.2% because if you see the March '23 quarter, we have done some bulk deals also. On account of this, it has decreased otherwise, we were at par whatever guidance we have given. This is the reason we are giving the growth of the 11% to 12%. If definitely if opportunity will come where we are in a position to give more than the 11% to 12% also, then we will revise the guidelines, but as of date it is 11% to 12%.

[Jai Prakash Mundhra, analyst]

And how much of that could be corporate sir? Would it be similar 11%, 12% or higher or lower?

[Atul Goel, executive]

It is the availability of the corporate as well as the RAM also. As I told you, our focus will be on the RAM. If we are in a position to garner good deal in the corporate also, we will not mind to lend them also.

[Jai Prakash Mundhra, analyst]

Last question. If I may ask.

[Rakesh Kumar, analyst]

Yes. Okay, sir. Okay.

[Jai Prakash Mundhra, analyst]

Just the last question, sir. RBI had, there's a new investment norms from the sector from April 1. If you can quantify what is the accretion to CET1 AFS reserve and general reserve post as of April 1.

[Atul Goel, executive]

Because this new guidelines is applicable from the first of the April, and we are required to shift from the STM, AFS, HFT. There is 2 more [indiscernible]. Your specific question, what will be the amount, which will be transferred. Generally that will be around INR 5,000 crores.

[Jai Prakash Mundhra, analyst]

Okay. Great, sir. So that number is good, sir. I mean, other banks have reported slightly -- I mean, 1/3 of your number, so this number of INR 5,000 crores acquisition looks very good. Thank you.

[Rakesh Kumar, analyst]

I will request Saurabh to unmute yourself and go ahead, please.

[Saurabh Kumar, analyst]

Sir, just 2 questions. One is on your OpEx growth. Could you just quantify how much do you expect it to be, especially both if you can break up staff and other expenses.

And the second is in terms of your gross slippages or what is the number you would guide for? These are 2 questions.

[Atul Goel, executive]

As far as the key OpEx, I will divide into 2 parts. First is the employee cost and other is the OpEx. And if you see the payment to the employee, it is around INR 5,630 crores in the last quarter. But there was an AS-15 provision around INR 2,396 crores. So if we are thinking definitely in the times to come, our requirement of the AS-15 be reduced because it is on account of the increase in the wage revision, et cetera. So I think it will be in the range of the wage revision will be in the range of INR 3,500 crores to INR 3,600 crores. And in addition to that, whatever the requirement of the AS-15 provision, we will make. As far as you're concerned -- the other operating expenses is concerned, other operating -- I think within the range of the 5% to 7%, they will be increased. There will not be much increase in the other operating expenditure.

[Rakesh Kumar, analyst]

Saurabh, do you have any other question?

[Saurabh Kumar, analyst]

Sir, just had 1 question on SLR, sir. So net-net, if you see from March '23 to March '24, we have SLR on the net basis on the outstanding basis is still rising. And though the non-SLR number is stagnant. So -- just a broader question that how we would like to -- because we have excess SLR so that we would liquidate the SLR and do the credit growth or we will kind of raise the duration further and try to take some gain on the profit on sale -- profit on sale of investment side. So what is the play that we are trying to have on the SLR investment side, sir?

[Atul Goel, executive]

It will be the mix of the both. Point number one, whether we want to keep the SLR portfolio or not, it depends on the whatever interested view. If definitely, if my payer is thinking interest rate will file in times to come. Definitely, it is an appropriate time to invite in the SLR securities. If they are thinking interest rate definitely we would like to share some of the excess SLR also. As I told earlier also, how much I am getting on the investment in the SLR and vis-a-vis what will be my incremental cost of the deposit. So I have to see both the number also. If incremental cost of deposit is lesser than the whatever yield I'm getting on the investment, I would prefer to raise the deposit instead of sharing my SLR. If deposit is much more than whatever I'm getting the yield on the investment, definitely I will not mind to share my SLR investment.

[Saurabh Kumar, analyst]

Okay. Understood, sir. Understood. And sir, on the non like non-retail term deposit growth side, sir -- so like how is the dependence there on the -- like because that is also being handled by the treasury itself. So like on the non-retail term deposit growth side, sir. So if you can say -- tell us that -- like are we increasing your dependence there or how the things are...

[Atul Goel, executive]

This is in the reason you see my deposit growth. This is the reason my growth is only 6.9%. So we are not dependent on the bulk deposit rather. Need wise, we are raising. Because we are not in this market. But definitely, if we need for the -- where we are getting the more return also, then we are raising otherwise, we have not.

[Saurabh Kumar, analyst]

Okay. Okay. Got it.

[Rakesh Kumar, analyst]

Mahrukh, do you have any questions? Kindly unmute yourself?

Okay. Anushka kindly unmute yourself and go ahead with your question?

Okay. Anushka Kindly go ahead with your question.

Anushka, do you have any other questions.

Hi Saurabh. You have any other questions, Saurabh?

[Saurabh Kumar, analyst]

Sir, just one question. On your current accounts, so it seems that there's obviously lots of market share. Can you just quantify like what's happening there on current accounts for you specifically? And if, let's say, we do get -- improvement in CapEx, do you think that share for you can go up given your exposure into corporate accounts. So if you can just talk about your current account.

[Atul Goel, executive]

Saurabh, actually, I will take it differently. We are not losing the market share in the current account. This type of the depot is very volatile. Sometimes you don't know at what time it will increase, what time it will be decreased. Point number one, we are just issued the corporate mobile app, which will definitely help to come this segment also, a lot of people will come, they will open the current account through mobile app, which was not earlier which we have launched in the last month only. Another thing, current account, if you see how many accounts we have opened in the last year, '23-'24, we have opened around 268,000 accounts as against the 200,000 accounts, which we have opened in '22-'23. The amount will also flow in this account. But this segment is very volatile. Sometimes you have 60,000, sometimes 70,000, sometimes 80,000. It is very fluctuating. But you are right, and we are very sensitive about this how to improve this because it is a [indiscernible] game for us also. So we are aware, and we are taking a lot of is how to increase the current account.

[Rakesh Kumar, analyst]

Ankit, please wait. Vinayak, would you like to go ahead with your question?

Kindly yourself unmute yourself and go ahead with your question.

Yes, Vinayak, please. Go ahead.

[Unknown Analyst]

So can you please quantify the amount of deferred tax assets you have. And is it possible for you to move to the lower tax regime from FY '26?

[Atul Goel, executive]

Vinayak, actually, we are under discussion with our tax consultant also. As on date, we have not moved -- definitely, we are aware. If we will move, definitely, there should be a benefit of the tax rate also. But as on date, our tax consultant has advised not to move to the new regime because we are having some entry which is related to the -- which is beneficial for us in the old regime.

[Unknown Analyst]

And can you quantify the amount, sir?

[Atul Goel, executive]

I will send you, Vinayak, yes.

[Rakesh Kumar, analyst]

Yes, Ashlesh. Kindly unmute yourself and go ahead with your question. Ashlesh, kindly unmute yourself?

So there is one question in the chat box. Out of the total return of pool, what is the composition in the NCLT and non-NCLT of the written-off pool sir?

[Atul Goel, executive]

You are asking the -- how much is the pool in the NCLT and?

[Rakesh Kumar, analyst]

Non-NCLT sir. Out of the total return of pool of around INR 90,000 crores, how much is part of NCLT and how much is the part of non-NCLT loans?

[Atul Goel, executive]

I have to check the exact number, Rakesh, but normally because the accounts which are in the NCLT will be high value. So such type of the account, we have already written off. So in my opinion, I will check the exact number, NCLT, whatever the account, they must have been written. The other will be the non-NCLT number, yes.

[Rakesh Kumar, analyst]

Got it sir. Ashlesh, kindly unmute yourself?

[Unknown Analyst]

[Technical Difficulty] quarter. So any reason for that? And secondly, if you can share the..

[Atul Goel, executive]

Just a moment, increase in?

[Unknown Analyst]

Slippages in the agriculture sector. That has increased in this quarter. So reason for that? And secondly, can you share the average cost of term deposits on the outstanding term deposits and also on the incremental term deposits?

[Atul Goel, executive]

As far as slippage is concerned, it is a very -- not very increase slippage. If you see the -- it was around INR 1,800 crores, and it was around INR 2,200 crores, so INR 300 crores to INR 400 crores is the total slippage. But if you see the Agri, normally, it remains around INR 800 crores to INR 700 crores, there is no much increase in the Agri side also. So it is on the same line, but INR 200 crores, INR 300 crores, there will be a fluctuation also because we are having the loan book of more than INR 9.85 trillion. As far as your question about the average cost of the term deposit. Normally, it is 95% of our deposit, 95% of our deposit has already been shifted to the new term deposit. So if you see my 1-year term deposit is around 7.25%.

[Unknown Analyst]

Okay. So you don't expect a lot of increase in the cost of deposits for you over the next...

[Atul Goel, executive]

95% has already been repriced, only 5%, which was in the long term in the nature, maybe about 5 years, 6 years, that has to be. So I don't think they will not include most of the deposits in the 1 year in the nature.

[Rakesh Kumar, analyst]

Anushka, kindly unmute yourself and go ahead.

Anushka, kindly go ahead with your question.

Yes, Anand kindly go ahead with your question, unmute yourself. Yes, please go ahead.

[Anand Dama, analyst]

So basically, first things are the new investment classification norms, which have come from 1st April 2024. What will be the CET1 benefit that we will read because of that. That is my first question. Secondly, we have heard a lot of whispers around particularly in the state of Punjab, where I think micro finance players have seen some [indiscernible]. Any repayment behavior change that difficulty we have seen for any of our retail or the agri loan in the state of Punjab. Basically, if you can talk about that.

[Atul Goel, executive]

Anand, as far as your first question, what will be the increment in the CET1 on account of the new valuation. Because basically, the unrealized profit has to be taken into consideration. As I just told you, around INR 5,000 crores because it keeps on changing. Let me clarify to all of you because there is some -- because we are having a subsidiary also, they will list it also. It keeps on changing. It depends on the market because what was the market as on date because it keep on changing. Because it is not entire is not the debt because we are having some subsidiary, et cetera, also with share is listed. So around INR 5,000 crores, I'm getting as on the date of 1st April, it keep on changing. The another question regarding the Punjab, et cetera. I have not seen any [indiscernible] in the retail or the agriculture side. It is across the same we are getting. And I have given the number also. What is my new underwriting, the slippage in the Agri's point around less than 40%.

[Rakesh Kumar, analyst]

Anand, please go ahead. You have any other question, Anand?

[Anand Dama, analyst]

So basically, sir, the third question that I had was about the project financing exposure. So basically, I know that [indiscernible] drop. Obviously, you will -- the idea certainly will go back to RBI and see some here over there. Or is it possible for you to quantify the overall project financing exposure as on date on our book?

[Atul Goel, executive]

Anand, because there is a 3 types of the exposure. Because infra, non-infra, then DCCO et cetera. So as I clarified earlier also, some of the loan, like InvIT loan we have given. It is classified in the infra. But it is not as per the circular also. The another way of discounting the lot of HAM project also. That is coming under infra also, that is coming in the infra, there is no DCCO because this basically [indiscernible] with the DCCO circular has come. So as on date, we are not in a position to quantify what is the exact amount here.

[Anand Dama, analyst]

But sir, if we are to just quantify the overall project financing exposure, be it DCCO or non-DCCO asset and what will be that. It will be 10% of the overall loan book?

[Atul Goel, executive]

Anand, because as I clarified, you also because a lot of projects, which is where cash flow generated, like the InvIT I have done. The circular is not applicable. Even the discounting we have done for the HAM. The circular is -- there is a running operational project where the cash flow is coming. I think it will not correct on my part also to give that particular data or may be the circular is not applicable. I think [indiscernible] let us wait for the final guidelines also.

I can assure all of you whatever the guidelines of the regulator will come in the final guidelines, what will be, we will be in a position to provide adequately. This I can tell you.

[Rakesh Kumar, analyst]

Do you have any additional questions, Anand? Anand, do you have more questions on this?

[Anand Dama, analyst]

Rakesh, I think [indiscernible].

[Rakesh Kumar, analyst]

Saurabh, do you have any other questions?

Anushka, would you have any questions?

Would you have any questions? You have raised your hand. I think that is all for today, sir.

We have no questions like any further from here. So we can wind up the session. We would like to request you to give any closing remarks, if you have, sir.

[Atul Goel, executive]

Thank you very much, Rakesh, and thank you to all the analysts also, who have attended this meeting also. And we have noted some of the suggestions, et cetera, also whatever we have discussed, and we have tried to reply all the questions also. If any question which they want to ask, they can contact my share department, Investor Relations department also. If you require further information also, we will give you that information also. But one thing I can tell you, bank is on the very right path. There is an all-time growth in all the parameters, whether it is the operating profit, net interest income, whether recovery from the NPA account or the provision, we are very comfortable in all the resources also. And one more thing I would like to tell, two things. This time, we have made INR 150 crore provision also for the NPR. And -- not only this, we have also disclosed in our Note 2 accounts also. This OTR-1 and OTR 2, with the requirement in some of the cases, the 5%, some of the cases, the 10% as on date around INR 238 crores extra provision we have made with the approval of the Board, not only in this quarter, in the last financial year. We are providing 12.51%. So we are adequately providing all the things also and wage revision which I just explained to you also. Whether it is a pension liability, whether it is a gratuity liability, whether it is on account of the other leave encashments, we are adequately provided. Our balance sheet has become very strong also. Normally, the question of the analysts is when you will be in a position to guide the ROE of the 1% also. So definitely by the exit of this financial year, '24, '25, we should be in a position to achieve the 1% ROE. With this word, I place on the court the support and the guidance we normally get when we meet the analysts on the industry leader also for the comment on our results also, that is encouraging us to improve further better with this work. Once again, thank you. Thank you to all.

[Rakesh Kumar, analyst]

Thank you, sir. Thanks all the participants and the PNB management. On the behalf of B&K Securities, we would like to thank the PNB management to giving us the opportunity to host you. Thank you. Thank you, everyone. We can close the session now. Thanks.

[Atul Goel, executive]

Thank you, Rakesh. Thank you.

[Rakesh Kumar, analyst]

Thanks a lot, sir.