Punjab & Sind Bank (PSB) Q4 FY23 Earnings Concall Transcript

Punjab & Sind Bank (NSE:PSB) Q4 FY23 Earnings Concall dated May. 02, 2023.

Corporate Participants:

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Ram Jass Yadav — Executive Director

Kollegal V Raghavendra — Executive Director

Unidentified Speaker —

Analysts:

Unidentified Participant — — Analyst

Ms. Manju — Indian Banking News — Analyst

Srivats — Hindu Business Line — Analyst

Dheeraj Tiwari — The Economic Times — Analyst

Joel Rebello — The Economic Times — Analyst

Preeti — Wama — Analyst

Nikesh Singh — Business Standard — Analyst

Nikunj Ohri — Reuters — Analyst

Anil Pandey — — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen. I’m Shilpa Abraham, the moderator for this press conference. I’d like to thank each one of you for joining

Us today for the Q4 and annual results fiscal year ’23 of Punjab & Sind Bank. Please note that this press conference is being recorded, and all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the opening remarks by the management. [Operator Instructions] I would now like to introduce the management of Punjab and Sind Bank. We have with us today, Managing Director and Chief Executive Officer, Shri Swarup Kumar Saha; Executive Director, Shri Kollegal V Raghavendra; Executive Director, Dr. Ram Jass Yadav, Executive Director, and Chief Financial Officer, Ms. Mahima

Agarwal. I would now like to hand the conference over to Shri Swarup Kumar Saha, MD and CEO of Punjab and Sind bank for the opening remarks, after which we will have the forum opened for the interactive Q&A session. Thank you and over to you, sir.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Thank you, Shilpa. Good evening, and welcome you all to this Q4 virtual press conference of Punjab & Sind Bank. On behalf of Punjab & Sind Bank, I welcome you all to this post result declaration virtual press conference. The Board today of the Bank has approved the financial results for the quarter ended and the financial year ended March ’23. The key highlights of the results are the Bank recorded its highest-ever net profit of INR1,313 crores in the financial year against a net profit of INR1,039 crores Y-o-Y basis, registering a growth of 26.37%. The Bank’s operating profit has zoomed to INR536 crores during Q4 of financial year 2023, thereby, registering a Y-o-Y growth of 69.09% and Q-o-Q growth of 55.1%. The total business of the bank has grown by 10.5% and now stands at INR1,90,647 crores having a mix of deposits of INR1,09,665 crores, showing a growth of 7.37%. And corresponding gross advances INR80,982 crores showing a growth of 15.05%, Y-o-Y.

The other key highlights of the results are. The operating profit has grown by 9.02% on a financial year basis. The net profit has grown by 32.08% on a quarter 4 Y-o-Y basis. The return on assets has improved to 1.33 at the end of quarter 4 and on the overall FY 0.98. The yield on advances has improved to 7.85 during the quarter and stands at 7.67 and the end of the financial year. The important impact that has happened on the results that we are declaring today is that the cost-to-income ratio has been reduced for the quarter to 56.45 against the corresponding figure of 65.19 last year, thereby showing a reduction of 874 bps. And for the financial year as a whole, it has also been reduced to 62.95. The non-interest income has grown by 154.42%.

The slippage ratio for the quarter was 0.63. The gross NPA percentage thereby showing our improved asset quality has reduced to 6.97 for the quarter end. Net NPA has been reduced to 1.84. The recovery and upgradation has been very robust for the bank and for the quarter ended March ’23 total recovery upgradation was INR1,153 crores and for the entire year was INR2,151 crores against a similar amount last year. So we have been able to maintain the momentum on our total recovery and upgradation.

The credit cost for the quarter has come down to 0.38. The capital adequacy of the Bank has been still — it’s still healthy and it is at 17.10 with the CET1 at 1,432. The net interest margin has on a Y-o-Y basis improved from 2.80 to 2.91, thereby, registering a growth of 11 bps. The provision coverage ratio though marginally declined from Q3 has shown an increase of 117 bps from 87.9 as of March ’22 to 89.06 over in March ’23. The credit deposit ratio has also improved to 73.84 for the quarter-end and also will be able to maintain this credit ratio going forward in the next financial year. The branch has also taken various initiatives on the digital front on branch expansion and we will be ensuring that in the next year onwards, we’ll be able to continue the performance that we have been showing over the last two years.

So thank you very much from my side. I’m now open to the questions that can be asked. Thank you. Over to you, Shilpa.

Questions and Answers:

Operator

Thank you sir. We will now begin the question-and-answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. [Operator Instructions] If anyone is having connectivity or audio issues you may share your questions on WhatsApp to us at 790-743-1859. I repeat, if anyone is having connectivity or audio issues you may share your questions on WhatsApp to us at 790-743-1859. Before asking the question. I request you to please identify yourself and your organization. Our first question is from the line of Dr. H. K. Karmanda [Phonetic] from DailyHunt. Sir, please go ahead with your question.

Unidentified Participant — — Analyst

Hello. So my question, where do we stand in terms of growth in overall banking industry? [Technical Issues]

Swarup Kumar Saha — Managing Director and Chief Executive Officer

I understand, the question is regarding the overall business growth guidance.

Operator

Sir, I intervene here. Mr. Karmanda wants to know, where do we stand in terms of growth in overall banking industry.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, so thank you, Mr. Karmanda, for your question. See, the last year, our overall business has grown by 10.50% with a deposit growth of 7.37% and gross advances at 15.05% and this year we intend that we should be growing at around 13% to 14% for the advances and deposit growth will be around 8% to 10%. So what we feel is that as per the market trends, we will be moving with the average growth of the market, as an industry as a whole.

Operator

Thank you sir. Our next question is from the line of Ms. Manju from Indian Banking News. Ma’am, please go ahead.

Ms. Manju — Indian Banking News — Analyst

I just wanted to ask you like how much of this growth is because you were able to increase your rates of interest because you know, the repo rate increased by to 250 basis points. And banks were able to pass on much of those increases, because you know the retail loans were linked to the external benchmark and all that. So how much of the profitability is coming from the ability to raise interest rates and what will be now for the next one year, you may not be able to raise rates as fast. So the impact of that.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, thank you, madam, for the question. As far as your question regarding the hike in the repo and the RBI repo cycle that is going forward, what we see is that we see our portfolio is around 32 plus — 32% is around in EBLR and 52% is MCLR. Yes, we have some impact on that, but. However, if you have noticed that the overall advances after a long time has been has now grown steadily for the bank. So last quarter also we had a growth of over 16%. We have been able to maintain that momentum in the current year. So our average earning assets is also increasing. Our gross NPA is coming down. So the average earning assets also increase. So while we are conscious of the dynamics regarding the interest rates but it is the fact that we are now also generating income out of the growth trajectory that we are in. Of course, the deposit side, we are lagging from the market to a little extent. However, we feel that we can, we have been able in December, March quarter, we were able to garner substantial deposits on the retail segment with a competitive rate of interest. We intend to do that forward. So overall, we feel that in the next year also the the trajectory will be maintained. We will be able to work on our growth story. And of course, we will be conscious of the bottom line growth also. So our margins, after protecting the margins will be able to grow qualitative.

Ms. Manju — Indian Banking News — Analyst

You’ve also been expanding our branch network. Will that also be a strategy this year. Will you further expand your–

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yes, yes of course. We have been for a long-time we have not been expanding our network. So while we will be — we have already opened 20 branches in all in the financial year. So we intend to open another 40 to 50 branches during the year by March ’24. We will be also in terms of supplementing the branch brick-and-mortar branches, we will also be deploying Corporate VCs. We intend to build our network on that. We have a very small number of VCs at 357. We intend to bring that also, to increase that also to a large extent, around 2000 we expect to increase our VCs for the year in totality. So yes and we will be expanding in the areas where we have not been visible so far. We have presence in only 310 districts in all over the country. We intend to bring that also as a part of our strategic thought process for expansion and wherever there is potential and our presence is not there in the district, we’d like to open our branches in that area.

Ms. Manju — Indian Banking News — Analyst

And one more, one last question on NPAs. How did you manage to bring this down by 139 basis points.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Pardon, I didn’t get you. There were some slight disturbance.

Ms. Manju — Indian Banking News — Analyst

No, I’m asking about the gross NPAs have come down quite substantially. You have reduced it by 139 basis points. How did you do it. Was there a write-off or–

Swarup Kumar Saha — Managing Director and Chief Executive Officer

There was a write-off of INR510 crores. And also if you have seen our recovery upgradation slide, my presentation is also now uploaded. So if you see my recovery upgradation for the quarter, you will find that our recovery has been very robust during the quarter. It has been INR1,153 crores. Of course, one substantial part of that of course was recovery in TW accounts. Out of that INR1153 crores, approximately INR600 crores is the recovery in the NPA, normal NPA account, and of course, we also had a write off of INR510. So that’s so that builds a story of our gross NPA reduction.

Ms. Manju — Indian Banking News — Analyst

Thank you so much and all the best.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, ma’am. Our next question is from the line of Mr. Srivats from Hindu Business Line. Please go ahead, sir.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Hello. Yeah, Mr. Srivats.

Srivats — Hindu Business Line — Analyst

Sir, good evening. I hope I am audible.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, you’re audible. We can hear you.

Srivats — Hindu Business Line — Analyst

Okay, so. I have also sent my question in writing. Basically what I wanted to understand is there has been a quantum jump in the 4th quarter profit. Can you help me understand what helped you record such a big jump in the 4th-quarter vis-a-vis the previous third and second quarters. And the supplementary question is for the entire fiscal current fiscal, how confident are you in sustaining this bottom-line performance. And this is the first time you are declaring dividend after a gap of few years.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Okay. So I’ll take the questions one by one. As far as the profitability is concerned, as I told in the earlier question that our — we had a good recovery in the technical written-off accounts. In two of the large accounts, we had a good recovery. So one of the component of the quantum jump in the net profit is of course due to that. As far as the sustained–

Srivats — Hindu Business Line — Analyst

Sir, can you share the name of that account.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

I think those are large accounts, which is in the public domain. We can talk about it, but those accounts have been already in the public domain.

Srivats — Hindu Business Line — Analyst

But what was the quantum of recovery.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

One was INR210 crores for us, and INR130 crores. So this is the two major accounts there, what we got resolved and of course as far as your question regarding the sustainability. Yes, we were helped by this good recovery in the — in good recovery. Our total recovery, if you see, of course, has been also maintained as far as the last year’s recovery upgradation. We were able to maintain that against the total recovery of 2100 last year, we were able to maintain the same level, nearly the same level in the current year also. So that is the other part of the story. And as far as the sustainability, yes, we need to, we can if you — now the bank is also in the business growth story is also happening. We are expanding our network. So, yeah, if you will find the average advanced growth, which was nearly up 2% to 3% last year has not moved to 15% 16% continuously. So our income-generating capacity is getting expanded, number one. Number two, if you see our core fee income excluding the treasury and recovering write off, that is also showing some traction. However, and we can also, I can also add to that point is that lot of initiatives have been taken for the bank to increase the fee income in the future. We have done lot of tie-ups with various third party partners. So that is going to take traction. Those are going to yield results next year also. So we will be able to maintain this, we can sustain the net profits of the current year. We are confident we can do that and as far as the dividend issue is concerned, last year also, we declared a dividend of 20%. This year, we are maintaining that momentum also and have declared a dividend of 25%.

Srivats — Hindu Business Line — Analyst

So, if I remember right, you have declared a dividend of 0.48, right?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, that’s per share.

Srivats — Hindu Business Line — Analyst

Thank you. And sir, one last point on the capital. Last time you told us that you will look to raise capital. So what is the update there.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, update of that is that yes, we have written to the government also for approvals, necessary approvals. Our merchant bankers are also now nearly on-board. So we are waiting for the results to be declared. We will now move ahead on that story. And depending on the market conditions, we will move in that. So we have that approval from the competent authority. So once we get a nod from the majority stakeholder, we will start working on that. The timing of the issue, of course, we will be, we’ll wait for the market to give us the insight on that.

Srivats — Hindu Business Line — Analyst

Would it be a debt or equity.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

We will primarily look for equity. But the options are open for both of us, for both the areas for this INR250 crores but preferably, we’d like to go to the equity route.

Srivats — Hindu Business Line — Analyst

Right, sir, thank you so much.

Operator

Thank you, sir. Our next question is from the line of Mr. Dheeraj Tiwari from The Economic Times. Please go ahead, sir.

Dheeraj Tiwari — The Economic Times — Analyst

Am I audible?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, yeah.

Dheeraj Tiwari — The Economic Times — Analyst

Hi sir, good afternoon. Just want a bit of clarity, sir, you said that you are going to raise around, looking to raise around INR250 crores this fiscal, primarily through the equity route, right?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah.

Dheeraj Tiwari — The Economic Times — Analyst

Alright. Sir, my question, the other question is that there is a lot of focus from the government on return of accounts. Is the bank also going to pursue any specific strategy towards that, towards return of accounts. That’s my first question. And my second question is, sir, that in the last month when the finance minister met all banks, public sector banks on the crisis that happened in the US including the SVB, then there was a nudge towards expanding operations in GIFT City. What kind of scale-up you are looking up on that front. That are my two questions, sir.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. I will let my ED Dr. Yadav to speak on the strategy on the written-off accounts.

Ram Jass Yadav — Executive Director

Yeah, Dheeraj, I think you have picked up very relevant question and government is also behind the bank that at least 40% recoveries would be happened in the writing off. Rather we are little bit optimistic, that we will be recovering more. And why. I am saying more because now we have a smaller account written off also wherein we have the good opportunity of having specifically no discretionary schemes for the OTS and also some of the big accounts. So definitely we will be achieving around 40% guidance, which the government is emphasizing.

Dheeraj Tiwari — The Economic Times — Analyst

Sorry to bother but 40% in this financial year or overall.

Ram Jass Yadav — Executive Director

No, we will be making efforts for this financial year ’24

Dheeraj Tiwari — The Economic Times — Analyst

Okay, so 40% recovery in written off accounts in this financial year. Correct, sir.

Ram Jass Yadav — Executive Director

Yeah.

Dheeraj Tiwari — The Economic Times — Analyst

Okay, thank you.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, and of course,I just want to supplement Dr. Yadav’s answer is that of course, we will look into our inventory on the written off accounts and take specific steps. We have been doing this quarter also. This quarter we have handsome recovery in the written off accounts. So the percentage of the recovery in the total write-off is in line with the industry as of now. As the industry scales up, we will also scale up our strategic. action points on the recovery of the written-off accounts. Regarding your second question as for as the expanding our operations in the in the GIFT City, yes, I was a part of that meeting also, and I had shared and this was the guidance that was given to us and because of our size and of our geographical segmental net working that we have, we are working on that and we have a zonal office actually in Gandhinagar, GIFT City. I will be operating, we will be looking into that. In fact I’ll be visiting that place very shortly and trying to look for opportunities if the opportunities are there. Yes, why not. We will explore opening a branch there itself.

Dheeraj Tiwari — The Economic Times — Analyst

Thank you so much sir. Really appreciate this

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, sir. So our next question is from Mr. Joel Rebello from The Economic Times. Please go ahead, sir.

Joel Rebello — The Economic Times — Analyst

So on provisions this quarter — can you hear me?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, I can hear you, please go ahead.

Joel Rebello — The Economic Times — Analyst

There a big write-back on provision this quarter. The write back has been consistent in the last, I think, three quarters at least even year-on-year. What is the write-back about can you give us some more details on this write back also. And. I have a second question, if you can answer this first.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Okay. So as far as the write back is concerned, you’re absolutely right in your observation that we have taken a write-back of INR473 crores, plus 67, overall our INR530 crores in the — in the overall financial year. These write backs are due to the recoveries that we made in the NPA accounts, where we are provided nearly some accounts are provided 100% also. So any recovery that comes in those accounts, gives us that advantage of having a write-back. And so our recovery has been remained robust, not only the TW accounts, in the non-TW accounts also, if you see, we have handsome kitty of recovery. So that is the mathematics of that.

Joel Rebello — The Economic Times — Analyst

So can you give us some details what is the recovery this quarter. How is it compared to last year or the quarter before.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

As far as. I think this is in the presentation. I just give you the small — I’ll just let you know. The overall recovery has been INR1,153 crores for the quarter against INR596 crores of last year. So 1153 for the quarter against 596 of the last quarter. So there is a quantum jump of nearly INR500 crores.

Joel Rebello — The Economic Times — Analyst

This is year-on year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

No, this is incremental QoQ. If you go by year-on-year, I will just let you know. Year-on-year is 2100, actually total recovery upgrade, you can see slide number 18, INR2,143 crores for last year and this year INR2,151, so we are able to maintain the recovery of–

Joel Rebello — The Economic Times — Analyst

No, I just wanted the last quarter, last year same quarter numbers.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Last year same quarter numbers. Okay, All right. Okay, INR553 crores.

Joel Rebello — The Economic Times — Analyst

That is substantially better than last quarter also, last year quarter.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yes, Slide number 15 for your reference.

Joel Rebello — The Economic Times — Analyst

Sure, I’ll cross check. Sir, also what is the provision coverage for you all right now after everything now

Swarup Kumar Saha — Managing Director and Chief Executive Officer

89.06%.

Joel Rebello — The Economic Times — Analyst

Okay, okay, so you’ll pretty well placed basically?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. We would like to improve it to more than 90% as we go ahead.

Joel Rebello — The Economic Times — Analyst

Okay, one last thing, sir, can you give us some details on your loan growth and other income. Where did this come from, this quarter.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Other income, of course, primarily the major impact is of course the recovery in the write-off accounts, so that is more than INR500 crores there. And in the other, what was the other point that you said, sorry.

Joel Rebello — The Economic Times — Analyst

Loan growth.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. Loan growth was about 15%, primarily it was driven by my RAM growth of over 20% and corporate growth. How much was the corporate growth, let me check, 9.24 was the corporate growth and RAM growth was 20.70%. So, we are now looking into how we churn our advanced mix between RAM and the corporate. And if you can see my slide number 8, you will find that my RAM percentage as for March 22 was 50.71. It has moved to 53.20 while the corporate on the other hand has been reduced from 49.29 March ’22 to 46.80 in March ’23.

Joel Rebello — The Economic Times — Analyst

How do you expect this year. Sir, how do you expect transition this year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

So we would like to improve it to 55% from 53.20% now. Our goalpost for March ’24 would be 55-45 ratio in favor of RAM growth.

Joel Rebello — The Economic Times — Analyst

Okay, and what is the credit growth outlook for next year. What was it this year, the whole credit growth this year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

It is 15.05% and we intend to be around 13% 14% growth next year.

Joel Rebello — The Economic Times — Analyst

Okay, sir. It can be slower, you’re saying basically next year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. See, if you have observed from the market, I think the Q2, Q3 growth that was growing around 18% 19%, will slow down a bit because of the rising one part, of course will be the rise in interest rates that will happen. And we feel as I personally feel that in ’23, ’24 growth story on the credit part for the commercial banks will be anything between 14% to 15%. It will moderate a bit. And therefore, we also feel that our — as far as our appetite is concerned, our market share is concerned and our expanding capacity is concerned in terms of resources, we feel that will be just in line with the average growth of the system.

Joel Rebello — The Economic Times — Analyst

Thank you very much. All the very best for the year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Thank you. Thank you.

Operator

Thank you. sir. Our next question is, we’ve got a message on the chat, it is from Priya Dutt Biswal from the Political and Business Daily. The question is would you please share your bank’s performance in Odisha and what’s your plan for the state for fiscal year ’24 in regards to opening new branches, especially in remote areas.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. For Odisha, what is the branch expansion plan?

Kollegal V Raghavendra — Executive Director

Yeah, branch expansion actually, if you have seen our slide, we have already opened 25 branches during this year and then the financial year coming financial year we want to open another 25 branches and this we are spreading across India, East, South and West and Central places. So we have a few branches in Odisha also.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

We can provide that data separately. The details maybe I am not having at this point of time, but if you feel it’s okay, I will tell my CFO to share with you, post the conference.

Operator

Thank you sir. Our next question is from Mr. R. Manisagham from Navjivan Express. What steps you have taken to push startups in Haryana.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, so Dr. Yadav will answer this.

Ram Jass Yadav — Executive Director

We are just giving our focus on startups by way of bringing the entire things on digital. And also we are focusing on both the sides, liability side and asset side. So dedicately, we are also coming out with, you know, customized schemes for them. But how much business will be garnered from this kind of segment right now, we have not been estimated [Phonetic].

Operator

Thank you sir. Our next question is from Mr. Prashant from National Herald News. His question is how much total number of branches does Punjab & Sind have and what are the expansion plans.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. We have a specific slide on the branch expansion. As of now, we are having 1,500 — 553 branches after opening 20 branches last month. And therefore, we will be opening another — we are as I said another 40 branches are in the offering for opening in the current financial year. So we will be expanding our geographies on wherever we are not present in the districts, particularly at the district level.

Operator

Thank you. Our next question is from Mr. Subodh from Mathrubhumi. There are two questions. One, your bank has made a good recovery this quarter. One, what are the big recovery, do you expect in the future. Second, will your bank provide additional credit beyond its limited loans to the farmers who are currently experiencing heavy unseasonal rains in Maharashtra and the financial losses of small farmers being huge.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, as far as the first part. I’ll answer. The second part. Dr. Yadav will answer. The first part is that, yes, there is one or two big corporate accounts which are in the pipeline under resolution within NARCL/NCLT. We expect some good recoveries from them. And as far as the farmers issues. Dr. Yadav can comment.

Ram Jass Yadav — Executive Director

Ma’am, you know, this is being a very sensitive as well as important area for agriculture. We are bringing new technology or new innovative products for these. You know merely Kissan Credit Card doesn’t suffice purpose of the agricultural growth. We are bringing their investment credit and moreover bringing our agriculture advances on digitally again. Either independently through our own app or also with fintech collaboration. It will be going to help even to reach out in Maharashtra and other states also.

Operator

Thank you, sir. Our next question is from Mr. Srivats from Hindu Business Line. Please go ahead, sir.

Srivats — Hindu Business Line — Analyst

So I hope I am audible.

Operator

Yeah, please.

Srivats — Hindu Business Line — Analyst

I just wanted your guidance for NIM for the current fiscal.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, this year we finished at 2.91. As far as Y-o-Y variation is concerned, we were 11 bps higher than last year’s financial year. We lost a bit of NIM in the quarter, during the quarter, Q4. However, keeping in view of our strategy that we have in place, we expect that we’ll be able to increase it to beyond 2.95% during the current financial year.

Srivats — Hindu Business Line — Analyst

Okay. And, sir, if one were to look at the private sector banks, they continue to enjoy a very-very healthy NIMs. So are you making any conscious effort to catch-up with the private sector on the NIM front.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, absolutely right. I think they are a bit ahead of the public sector as a class. And having NIMs of over 4 and someone having 5. See, as a bank of our size and of our legacy, our basic challenge is of a low CASA base. You need to augment that base in a very strategic manner, but we have to we improve our low-cost resources. At 33.59%, it is pretty low and we are the lowest in the public sector space. So our strategic thought process is that we will be expanding as we expand to the various branch network in the various parts of the country where potential of low cost resources are there. We will be also trying to build up our portfolio, our asset portfolio based on the returns that we get on certain products like personal loan, gold loan. We are going into a co-lending in a big way and all these measures which will give me return on my assets on my advances at a higher level than a normal advance because corporates, of course, there is lot of competition amongst the, in the corporate segment. So that’s why we are building up a trajectory for increasing our RAM segment growth at least through beyond 55% at touch base sometime within two-three years’ time around 60%. That is a — that would give me a margin on my return on my assets. Therefore, it is a two-pronged approach that we need to increase, improve upon. Our income capacity, generating capacity has to improve. So as you see it as my corporate credit growth, my RAM credit growth we are having a steadily return on average earning assets. So this time also my credit growth has been more than 15% and these are back-to-back at 16.54% of last quarter. So all these factors I’m very sure are going to yield results in the current year and help to strengthen my NIMs, but to reach the level of the private sector, we also in parallel need to work on technology utilization, reduction of operating costs. So these are all part of our strategy that we have. We have created, we have floated RFP on FinTech collaboration. So those vendors will come on-board as the FinTech come on board, we will be able to — and the best of the services can be given through various technologies and these FinTech companies products that they have. So it is a step-by-step effort that we are making. We will be moving towards, we cannot move in one fine year but our aspiration would be to be as much comfortable with NIM as it is possible.

Srivats — Hindu Business Line — Analyst

So would you like to leave a number with me on the aspiration on the CASA side from 33 where would you like that to be by March ’24.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

So ideally we would like to add 1% to that ratio but if you have seen the migration of the CASA to the term deposits of all the banks that have declared results so far, you will find out as far as the ratio is concerned, there is an impact in the private sector banks also for say, even the best of the private sector banks have lost on the ratio. So while the ratio is important, our ultimately aim will be to generate the quantum of the resources on the CASA that is that we need to build upon. So ideally in terms of a guidance. I will say. now IT is 33.59, we should be 1% higher at the end of March ’24.

Srivats — Hindu Business Line — Analyst

Thank you, sir.

Operator

Thank you sir. Our next question is from Ms. Suman Gupta from Mumbai News Express. Sir, do you plan to raise priority sector advances.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, Dr. Yadav?

Ram Jass Yadav — Executive Director

Yeah, ma’am, indeed as you must have observed that our priority sector is already crossing benchmark of 40%. But definitely under their arm segment which is are thinking that from 53% we are taking 55% my priority sector advance will definitely grow.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

We are already as far as the regulatory, I’ll just supplement Dr. Yadav. As far as the regulatory guidance is required for the priority sector, 40% is the regulatory limit. We are now at 55% and that is of March ’23. So we are very — we will be very happy to be part of that story.

Operator

Thank you, sir. I have my next question from Ms. Preeti. May I request you to please introduce yourself.

Preeti — Wama — Analyst

Sir, I am Preeti from Wama. Can you please share guidance on margin.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, as I just said that my guidance of the margin would be over 2.95% for the financial year as a whole. We were at 2.91%. We had increased our margins from 2.80 of FY ’22 to 2.91 in FY ’23. So now our guidance would be beyond 2.95% for the March ’24 as a whole.

Preeti — Wama — Analyst

Okay. What is your strategy to increase the margin.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Ultimately it’s a multi-pronged approach for increasing the margin. We need to increase our income and capacity both on the asset side and on the investment side also. So we have taken multiple strategies towards that. As I just mentioned a few moments earlier that our RAM growth will be a product predominantly the guiding factor which will give me better yields on advances, so we’d like to increase the ratio of the RAM component going forward. And all course, as I said that the low-cost resources particularly on the CASA front, we are now doing too satisfactory level in the current account level or savings account. Has a steady base now. So what we’re now doing is that lot of digitized products, we are bringing into the system. We are having upgraded our unique app so that the customer convenience. once the customer convenience increases the stickiness of the customer improves. We are bringing a lot of value-added products like credit cards, health insurance, life insurance, mutual fund business. So these will all attract a new-generation customer. We are taking a lot of effort to mobilize bulk salary accounts that helps my cross selling on the retail and that gives me good yields and we have tasted some success in certain segments. We will continue to build on that. So and of course another area which we are working on the low-cost resources is that we will try to build up a good healthy institutional CASA base. So the bank has now taken a lot of initiatives towards that aspect. So, we generate low-cost resources, we generate our high-yielding returning advances and that will contribute significantly to my NII and in turn my NIM.

Operator

Thank you, ma’am. Our next question is from Mr. Dau from Anytime News. Please go ahead, sir. Mr. Dau. Okay. I think there is some audio issues. I’ll take his question. He wants to know sir, what is your branch expansion plan in the current financial year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. See, last year we opened 20 brand new branches. So we are at 1553 number now at this point of time. And current year also we’ll be opening around 40 branches, particularly in the areas where we are not present in the districts where we’re not present, we are only present in 313 districts so far. So we’d like to – 318 districts to be precise. So we’d like to expand to those districts where we can build upon our brand and generate our business for the bank. So overall, the plan for the current year would be around 40 more. We are at 1553 now.

Operator

Thank you sir. He has two additional questions. It’s in Hindi. [Foreign Speech]

Ram Jass Yadav — Executive Director

Yeah, I will respond the second question. [Foreign Speech]

Kollegal V Raghavendra — Executive Director

[Foreign Speech]

Thank you, sir. I have an additional question from Dr. HK Karbanda. He wanted to know how will you deal with loans in increasing interest rate scenario. So that’s a pertinent in question to be precise, actually. In the loans that are increasing, see, ultimately we need to monitor while we lend. So there are two aspects lending and monitoring. While the lending is happening, we find that the rise in interest rates are peaking out to a certain level. So the impact on my building a book for the loan portfolio will not be very grossly impacted. However, in view of the rising interest rates, our collection efficiency needs to improve. We have improved our collection efficiency to a large extent. In fact, over the period of one year, our collection efficiency has moved from 75% to nearly 92% at this point of time. So we are in touch with our customers either to — I’m telling them the importance of maintaining their account as a standard account. And based on their feedback we talk with them, whether to increase the EMI or elongate the repayment period as per permissible under the regulations, so all its –we take a 360 degree view on this and act on it and we will be watching the situation very closely. Our collection efficiency has improved. So my retail NPA and it has also improved. If you see my sectoral NPAs slide on slide number 15, my retail NPA has moved down from 5.09% to 2.91, so very significant improvement in my retail NPA. So with all these strategies in place, I think we will grow our expansion expected in the retail segment is over 22% to 24% in the current financial year and we hope that we’ll be able to maintain that growth story.

Operator

Thank you sir. Our next question is from Mr. Dhairya Vardhan Singh from Business Remedies. His question. Punjab & Sind Bank’s gross NPAs were down significantly by FY 20 bps in fiscal year ’23, what is the reason. And will this trend continue in the coming financial year.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. See, again here, the gross NPA has reduced due to multi-pronged approach. We had a very good recovery this year also. And as I told earlier to another question, our overall recovery upgradation for the entire year was 2,151 crores. That has brought down my NPA and of course, we have done some technical write-off accounts as provided under the provisions of the regulations, which also has helped to bring it down. So while we also keep it’s an order booking only balance sheet purpose we do the technical write-off. We continue to maintain strong vigil on the recovery. And that is paying dividends also. We had a good recovery in the TW accounts in the current year also. So therefore, we have, it’s a multi strategic approach, which has helped us to reduce our NPA and not only that. Another area which which we have done is that we have done a lot of structural changes in the bank for preventing future delinquency. One is of course the legacy book that we carry. But we are also conscious of what are the lending that we’re doing at the current point of time. So, we have improved our credit underwriting standards. We improved our, we have segregated our sourcing and sanctioning of loans. All the loans are now sanctioned by the our back-office structure. So, that will also help qualitative improvement and as I also said another area which we work very closely for prevention of slippages is on the collection efficiency. Our collection efficiency has increased significantly. So we’ll be bringing in latest technological weapons which are presently in the system, which will further improve our collection efficiency. And another area of course would be the qualitative loan growth that we will do. So while we will recover, we do qualitative lending, we improve our collection efficiency. This also this is we have multiple strategic approach to reduce the NPA and your last question was regarding the guidance, and we have given a guidance of more than INR1,500 crores of recovery upgradation for the current year. Our guidance slide is available at the end of the presentation.

Operator

Thank you sir. Our next question is from Mr. Sushil Kumar, Dainik Janmat. His question is, there are 25 new branches, which has started. Out of these, how many branches are there in Mumbai. And what is your future expansion plan in the sate.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

That, we have details of that. Presently. I don’t have the overall, but we have opened in overall and the central part of the country, southern part, Eastern part. So I can provide the details separately to the person who has asked the question.

Kollegal V Raghavendra — Executive Director

Thank you sir. Our next question is from the line of Mr. Nikesh Singh from Business Standard. I think Nikesh has just left. In the meantime, I’ll move on. I have another question. Yes, Mr. Nikesh is back. Please go ahead, sir.

Nikesh Singh — Business Standard — Analyst

Hello. Sir, in the last meeting presided over by Finance Minister, there were certain instructions for the bank to like enhance the share of loans through external benchmark lending rates. So how do you consider that aspect in this financial year. And the second aspect is, how do you see the slippage in this quarter across the sectoral wise like what has been the agriculture, what has been MSMEs, what has been the corporate slippage on that aspect. And sir, my new question is that how do you see the net interest margin going ahead, being impacted by in this financial year. Like, will it be sustained or will it go down. Thank you.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Okay. So as far as the EBLR and MCLR is concerned, my banks present portfolio. EBLR is 35%, MCLR is 52%. So we are building it up with. This has increased by 3% year-on-year. So as we increase our our RAM segment, ideally, we’re not giving a specific guidance, but we will be ideally trying to reach our EBLR around 40% over a period of one or two years. So that would be the area which we are looking into. I think you had also asked about the NIM guidance, I understand. NIM guidance, so that would be around above 2.95 for the entire year. Please let me know if I missed out on one of your questions.

Operator

Thank you sir. Our next question is from Mr. Nikunj Ohri from Reuters. Please go ahead, sir.

Nikunj Ohri — Reuters — Analyst

I had a query. GoAir has today announced that they’re going to push for voluntary insolvency resolution proceedings before NCLT. So wanted to check if the bank has any exposure to the–

Swarup Kumar Saha — Managing Director and Chief Executive Officer

GoAir, I understand.

Nikunj Ohri — Reuters — Analyst

Yeah, GoAir.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

No, we don’t have any exposure.

Nikunj Ohri — Reuters — Analyst

Okay, okay. And secondly, sir. I wanted to ask you like is there, there were reports that the government wants all banks collectively to improve their focus on recoveries from written-off accounts. So is there, is that the plan. And would you also, have you also set targets for internal targets for yourself?

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. Yeah, that is what we are also working on and we had a good recovery in written off accounts last year. So, we will also have our action plan ready. We do it in our own way. Now since the directions are coming. So we will be now much more structuredly focused to increase the recovery in the written-off accounts. So let us see we will, but that is a strong focus area for us also because it helps my balance sheet qualitatively also.

Nikunj Ohri — Reuters — Analyst

Okay. any targets that you set for yourself, for all the recoveries.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Dr. Yadav, do you want to comment?

Ram Jass Yadav — Executive Director

No, as such, it will be very challenging right now to give any numbers but definitely the focus which has been given by the Government of India that we will be following that.

Nikunj Ohri — Reuters — Analyst

Thanks, sir.

Operator

Thank you, sir. Our next question is from Mr. Anil Pandey. Sir, may I please request to introduce yourself.

Anil Pandey — — Analyst

Yeah, good afternoon, Mr. Saha.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Good afternoon.

Anil Pandey — — Analyst

Yeah, you have just mentioned your proportion of more than 35% of EBLR and more than 50% of MCLR. How much do you agree that region by MCLR proportion in benchmark of loan book we can increase our margin. And what efforts are you doing to increase your MCLR proportion in loan book.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. See, it’s a dynamic call that we take, depending on the market dynamics and what RBI MPC decides on the repo rates. Therefore, as of now, yes, we are at 35 of EBLR and MCLR of 52% and this EBLR component was around 31%, 32% one year ago. So increase that to 3% plus. As I said also earlier that we would like to increase it to not a guidance as such, but our aspiration would be to improve this EBLR concept, EBLR portfolio near to 40%. As far as the MCLR, yes, we depending on our calculation that we have on the cost of funds, we have revised our MCLR significantly as the hikes have happened over the past one year or so and we have increased our MCLR. So, as the market dynamics move and as we and our ALCO also takes a view on that, we will be closely monitoring. Our ALCO meets every month on a particular day of the month and assesses and reviews the overall requirement. So as of — of course on the present context we find that the MCLR component on the corporate segment at least has taken some traction. There’s a lot of queries on what is our MCLR and how are we able to price our portfolio. So yes, we will be as we build our portfolio, and we go for the credit growth, we will build our MCLR to that extent, depending on our ALCO decision on the market.

Anil Pandey — — Analyst

Fine. Honorable Finance Minister has talked of INR35,000 crore of booster savings. In this default rating of income tax, so can we expect the deposit growth in your bank also.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yes. I think that’s what the market sentiments are all about. Absolutely right. And that is why we have now taken out as all banks have also done in some some way or the other. We also are giving very attractive rate of interest on our term deposits. In fact, in the last quarter March quarter, our 222 days product was was a very-very significant impact on our mobilization of resources and we got a lot of feedback and lot of new customers were added by this process. So now we are based on the current scenario, we have got attractive schemes in 555 days, 601 days. So all these are all part of the story to tap wherever resources are are in the market to tap the best of the customers in our fold. Our bank is in an effort to acquire new and new customers. So while we do all sorts of such activities in terms of product dimension, we also have to parallely work on our digital journey. Our customer experiences that they go through in the digital space. So we are putting lot of effort on the digital story also in the current context. So we will be as the news is regarding the direction of the government, we are also in tune with that and implementing the plan.

Anil Pandey — — Analyst

Finally, may I know that non-performing investment. How much do we have and about PCR for NPI. NPI non-performing investment, how do we have.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

You’re talking of non-performing investment.

Anil Pandey — — Analyst

Yes, NPI for that.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

INR450 crores we have.

Anil Pandey — — Analyst

Thank you. We always like to listen to you.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Thank you, Mr. Pandey. Thank you.

Operator

Thank you, sir. Our next question is from — sorry, our next question is from Mr. Mohan Kulkarni from Aryavarth Express. His question is, are you in the expansion mode good. How about your presence in rural area, particularly in South India.

Unidentified Speaker —

Yeah, actually [Foreign Speech] where we do not have the presence [Foreign Speech] at least 25 branches should be invariably in rural India. That’s RBI requirement. Therefore, at least one-fourth of the branches will be rural branches [Foreign Speech].

Operator

Thank you sir. I have an additional question from Mr. Dhairya Vardhan Singh from Business Remedies, His question is, what is the position of bank in priority sector, agriculture, small farmers, weaker section, micro enterprises and advance.

Ram Jass Yadav — Executive Director

Yeah. I think the priority sector position is overall against target of 40%. We are at the 55%. In agriculture against 18% we are 21%, small and marginal farmer against 9.5% we are 11% plus. Weaker section we are 12.68% and in micro enterprises 14.31%.

Operator

Our next question is from Mr. Umendra Viraj [Phonetic]. PMJJBY [Foreign Speech]

Unidentified Speaker —

[Foreign Speech]

Operator

Thank you, sir. We will wait for a moment for any further questions. Our next question—

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Can I answer one question, Shilpa, regarding Odisha, I would just like to confirm that we have — three branches are to be opened in three rural areas of Odisha. That’s our plan. We are working on the modalities. I have the details, it can be shared separately but as far as Odisha is concerned, we have three branches lined up in the rural area.

Operator

Thank you sir. Our next question is from Ms. Preeti from Wama. Please go ahead ma’am.

Preeti — Wama — Analyst

Share recent digitalization initiatives taken by your bank.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah. Thank you for the question. We have a very unique app which is quite unique in our both — which suits our name also. The name is PSB UnIC and it has certain unique features which is an outlier in the industry in terms of having the same user experience in both web and mobile app. That’s a new dimension we are adding, we are adding to that. So there are lot of why we implemented this new app we have gone through certain teething issues. Those things have been greatly solved and in my, if you see our rating in the PlayStore, it has significantly improved. 4.2 out of 5 is a significant jump we have both in the Apple Store and the Google Play Store. So first of all, on the digital story, I would like to mention here that we are giving a lot of focus to improve our app and adding value-added services. Lot of other already and the customer acquisition, we are trying to build upon on instant online account opening, virtual debit card. Applying for digital loans of MSME detail, integration of compliant portal. The pre-approved personal loan category, which was we were lagging behind compared to other banks today the pre-approved personal loan is also available on our digital app. We have created instant recurring and fixed deposits opening closing, filing of tax through these app and generation of UPI pin through Aadhar and OTP. And in terms of the future initiatives that we will be taking is that we are going in for Whatsapp banking, wearable [Phonetic] banking, App banking, cardless cash withdrawal, online current account opening. We will have reward programs also and various other value-added services. So our digital transactions are increasing many fold. We have a growth of 78% in our digital transaction. Our new merchant acquisitions are showing a very healthy trend. Our UPI users are improving, 38% Y-o-Y basis. So these are all areas that we are working on. Ultimately, we want to make this app, a super app and we will be doing that as our technological upgradation happens on the core banking. We will be supplementing after the upgradation happens, which is happening anytime down the quarter. And we’ll be able to improve our standards of mobile banking in a big way. And of course, we will also be in other than the digital app mobile app, we’ll also be working on how we do fintech collaborations, how we do bring new products on the Digital and FinTech with fintechs on board. We will do co-lending as a big business initiative. We’d like to bring more-and-more pre-approved loans category like gold loan, housing loan, vehicle loan through our mobile app. So we have a very-very aggressive plan on our digital journey. And maybe two years down the line, we’ll be in a position to be one of the best in the industry.

Preeti — Wama — Analyst

Sir, best wishes and congratulations. Sir, one more question from my side. It’s my favorite question, sir. Representing women’s organization, may I know your vision for succession planning, particularly regarding women executives.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, in my boardroom. I don’t know whether you can see all of them. One of them is my CFO who is sitting left to my side. And the other, I just tell my person to show new GM that has just been promoted. Madam Kwatra [Phonetic]. You can just see as my camera will be scanning,

Preeti — Wama — Analyst

Okay, congrats ma’am.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, she has just been promoted in the GM cadre. She is the only General Manager in my — woman general manager amongst my GMs. And we have one CFO woman CFO, who is handling the very critical department of ours. I think this is a reflection on what we are thinking about our gender diversity.

Preeti — Wama — Analyst

Okay sir, thank you.

Operator

Thank you, sir. We will take the last question from Mr. Dau from Anytime News. Please go ahead, sir.

Swarup Kumar Saha — Managing Director and Chief Executive Officer

Yeah, please go.

Unidentified Participant — — Analyst

[Foreign Speech]

Unidentified Speaker —

[Foreign Speech] I will just tell you. [Foreign Speech] we have kept a slide on Treasury. [Foreign Speech] as far as size, so we have a healthy book of [Foreign Speech]

Unidentified Participant — — Analyst

Thank you.

Operator

Thank you, sir. We’ll just take a moment in case if there is any further questions. If you have any further queries, please reach out to Shilpa at 790-743-1859 or shilpa.abraham@dentsu.com. Details are mentioned in the Webex chat and the media invitation sent to you earlier. [Operator Closing Remarks]