Key highlights from Punjab & Sind Bank (PSB) Q3 FY24 Earnings Concall
- Financial Performance
- CASA ratio improved by 158 bps to 32.77% sequentially.
- NIM improved by 21 bps to 2.54% sequentially.
- Net interest income grew 9.48% to INR 739 crores sequentially.
- Gross NPA improved to 5.70%, decline of 53 bps.
- Operating profit improved to INR 277 crores sequentially.
- Yield on advances improved significantly to 8.91%, up 29 bps.
- Business Growth
- Total business crossed INR 2 lakh crore in Q3, growth of 7.84%.
- Deposits grew 8.09%, retail term deposits grew nearly 9%, CASA grew 6.38%.
- Retail advances up 15.5%, agri advances up 6.12%, MSME up 12.84%.
- RAM percentage improved from 49.47% to 51.46% on Y-o-Y basis.
- Core fee income increased by 35.29%.
- Fresh slippages contained at INR 228 crores, lowest in 4 quarters.
- SMA 2 book above INR 5 crores declined to INR 201 crores from INR 407 crores.
- Outlook
- Expect INR 350-400 crores recovery from NCLT and other bad debts in current quarter.
- Targeting 6-8% credit growth this quarter given dynamic environment and focus on bottom line protection.
- Aim to maintain NIM in 2.50-2.55% range in line with 9M NIM of 2.50%.
- Plan to raise INR 250 crores via QIP, will revisit plans and announce details after consulting committees.
- Currently comfortable capital adequacy ratio of 16.13%, so no immediate need.
- Interest Expense Trends
- Increase driven by higher deposit and borrowing costs.
- CASA migration also contributed but cost deposit up only 3bps vs 29bps increase in yield on advances.
- Able to grow qualitatively while protecting bottom-line.
- Cost-to-income ratio increased due to INR 150 crores of exceptional wage revision expenses.
- Credit Growth Outlook
- Targeting 6-8% growth this quarter.
- Consciously limiting corporate lending given high competition.
- Focus on profitable RAM sectors leveraging tech upgrade.
- Expanding services like digital lending through fintech tie-ups.
- Scaling up products like gold loans, personal loans etc.
- Raising RAM share from 51% currently to 60% next fiscal.
- Falling Bond Yields Impact
- Positive MTM impact on profits and cost-income ratio.
- Provided for depreciation last few quarters, got some reversal in Q3.
- Further yields decline to boost profits.
- Rate cut transmission will reduce EBLR loans cost.
- May enable higher income if investment yields can be maintained.
- HR Transformation Plans
- Currently focused on upgrading technology.
- Will now work on HR processes like succession planning, competency mapping.
- Arranged specialized trainings in project and infrastructure financing.
- Planning initiatives around performance management, training, transfers etc.
- Sending top executives for training at reputed institutes.
- HR changes including lateral hires and training throughout 2024.
- Already hired CRO, other CXOs joining by April post notice period.
- Undisbursed Loans Position
- Around INR 500 crores of undisbursed sanctioned loans currently.
- Mainly pertains to infrastructure loans with pending disbursements.
- Co-lending Business Progress
- Grown co-lending book to INR 1,800 crores with over 10 partners.
- Earlier focused on priority sector, now entering non-priority sector as well.
- Also exploring direct assignment route, expected to implement after more tech readiness.