Release Date: October 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Punjab & Sind Bank (BOM:533295, Financial) reported a significant increase in operating profit by 76.15% for Q2.
- The bank's net profit rose by 26.98% year-over-year, reaching 240 crores.
- Net interest income saw a robust growth of 29.3%, contributing to the overall positive financial performance.
- The bank's gross advances grew by 11.14%, indicating strong credit growth.
- The net NPA ratio improved, reducing to 1.46%, reflecting better asset quality management.
Negative Points
- The cost to income ratio, although improved, remains relatively high at 62.82%.
- CASA ratio saw a marginal reduction to 30.43%, indicating challenges in deposit mobilization.
- The bank faces challenges in deposit mobilization, particularly in improving the CASA component.
- There is a noted dependency on non-interest income, which may not be sustainable in future quarters.
- The bank's credit growth target remains conservative at 10-12%, despite potential for higher growth.
Q & A Highlights
Q: What is the outlook for non-interest income and net interest margin (NIM) for the remaining quarters of FY25?
A: Shri Swarup Kumar Saha, MD & CEO, explained that while non-interest income, particularly from treasury operations, significantly contributed to Q2 results, future contributions might moderate due to market conditions. The bank aims to offset this with increased core fee income and strategic shifts in its loan portfolio. The target for NIM by March is around 2.75% plus, despite challenges in deposit costs.
Q: Given the strong credit growth in Q2, is there a possibility of revising the credit growth target from 12% to a higher figure?
A: Shri Swarup Kumar Saha stated that while the bank acknowledges the potential for higher growth, it prioritizes sustainable and profitable growth. The current guidance remains at 10-12% due to industry-wide moderation in credit growth and challenges in deposit mobilization.
Q: How does the bank plan to improve its CASA ratio to enhance margins?
A: The bank is focusing on customer acquisition and retention through improved services and products, particularly targeting MSME lending to boost current accounts. Strategic collaborations and digital enhancements are also part of the plan to increase CASA and retail term deposits.
Q: What steps are being taken to control slippages, especially in MSME and agriculture segments?
A: The bank has implemented centralized calling, credit mid-office concepts, and enhanced monitoring systems to improve collection efficiency. Structural changes in loan sanctioning and proactive measures in monitoring have led to improved collection efficiency and reduced slippages.
Q: What is the bank's strategy regarding the shift towards RAM (Retail, Agriculture, MSME) segment and away from corporate loans?
A: The bank is strategically increasing its RAM portfolio to over 56% to diversify risk and improve yields. The focus is on secured retail products and MSME lending, which offer better returns and align with the bank's risk management strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
