PNB CEO says 95% deposits repriced but no significant rise in costs expected

Atul Kumar Goel, the Managing Director and CEO of Punjab National Bank (PNB) on Monday, January 29, addressed the impact of increasing interest rates on the bank's deposits. He revealed that 95% of deposits have already been repriced, minimising potential repercussions.

Despite a 10 basis points increase in the cost of deposit, he expressed confidence that the remaining 5% could be managed effectively, resulting in a modest uptick in the overall cost of deposits.

The CEO underscored the significance of the current account and savings account (CASA) ratio, which stands at 42-43%.

With a nationwide presence through 10,000 branches, PNB is emphasising the opening of savings and current accounts, aiming to maintain the CASA ratio within the established range, the CEO told CNBC-TV18.

Goel further provided an overview of the bank's global and domestic net interest margins (NIMs), standing at 3.15% and 3.3%, respectively.

While offering a guidance of 3% for the fiscal year 2024, he expressed optimism about sustaining current yield levels.

Addressing concerns about incremental deposits, Goel acknowledged a 40-50 basis points increase in the last 1-2 months.

Despite potential pressures on incremental deposits, he assured that loan growth is expected to be robust, targeting a range of 12-13%.

Credit growth remains a strong suit for the bank, even amid weaker deposit growth.

Touching upon financial metrics, Goel expressed confidence in maintaining credit costs below 1% in Q4FY24 and throughout FY25.

Further, he anticipated a recovery of ₹1,200 crore in the fourth quarter of the financial year through the National Company Law Tribunal (NCLT) process.

The CEO further outlined plans to raise tier I capital in Q4FY24.

Goel was speaking to CNBC-TV18 days after the lender reported a net profit of ₹2,222.8 crore for the December quarter of the financial year (FY) 2023-24, up 253.49% from the year-ago period.

The bank's gross non-performing asset (NPA) stood at 6.24%, down from 9.76% recorded in the same quarter last year.