Punjab & Sind Bank eyes 22-24% credit growth in FY12

Speaking to CNBC-TV18, PK Anand, executive director of the bank said the government hasn’t replied yet as it is still collecting data from most of the banks regarding the capital requirement in view of BASEL III and IFRS.

As far as the bank's future goals are concerned, Anand said that the bank is eyeing 22-24% credit growth in FY12.

Below is a verbatim transcript of his interview with CNBC-TV18’s Reema Tendulkar and Ekta Batra. Also watch the accompanying video.

Q: Before we come to your numbers, there are a couple of agency reports doing the rounds that you all have sought Rs 990 crore of capital infusion from the government, could you all confirm that for us?

A: We have moved a letter to the government of India, about a fortnight back requesting for capital infusion of Rs 990 crore.

Q: Have they reverted to you and what kind of dilution would this involve and how soon are you hoping this money will come into you all?

A: We have not heard anything from the government as yet. I believe the government is still collecting data from most of the banks and the capital requirement in view of BASEL III and IFRS.

Q:  What are you expecting as far as credit growth is concerned for FY12?

A: Our present quarter growth, on a year on year basis, is 28.50%. However, going forward, we expect it to be muted around 22-24%.

Q: What about the asset quality?

A: The asset quality by and large is fine. As far as NPAs are concerned, we should be around 1 to 1.1% and as far as net NPAs are concerned, we should be in the vicinity of 0.75-0.80%.

Q: If you all do get Rs 990 crore infusion from the government, what kind of dilution would it result in? And also what would your capital adequacy ratios stand at?

A: No, that will depend upon at what price the funding is done by the Government of India.

Q: You had indicated that you are targeting net interest margins of about 2.7%, which is slightly higher than what you all had done recently. Given the rate hikes that have been undertaken off late by the RBI, are you still confident that the net interest margin by the end of the year would average at 2.7%?

A: The net interest margin has taken a slight hit this quarter. We have come down to 2.30%. So, the effort would definitely be to reach in the vicinity of 2.7-2.75% by the year end.

Q: You have tapered your credit growth down to 20-24%, can you just give us a breakup of what type of services you have and what your loan portfolio basically comprises of?

A: If you look at our sectorial deployment, the infrastructure occupies around 22%, the agriculture is around 14-15%, the MSME is 16-16.5% and the non-banking financial institutions comprise of 19%. Initial mortgages around 3.70% and indirect loans to HSCs are 7%. The commercial real estate is in the vicinity of 5% and personal loan comprises around 7.50%.

Q: If you do plan to increase your net interest margin from a current 2.3% to 2.7%, what would your CASA by the end of year stand at?

A: We are looking at 27.50%.

Q: How many provisions you require to make in the coming quarter?

A: As we go along each quarter, we have been maintaining the provisions that are required. For instance, in this quarter that has just gone by, we had to make provisions of about Rs 75 crore for the second pension liability and which has dented our margins for this quarter.

At the same time, we had provision of about Rs 45 crore for the depreciation in security and then as per the revised RBI norms for provisions against standard assets and NPAs, we have made another provision. So each quarter we are making provisions, and by the end of the year, we have no surprises in store for us.

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