NIMs seen at 3.5% by end of FY13, says PNB

In an interview with CNBC-TV18, Rakesh Sethi, ED of Punjab National Bank said they will review lending rates when deposit rates come down. According to him, asset quality will remain under pressure due to weak macros. In Q1, the bank saw asset upgradation of Rs 896 crore and a recovery of Rs 1500 crore in the first quarter of the current fiscal is the highest ever, added Sethi.

However, Sethi is not betting on a macro recovery in the near term. He expects NIMs to be at 3.5% by the end of FY13. At present, the bank has two accounts in its restructuring pipeline, he informed.

Here is the edited transcript of the interview on CNBC-TV18.

Q: Can you take us through what has been the reason for the sharp rise in NPLs at your end?

A: The reason is that the macro economic vertical indicators are such that there would be stress in the economy. There are just two points that I would like to put in with regard to the NPLs having gone up. The first one is the recovery as against the slippages of about Rs 2,700 crore. The recoveries have been Rs 1,500 crore, out of which as against the total cash recovery of Rs 1,675 crore, last year the cash recoveries were Rs 570 crore.

But, what is more heartening is against the total upgradation of about Rs 530 crore last year, upgradations have been Rs 896 crore this quarter alone. The point I am taking is that whatever were the slippages last quarter, we had given a guidance when we were asked whether this would have peaked.

But, we said that as long as lending is there, there is no question of an NPL also peaking. We had assured the market that whatever are the higher slippages will be offset by a very robust recovery in the coming quarter. I think we have stood by that and if you take into account Rs 1,500 crore, this is the highest ever recovery in any quarter by us.

Slippages this year have happened primarily because of what you call two accounts both from Hyderabad, one a jeweller and another one a ferro-alloy company, a listed company.

Q: What are the total fresh slippages in the current quarter and the fresh restructuring in the current quarter?

A: The total slippage is Rs 2,700 crore. I didn't get the second part of your question.

Q: Fresh restructured assets?

A: Fresh restructured assets is Rs 1,235 crore.