'We hope to achieve 4% gross NPA level by end of FY25,' says PNB chief AK Goel

Earlier, we had guided a GNPA of 5 percent for FY25 but now we see that we can achieve a 4 percent GNPA in this fiscal.

State-run Punjab National Bank looks to achieve 4 percent gross non-performing assets (GNPA) by the end of fiscal 2025, Managing Director and Chief Executive Officer Atul Kumar Goel said.

According to him, the lender expects that the central bank’s new draft on liquidity coverage ratio (LCR) will have a 10 percent impact on it. The bank’s LCR, as of June 30, 2024, stands at 125 percent and this may come down to 115 percent due to the new norms.

LCR is a liquidity requirement which banks need to maintain at all times in a certain proportion of high-quality liquid assets (HQLA). These assets may be cash, reserves with the central bank, and bonds. The RBI's latest draft on LCR framework requires banks to maintain a stock of HQLA to cover expected net cash outflows over the next 30 days.

Goel said that the bank is optimistic on maintaining its net interest margin (NIM) at current levels and is also looking at strong growth on the deposit front, especially the current account savings account (CASA).

PNB, Goel said in an interaction with Moneycontrol, is expecting a total recovery of Rs 18,000 crore in this fiscal year. Excerpts from the interaction:

How are you looking at your deposit growth?

There is a gap in the banking industry between deposit and credit because credit growth is much more than deposit growth. As far as PNB is concerned, we are focusing more on CASA and not on bulk deposits as the rate of interest there is high. We do not want to grow our topline at the cost of the bottomline.

Also read: CSB Bank expects 10% impact from RBI’s LCR norms, says CFO

In the last fiscal year, we opened around 2 crore accounts. In Q1FY25, we opened around 57 lakh accounts. This helped us gain more deposits.

Could you give some guidance on how you are looking to grow your credit, deposit and maintain your asset quality?

In the first quarter of fiscal 2025, we reported a credit growth of 11 percent and we are expecting the same to be around 10-12 percent this fiscal year.

On the deposit front, we reported an 8.5 percent growth in the first quarter. And for the fiscal year, our deposit growth target for the year should be around 9 to 10 percent.

We have changed guidance on our GNPA. Earlier, we had guided a GNPA of 5 percent for FY25 but now we see that we can achieve a 4 percent GNPA in this fiscal.

Your bank reported stable margins for Q1FY25. What would be your outlook on the same?

Towards margins, we have given 2.9 to 3 percent as our guidance for NIM and this Q1FY25, we have achieved margins of 3.21 percent in domestic and 3.07 percent globally. And our guidance will be the same as we have seen some strict borrowing patterns among our customers.

The Reserve Bank of India recently brought in draft guidelines on LCR for banks. How will that impact PNB?

We have made an internal assessment of the draft LCR guidelines. There would be some run-off depending on the deposit provided, maybe 5-10 percent on deposits.

Our LCR rate is 125 percent and the LCR guidelines, we expect, will have an impact of 10 percent.

Also read: Private banks face toughest June quarter in years with shrinking margins, poor asset quality, high slippages

On the recovery side, what is your target for FY25?

We are expecting a total recovery of Rs 18,000 crore in this fiscal year.

Through the NCLT route, last year we recovered around Rs 3,603 crore. And this year also, we are expecting to recover more than Rs 3,000 crore from our cases in the NCLT.