Punjab & Sind Bank upgrades its FY23 guidance for NIMs, credit costs

S K Saha, managing director and chief executive of the bank, said the lender is trying to create an image of a niche bank

Punjab & Sind Bank (P&SB) has revised upwards its guidance for net interest margins (NIMs) to 2.95-3.0 per cent for FY23 from the earlier estimate of 2.90 per cent. This comes on the back of improved margins of 3.12 per cent for Q3 and growth prospects.

The Delhi-based public sector bank scaled down FY23 estimates for slippage ratio, the rate at which performing loan accounts become stressed assets, to 1.0 per cent from the earlier 1.5 per cent. Its Gross Non-Performing Assets (GNPAs) declined from 8.36 per cent in December 2022 from 14.44 per cent a year ago.

S K Saha, its managing director and chief executive, told Business Standard the lender is trying to create an image of a niche bank. The performance has improved over the last five quarters. This gives the bank the confidence to revise guidance upwards, Saha said.

The higher credit growth of 16.54 per cent (to Rs 77,745 crore) year-on-year (YoY) as of December 31, 2022, reflects the low base of December 2021. The base effect will not be much in the March quarter, Saha said. The bank has estimated credit growth of 15 per cent YoY for FY23.

Overall the banking industry performance of high credit growth (17-19 per cent) will also moderate to a great extent to 14-15 per cent. “Keeping that in mind we feel that original guidance of 15 per cent is ok for the bank,” he said.

As for competition in raising funds, he said the intensity among banks is going to continue in this quarter. “The basic issue is about tight liquidity. The rising rate situation (on deposits) will moderate to some extent post March 2023.”

While its FY23 guidance for deposit growth is 12 per cent, they grew by 9.11 per cent YoY to Rs 1,09,497 crore as of December 31, 2022.

On the capital raising plan, Saha said the board of directors has given approval for raising Rs 250 crore in capital either in the form of equity via QIP or bonds. Though there is no immediate requirement, the bank wants to send a signal to the market that it is able to raise its own resources. Its capital adequacy stood at 15.57 per cent at end of December 2022.

“The amount is small, so is the bank. The bank will first try to raise this amount and can think of raising more going forward. The shareholding of the Government of India has to be reduced to meet regulatory requirements of 25 per cent public shareholding and also perception of the bank needs to change,” he said.

There is very little floating stock of bank shares in the market with the government holding 98 per cent stake in it.