Punjab and Sind Bank’s (PSB) credit growth is expected to decelerate in FY24, with a slowing economy pushing back investments and dampening demand for corporate sector credit, Swarup Kumar Saha, the state-owned bank’s managing director and chief executive officer, said.
PSB’s credit growth is likely to ease to 13-14% in the current fiscal year, in line with industry trends, following a robust 15.05% expansion in FY23.
Though credit demand for the corporate sector may be lower than FY23, increased focus on RAM—retail, agriculture and MSME (micro, small and medium enterprise)—segments by banks will make up for the losses and lower the impact of a falling credit cycle, he added.
The bank had raised the share of RAM advances to 53.20% in the last financial year from 50.71% in FY22. This will be further raised to over 55% this fiscal year to offset the decline in credit flows to large corporates, Saha said.
“We have done rebalancing of the portfolio last year, raising the level of RAM advances over corporate advance. It will go up further in FY24 as the accounts provide steady growth to PSB. This may hit advances growth moderately as the topline growth in corporate advances is more than RAM,” he said.
Slippages rose marginally in the March quarter to ₹448 crore from ₹433 crore a year ago, he said. “Slippages were largely seen in small-value agriculture accounts. In the corporate sector we are immune to any such events.” All these assets have been recognised and as we go forward the trajectory will be downwards, he added. PSB followed a conscious path to make recovery even from written-off accounts as it was a liability that required a resolution. It saw recovery and upgradation of ₹2,151 crore in FY23 , almost on a par with the previous year. The bank hopes to recover another ₹1,500 crore in FY24. In terms of recognised bad assets, it is targeting to reduce gross NPA level to below 6% and net NPAs to below 1.5% in FY24.
However, its provision coverage ratio is expected to increase to over 90% from 89.06% in the previous year.
The bank also plans capital raise of ₹250 crore in FY24. The issue is expected to be for qualified institutional investors and may be launched before September this year. The bank has sought government approval for the same.
PSB has reported a 32% increase in net profit for the quarter ended March, 2023 at ₹457 crore as against ₹346 crore in the previous year. The bank’s total income in the quarter stood at ₹2,652 crore, also up 32% from ₹2,008 crore in the same period of previous year.
For full fiscal; 2022-23, the bank recorded highest ever net profit of ₹1,313 crore, an increase of 26.37% over net profit of ₹1,039 crore in the previous fiscal.
