Punjab & Sind Bank revises its forecast for the fiscal year 2023, increasing its guidance for net interest margins and credit costs

Punjab & Sind Bank has updated its forecast for net interest margins for the fiscal year 2023, raising the estimate from 2.90% to a range of 2.95-3.0%. The change is due to the bank’s improved margins of 3.12% during the third quarter, as well as positive growth prospects.

The public sector bank based in Delhi has lowered its projections for the slippage ratio for the fiscal year 2023, from the previous estimate of 1.5% to 1.0%. This is due to the decline in the bank’s Gross Non-Performing Assets (GNPAs) which decreased from 8.36% in December 2022 to 14.44% in December 2021.

The Managing Director and Chief Executive of the bank, S K Saha, stated that the bank is working to establish a reputation as a specialized lender. He also mentioned that the bank’s performance has seen improvement over the last five quarters, which has led to the decision to revise their guidance upwards.

The bank has reported a significant increase in credit growth, reaching 16.54% YoY (or Rs 77,745 crore) as of December 31, 2022. This growth can be attributed to the low credit growth from the same period in the previous year. However, the bank’s managing director and CEO, S K Saha, has stated that this trend is unlikely to continue in the following quarter and the bank has estimated a credit growth of 15% for the fiscal year 2023.

The overall performance of the banking industry, which previously showed high credit growth of 17-19%, is expected to decrease significantly to a range of 14-15%. Given this forecast, the bank’s original guidance of 15% for credit growth is considered appropriate, according to the bank’s managing director and CEO, S K Saha.

The managing director and CEO of the bank, S K Saha, stated that competition among banks for raising funds will remain strong in this quarter, due to the ongoing tight liquidity situation. He also added that the increasing deposit rates is expected to decrease after March 2023. The bank’s guidance for deposit growth for the fiscal year 2023 is 12%, however, as of December 31, 2022, deposit growth was at 9.11% YoY, reaching Rs 1,09,497 crore.

S K Saha, the managing director and CEO of the bank, mentioned that the bank’s board of directors has authorized the raising of Rs 250 crore in capital, either through a Qualified Institutional Placement (QIP) or bonds. While there is currently no immediate need for the capital, the bank aims to demonstrate to the market that it has the ability to raise its own resources. The bank’s capital adequacy stood at 15.57% at the end of December 2022.

The CEO of the bank, S K Saha, stated that the bank plans to raise a small amount of capital initially, as the bank is small in size. He also mentioned that the bank is planning to try to raise this amount first and can consider raising more in the future. The bank is looking to reduce the shareholding of the Government of India to meet regulatory requirements of 25% public shareholding and also change the perception of the bank.

The government holds a 98% stake in the bank, resulting in very little floating stock of bank shares available in the market.