He said the revival of the economy and focused recovery initiatives would help the lender to reduce non-performing assets (NPA) to single digits.
“We are primarily a consumption-based economy with a strong demographic dividend. As far as credit is concerned, it is expanding in double digits and will continue to do so despite rising interest rates. A stronger economy, budgetary support from the government in the capital-intensive sector, schemes such as PLI (production-linked incentives), ECLGS (emergency credit line guarantee scheme) and better consumption demand will pave the way for better credit growth. The banking sector is also stronger and well positioned to grab the upcoming opportunities,” Goel told ET in an exclusive interview.
India has become the fifth-largest economy in the world overtaking the United Kingdom and is expected to be the third-largest by 2030.
“When the developed world is reeling under high inflation and the policymakers are finding it difficult to curtail it, we have been able to manage inflationary expectations quite well. I am hopeful the Indian growth story will remain intact,” he said.
The Delhi-based lender has crossed ₹8 lakh crore in global advances showing a 10% year-on-year growth with retail loan portfolio rising by 11% and personal loan rising by 25%.
Besides retail, Goel said that the focus is also on MSME, manufacturing, renewable energy and infrastructure sectors such as roads. “All these sectors are getting support and enhanced investment from the various policy initiatives,” he said.
Its NPA ratio, however, remained elevated at 11.2%, despite recent improvements.
“We expect gross NPA ratio to come down to single digit and net NPA level to below 4% by the end of the current financial year,” Goel said, adding that the bank has set up separate verticals for sourcing of leads, sanctioning and monitoring of loans to improve underwriting standards.
He added the bank’s net interest margins (NIM) would remain in the range of 2.80-2.90% by the end of the year against the 2.79% seen in the June quarter.
The bank has the approval to raise up to ₹12,000 crore in one or more tranches – by way of Basel-Ill compliant additional tier-1 (AT1) bonds up to ₹5,500 crore and tier-II bonds up to ₹6,500 crore. “The approach will be gradual and will depend upon the progress in business growth, market situation, and pursuant to applicable laws/guidelines,” said Goel.
Out of the ₹5,500 crore AT1 plan for the year, the lender has already raised ₹2,000 crore in July. “Even without raising any equity capital during the current financial year our CET1 (common equity tier-1) was at 10.94% and CRAR (capital to risk-weighted assets ratio) is expected to remain around 14.5% level,” said Goel.
“With all such initiatives, it is expected that quality credit growth going forward will further improve the profitability of the bank. Gradual improvement in margin, steady operational efficiency coupled with adequate provision buffer will surely improve shareholder value in times to come,” Goel said.
PNB is also planning to open 200 branches mainly in the southern and western parts of the country.