PNB hopeful of achieving net interest margin, FCNR (B) targets

What are the new initiatives to achieve the target of $2.5 billion through FCNR (B) deposits by September 30, 2026?

We are actively reaching out to NRIs, leveraging our extensive franchise and strong NRI base. All communication tools have been mobilized to explain the product clearly. One key strategy is direct engagement with the NRI community, and the second is highlighting the benefits they can gain from FCNR (B) deposits. We remain confident about meeting the target.

You have given a guidance of 7 per cent for growth related to Net Interest Income (NII). However, growth during first quarter was 2.1 per cent. How are you going to achieve this kind of guidance?

We are building a high‑quality credit book and have moved past the phase of low‑holding advances. Deposit costs are beginning to fall, and mobilising FCNR (B) deposits will further reduce the cost of funds because these deposits do not attract CRR‑SLR requirements. This will lower our overall deposit cost. Simultaneously, we are working to improve yields on advances. By addressing both cost of deposits and asset yields, we expect solid NII growth going forward.

Guidance for operating profit is 9-10 per cent while growth during first quarter was 6.2 per cent. How are you going to achieve the guidance for the operating profit?

Last year the bank launched three new initiatives—supply‑chain vertical, cash‑management services, and credit cards—which were fully stabilised by December‑January and have begun to pick up strongly this fiscal year. Each vertical carries a revenue target. Additionally, we have re‑engineered the balance sheet by shedding low‑yielding advances, which will boost profitability. Finally, although recoveries were modest in Q1, we anticipate improvement. Together, these actions should deliver at least 9‑10 percent operating‑profit growth.

Your net profit surged over three times in first quarter and one reason is that last year your tax outgo was very high in the corresponding quarter. However, on a sequential basis, the growth in net profit appears to be plateaued. Is it so?

On the contrary, we have added an extra cushion this quarter—₹390 crore set aside as an ECL provision. This floating provision now totals ₹2,435 crore, a reserve we started building from Q2 of last year. These provisions will support us during‑the‑year buffers will aid us when migration to the new tax regime occurs from April 1 2027. Had we included this provision in net profit, the figure would exceed ₹5,700 crore. Keeping it for future migration challenges ensures a smoother transition. Moreover, the unusually high tax outgo in Q1 of the previous year was an aberration; excluding that, Q2, Q3, Q4 and the current quarter show steady improvement, and the trend remains upward across all critical metrics. The bank continues to manage these factors consistently and will sustain similar performance ahead.

Deposit growth is lower than credit growth in your guidance too, is this a concern?

It is not a concern at all. In the quarter we recorded deposit growth of 8.5 percent versus credit growth of 12.7 percent, leaving our CD ratio at 73.4 percent. This gives us headroom to raise the ratio toward 77‑78 percent before needing to match credit‑growth speed. For now we are limiting deposit growth to around 9 percent, as per our guidance. We are attentive about sourcing bulk‑segment or CD‑market deposits; they are available but often come at a cost that does not justify the return. Hence we prefer to avoid such costly mobilisations unless they add clear value.