New Delhi, days ahead of the RBI monetary policy, Punjab National Bank (PNB) Managing Director Atul Kumar Goyal said interest rates are at a peak and are expected to see a reversal by the end of this year.
The Monetary Policy Committee, which is expected to keep the policy rate unchanged for the eighth consecutive time, is scheduled to meet on June 5. The rate-setting panel's decision will be announced on June 7.
“Interest rates depend on many factors like growth, inflation, monetary policy stance of other countries. I think the rates have reached a peak.I think sometime later perhaps by the end of this year, we may see some rate reduction interestingly,” he said.
There should be no increase in deposit rates as 95 per cent of deposits have already been revalued, he said.
Goyal said the retail, agriculture and MSME (RAM) segment will be the focus area for the bank, but will not shy away from financing good corporate loans.
“RAM accounts for about 55 per cent of the total credit. We want to increase this number to about 60 per cent in the next four to five years.For this year, we have targeted to achieve 57 percent. As I told you, we are one of the largest banks in the country, although our focus is on RAM but if the opportunity comes, we will not let it go.
He said, as far as corporate credit is concerned, there is demand from infrastructure projects, especially roads.
"Even some big corporates are planning to increase their capacity. So, there is demand from the steel sector and even renewable energy, where we see a lot of demand," he said.
PNB has seen a steady improvement in its financial health and has recorded the highest growth in profit in FY24.PNB topped the charts recording the highest profit growth of 229 per cent among 12 public sector banks during the financial year ending March 2024. The bank's net profit increased three times to Rs 8,245 crore compared to Rs 2,507 crore in the previous financial year.
Talking about the strategy to improve profitability, he said, the focus will be on expanding retail, agriculture and MSME portfolio, good corporate lending, controlling slippages and improving recovery.
Besides, he said, emphasis will also be laid on improving foreign exchange earnings to increase non-interest income and achieving higher fee income from selling third-party products.
Regarding improvement in interest income, he said, the focus will be on increasing low-cost deposits CASA (Current Account Savings Account).CASA as a percentage of total deposits stood at 41.4 per cent at the end of March 2024, he said, adding that the target is to improve to 42 per cent by the end of the current financial year.
The bank intends to keep the credit cost below 1 per cent during this financial year.
With all these efforts, he said, the return on assets (ROA) is expected to increase by 0.8 per cent during the year and reach 1 per cent by the end of March 2025, which will lead to a substantial jump in profits.
Asked about the projected business growth in the current financial year, Goyal said, loan growth is expected to be 11-12 per cent while deposits are expected to be 9-10 per cent.
To fund this business growth, the bank has received approval to raise capital of Rs 17,500 crore from Tier I and Tier II bonds and share sale through private placement during the year.He said that during FY24, the bank had raised Rs 10,000 crore from Tier I and Tier II bonds at a very competitive rate.
The Monetary Policy Committee, which is expected to keep the policy rate unchanged for the eighth consecutive time, is scheduled to meet on June 5. The rate-setting panel's decision will be announced on June 7.
“Interest rates depend on many factors like growth, inflation, monetary policy stance of other countries. I think the rates have reached a peak.I think sometime later perhaps by the end of this year, we may see some rate reduction interestingly,” he said.
There should be no increase in deposit rates as 95 per cent of deposits have already been revalued, he said.
Goyal said the retail, agriculture and MSME (RAM) segment will be the focus area for the bank, but will not shy away from financing good corporate loans.
“RAM accounts for about 55 per cent of the total credit. We want to increase this number to about 60 per cent in the next four to five years.For this year, we have targeted to achieve 57 percent. As I told you, we are one of the largest banks in the country, although our focus is on RAM but if the opportunity comes, we will not let it go.
He said, as far as corporate credit is concerned, there is demand from infrastructure projects, especially roads.
"Even some big corporates are planning to increase their capacity. So, there is demand from the steel sector and even renewable energy, where we see a lot of demand," he said.
PNB has seen a steady improvement in its financial health and has recorded the highest growth in profit in FY24.PNB topped the charts recording the highest profit growth of 229 per cent among 12 public sector banks during the financial year ending March 2024. The bank's net profit increased three times to Rs 8,245 crore compared to Rs 2,507 crore in the previous financial year.
Talking about the strategy to improve profitability, he said, the focus will be on expanding retail, agriculture and MSME portfolio, good corporate lending, controlling slippages and improving recovery.
Besides, he said, emphasis will also be laid on improving foreign exchange earnings to increase non-interest income and achieving higher fee income from selling third-party products.
Regarding improvement in interest income, he said, the focus will be on increasing low-cost deposits CASA (Current Account Savings Account).CASA as a percentage of total deposits stood at 41.4 per cent at the end of March 2024, he said, adding that the target is to improve to 42 per cent by the end of the current financial year.
The bank intends to keep the credit cost below 1 per cent during this financial year.
With all these efforts, he said, the return on assets (ROA) is expected to increase by 0.8 per cent during the year and reach 1 per cent by the end of March 2025, which will lead to a substantial jump in profits.
Asked about the projected business growth in the current financial year, Goyal said, loan growth is expected to be 11-12 per cent while deposits are expected to be 9-10 per cent.
To fund this business growth, the bank has received approval to raise capital of Rs 17,500 crore from Tier I and Tier II bonds and share sale through private placement during the year.He said that during FY24, the bank had raised Rs 10,000 crore from Tier I and Tier II bonds at a very competitive rate.
