FINANCIAL RESULTS Q1 FY 18

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Sheila Beasley
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1 1 FINANCIAL RESULTS Q1 FY 18

of Infrastructure Investment Supportive FDI & FII

2 2 EMERGING ECONOMIC & BANKING SCENARIO Strengthening of NPA Resolution Process Strong Macro Economic Environment Good Monsoon Improves Rural Business Growth Outlook Re-emergence of scope of Infrastructure Investment Supportive FDI & FII Inflows Economic Widening riding Digitalization (Post Demonetization & GST)

3 3 CORE STRENGTHS OF THE BANK Dedicated Workforce Strong Retail Franchise Vast Branch & Digital Network Sharp focus on Asset Quality Consistently growing Operating Profit Commanding Share in CASA

4 4 BRANCH & ATM NETWORK-PAN INDIA PRESENCE Domestic Branches ATM Type of office Branches (4) Subsidiary (3) Joint Venture (1) Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Overseas Presence Destination Mumbai, Hong Kong Main, Kowloon Hong Kong, DIFC, Dubai PNBIL, UK (7 branches), DRUK PNB Ltd., Bhutan (7 Branches), Everest Bank Limited, Kathmandu, Nepal (61 Branches), Bank also provides Managerial Support to EBL. One Associate at JSC SB PNB, Kazakhstan (6 Branches) Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Representative Office (4) Shanghai(China), Dubai (UAE), Sydney (Australia), Dhaka (Bangladesh)

5 5 FINANCIAL HIGHLIGHTS Q1 FY 18 Domestic Business growth 12.3% Global Deposit growth 12.9% Retail Loans growth 15.9% Fee Based Income growth 31.1% CASA growth 23.6% CASA Share (Domestic) 44% Provision Coverage Ratio: 58% NII growth indicates increasing trend

6 6 Rs. Cr. BALANCE SHEET - PNB STANDALONE Sl. Parameters Jun'16 Mar'17 Jun'17 YoY Variation Amt. % CAPITAL & LIABILITIES 1 Capital Reserves and Surplus Deposits Borrowings Other Liabilities and Provisions Total ASSETS 1 Cash and Balances with RBI Balances with Banks Investments Loans & Advances Fixed Assets Other Assets Total

7 7 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

8 8 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

9 9 Rs. Cr. BUSINESS PERFORMANCE - MAJOR COMPONENTS (TERMINAL LEVEL) Sl. Parameters Jun 16 Mar'17 Jun 17 YoY variation Amt. % 1 Global Business Domestic Business Overseas Business Overseas Business (In USD Mio) Share of Overseas Business (%) Global Deposits Gross Advances Global Net Advances CD Ratio (%) CASA Deposits Saving Deposits CASA Share Domestic (%)

10 Sl. Rs. Cr. BUSINESS PERFORMANCE - MAJOR COMPONENTS (DAILY AVERAGE BASIS) Parameters Jun 16 (Qtr) Mar'17 (FY) Jun 17 (Qtr) YoY Variation Amt. % 1 Global Business Domestic Business Overseas Business Share of Overseas Business (%) Global Deposits Gross Advances Global Net Advances CD Ratio [%] CASA Deposits Saving Deposits CASA Share Domestic (%)

11 11 Rs. Cr. BUSINESS PERFORMANCE - DEPOSITS YoY Variation Sl. Parameters Jun 16 Mar'17 Jun 17 Amt. % 1 Global Deposits Domestic Deposits Overseas Deposits CASA Deposits Current Deposits SB Deposits Share of CASA To Domestic Deposit 41.39% 45.97% 43.96% 7 Term Deposits Of Which 8 Core Term Deposit

12 12 LOW COST DEPOSIT : STRONG HOLD CASA Share % - Absolute Casa Share % - Average 41.4% 42.1% 47.1% 46.0% 44.0% 39.6% 39.6% 40.8% 41.7% 43.3% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17

13 % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Rs. Cr. CONSISTENTLY GROWING CASA DEPOSITS CASA Terminal Level CASA Average % 26.5% 23.6% % 22.1% 25.8% 14.1% 14.2% 12.1% 11.1% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 CASA Deposit YoY Growth % Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 CASA Deposit YoY Growth % 13

14 14 DECLINING AVERAGE COST OF DEPOSIT 6.98% 6.42% 6.11% 5.99% 5.46% 5.10% Jun'12 Jun'13 Jun'14 Jun'15 Jun'16 Jun'17

15 15 CREDIT Rs. Cr. Sl. Parameters Jun 16 Mar'17 Jun 17 Share % YoY Variation Amt. % 1 Global Gross Advances % Overseas Advances % Domestic Advances % Large Industry % Agriculture & Allied % MSME % Retail Loans % Others (Incl. NBFC) % YoY Parameters Jun 16 Mar'17 Jun 17 % Share Amt. % Domestic Advances % Upto Rs. 5 Cr % Above Rs. 5 Cr %

16 16 CONSISTENTLY GROWING SHARE OF SMALL TICKET ADVANCES (<5 CR.) 41.6% 38.7% 39.6% 39.2% 39.4% 35.9% Mar'16 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17

17 17 Rs. Cr. PERFORMANCE UNDER NATIONAL GOALS Parameter National Goals Ach. Jun 17 O/S Balance Priority Sector Priority Sector (%age of ANBC) 40% 40% Total Agriculture Adv. (%age of ANBC) 18% 19% Small & Marginal Farmers (%age of ANBC) 8% 9% Other National Goals Micro Enterprises Accounts (YoY Gr.) 10% 18% Credit to Micro Entrp. ( %age of ANBC) 7.50% 6.74% Jun 17 ANBC= Rs Crore

18 18 SMALL TICKET ADVANCES CLASSIFICATION Rs. Cr. Agriculture MSME Retail Jun'16 Jun'17 Jun'16 Jun'17 Jun'16 Jun'17

COMPOSITION OF RETAIL BREAKUP % Inner Circle=Jun 16 & Outer Circle =Jun 17 7.5% 17.2% 19.1% 15.3% 21.1% 7.

19 COMPOSITION OF RETAIL BREAKUP % Inner Circle=Jun 16 & Outer Circle =Jun % 17.2% 19.1% 15.3% 21.1% 7.9% Housing Car/vehicle 8.4% 8.3% Education 47.5% Mortgage Others 47.9% Housing Loan Grown by 17 % YoY Car Loan Grown by 17 % YoY 19

20 Sl. Major Industry Rs. Cr. ADVANCES TO INDUSTRY - BREAKUP Amt. Jun 16 Mar 17 Jun 17 YoY Variation Share % DC Amt. Share % DC Amt. Share % DC Amt. % 1 Food Processing Textiles Chemical & Chemical Products Cement & Cement Products Basic Metal & Metal Products a -Iron & Steel Paper & Paper Products Petroleum All Engineering Products Vehicles & Vehicle parts Construction Infrastructure Others Industry Total DC : Domestic Credit 20

21 21 Rs. Cr. ADVANCES TO INFRASTRUCTURE SECTOR- BREAKUP Major Industry Amt. Jun 16 Mar 17 Jun 17 Share % DC Amt. Share % DC Amt. Share % DC YoY variation Amt. % Infrastructure Power Tele-Communication Roads & Ports Others DC : Domestic Credit

22 22 APPROACH & WAY FORWARD FOR BUSINESS Syndication Cell Bank has set up Loan Syndication Vertical headed by General Manager to bring in AA & AAA rated new relationships De-Risking of Loan Portfolio Leveraging of vast branch network to diversify & expand small ticket credit. Loans below Rs.5cr post 14.7% yoy growth Rural Credit 61.5% branch network is located in Rural & Semi-urban India which is presently attracting fresh investment Large Corporate Bank is keeping watch on bringing in high rated credit clients from the banks which face constraint of financing e.g. PCA

23 23 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

24 24 PROFITABILITY HIGHLIGHTS-Q1FY17 Operating Profit Consistently growing Operating Profit. Net Interest Income NII growth 4.2% YoY, indicates increasing trend Treasury Income Interest Income on Investment increased by 22.2%. Robust growth of 34.5% in Trading Profit. Fee Based Income Fee Based Income increased by 31.1%.

25 25 PROFIT Rs. Cr. Sl. Parameters Q1 FY 17 Q4 FY 17 Q1 FY 18 YoY Variation Amt. Gr. % 1 Interest Income Interest Expenses NII (Spread) (1-2) Other Income Operating Income (3+4) Operating Expenses Burden (6-4) Operating Profit (3-7) Provisions Net Profit

26 26 Rs. Cr. INCOME & PROFITABILITY Net Interest Income Operating Profit Net Profit Jun'16 Jun'17 Jun'16 Jun'17 Jun'16 Jun'17

27 27 PROVISIONS Rs. Cr. Sl. Parameters Q1 FY 17 Q4 FY 17 Q1 FY 18 YoY Variation Amt. Gr. % 1 Provision towards NPAs Standard Advances incl. Standard Restructured Depreciation on Investment Income Tax Others Total Provision

28 28 Rs. Cr. NET INTEREST INCOME Sl. Parameters Q1 FY 17 Q4 FY 17 Q1 FY 18 YoY Variation Amt. Gr. % 1 Interest Income (2+3+4) Interest on Advances Interest on Investments Other Interest Income Total Interest Paid (6+7+8) Intt. Paid on Deposits Intt. Paid on Borrowings Others NII (Spread) (1-5)

29 29 Rs. Cr. FEE BASED INCOME COMPOSITION Sl. Parameters Q1 FY 17 Q4 FY 17 Q1 FY 18 YoY Variation Amt. Gr. % 1 Processing Fees LC/LG Income Bills & Remittance Incidental Charges Income from Ins & MF Govt. Business Misc Fee Income Exchange Profit Fee Based Income

30 IMPROVING COST & YIELD RATIOS (%) 5.46 CoD 4.68 CoF 2.80 NIM-Domestic Q1 FY 17 Q4 FY 17 Q1 FY 18 Q1 FY 17 Q4 FY 17 Q1 FY 18 Q1 FY 17 Q4 FY 17 Q1 FY YoA 7.93 YoI 6.88 YoF Q1 FY 17 Q4 FY 17 Q1 FY 18 Q1 FY 17 Q4 FY 17 Q1 FY 18 Q1 FY 17 Q4 FY 17 Q1 FY 18 30

31 31 PROFITABILITY RATIOS Sl. Particulars Q1 FY 17 Q4 FY 17 Q1 FY 18 1 Return on Assets [%] Return on Net worth [%] Opt. Profit to AWF [%] Cost to Income Ratio [%] Estb. Exp. To Total Exp. [%] Opt. Exp. To AWF [%] Book Value per Share [Rs] Earnings per share [Rs]

32 32 APPROACH & WAY FORWARD FOR PROFITABILITY Profit Profit Consciousness as Primary Driver Of Business. Cost of Deposit Consistently declining due to incremental growth in Average CASA Yield on Advances Reversal of trend: YoA increased sequentially FBI Sharpened Focus on Leverage of Branch Network to Earn Higher Fee Based Income Treasury Paradigm Shift in Strategy and Resultant Increase in Earnings

33 33 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

34 34 TREASURY HIGHLIGHTS Up by 35% Up by 22.2% Up by >100% Up by >100% Share of SLR Securities at 74% Trading Profit at Rs. 802 Cr. Interest Income on Investment at Rs Cr. Merchant Profit at Rs. 244 Cr. Exchange Profit at Rs. 268 Cr. Investment in SLR Securities at Rs cr.

35 35 Rs. Cr. TREASURY OPERATIONS Investment Portfolio Parameters Jun 16 Mar 17 Jun Domestic Investment SLR Non SLR Held To Maturity (HTM) Available For Sale (AFS) Held For trading (HFT) Investment by Overseas Branches Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Global Investment

36 36 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

37 37 Rs. Cr. RECOVERY AND REDUCTION ANALYSIS Sl. Parameters Jun'16 Mar'17 Jun'17 1 NPA as at the beginning of Yr Cash Recovery Upgradation Write Off Total Reduction (2+3+4) Fresh Addition Fresh slippages Debits in existing NPA A/cs Gross NPAs end period Eligible Deductions incl. Provisions Net NPAs Recovery in written-off debt A/Cs Particulars Jun'16 Mar'17 Jun'17 Gross NPA Ratio 13.75% 12.53% 13.66% Net NPA Ratio 9.16% 7.81% 8.67%

38 Rs. Cr. BREAK-UP OF FRESH SLIPPAGES Category Sector Q1FY17 Q4FY17 Q1FY18 Agri Upto Rs. 5 crore Others Total Above Rs. 5 cr. Total Total Total Q1 FY 17 FY 17 Q1 FY 18 Fresh Slippage Of which from Restructured Book Overseas Domestic Of which Above Rs. 5 Cr Upto Rs. 5 Cr

39 % 18% 18% 17% 17% 16% 16% 15% 39 DECLINING STRESS Rs. Cr. Stressed Assets (Rest. +GNPA) Provision Coverage Ratio 18% 58% % % Jun'16 Jun'17 Stressed Assets Amt. Stressed Assets % Jun'16 Jun'17

40 % 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Rs. Cr. RESTRUCTURED ACCOUNTS - SECTOR WISE Standard Restructured Adv Sector Jun'16 Mar'17 Jun'17 % Share Infrastructure % Power Telecom Road & Port Agriculture Sugar % Iron & Steel IT park/logestic construction Cement Textiles Hotel Services Jun'16 Jun'17 Others Std. Rest. Adv Std. Rest. Adv % Total

41 41 Rs. Cr. MOVEMENT OF STANDARD RESTRUCTURED PORTFOLIO Sl. Parameter Jun 16 Mar'17 Jun'17 A Opening Balance B Total Addition Fresh Restructuring Up-gradation C Reduction In eligible Downgradation to NPA Exit/Failure Closing Balance (A+B-C)

42 APPROACH & WAY FORWARD - ASSET QUALITY Widening of War Room Splitting of existing War Room to Create Separate War Room for monitoring of irregular & weak loan accounts Negotiated Settlement launching of Special One Time Settlement schemes for Doubtful & Loss category Small & Medium size NPAs Recovery Vertical Recovery Vertical further strengthened by posting of One More General Manager, totaling three now Gandhigiri The Bank is practicing Gandhigiri and Organizing Mega Rin Mukti Shivirs Resolution Of Large Ticket Advances 9 Large stressed accounts are under IBC Resolution 42

43 43 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

44 44 CAPITAL ADEQUACY RATIO June 16 June 17 CRAR 11.58% CRAR 11.64% Tier I (8.62%) Tier I (8.94%) AT I (0.54%) CET (8.08%) AT I (1.03%) CET (7.91%) Tier II (2.96%) Tier II (2.70%)

45 45 CAPITAL ADEQUACY (BASEL III) (Rs. Cr.) Sl. Particulars Jun 16 Mar 17 Jun 17 1 Tier I Common Equity Additional Tier I Tier II Total (Tier I+II) Risk-weighted Assets Tier I 8.62% 8.91% 8.94% Common Equity 8.08% 7.87% 7.91% Additional Tier I 0.54% 1.04% 1.03% 2 Tier II 2.96% 2.75% 2.70% 3 Total (Tier I+II) 11.58% 11.66% 11.64%

46 46 APPROACH & WAY FORWARD FOR CAPITAL Capital Focus on improvement in internal generation of surplus to shore up CET Sale of Non Core Assets Bank has embedded value of saleable Non-Core Asset Conservation of Capital Bank is working on Reduction in RWAs by Rebalancing Asset Portfolio Tapping of Market for Capital The Bank is in readiness to tap market for shoring up capital.

47 47 SHARE HOLDING PATTERN 10.36% 6.58% 6.41% 10.42% 5.38% 5.78% Jun'16 Jun' % 62.08% 13.41% 65.01%

48 48 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

49 49 DIGITAL BANKING Crossing new frontiers in digital transactions ATM Crossed 12.5 Cr. Txns. Internet Banking Crossed 92 Lac Txns Mobile Banking Crossed 35 Lac. Txns. PoS & E- Com Crossed 3.21 Cr. Txns UPI Crossed 12.2 Lac Txns. Kitty Crossed Txns BHIM Crossed 11 Lac Txns.

50 WAY FORWARD 1. Launch of following new Digital Products in Q 2 FY 18: PNB erupaya an in-house & trademarked product for Digital Villages adoption. M-Passbook app Rupay International Debit Card QR code based payment system in Mobile Banking Bharat Bill Payment (BBPS) Co-branded mobile wallet (SpeedPay) for BSNL retailers Instant Money Transfer (IMT - Acquirer) VISA ( non NFS ) acquiring at PNB ATMs 2. Implementation of strategies for inculcating digital culture and its usage in daily life, among staff and customers, with focus on the common man especially in rural / Semi-urban areas 3. Focus on achievement of Government s Budget of 144 crore digital transactions during this financial year 4. Improvement In Digital Infrastructure with focus on Ease of Operation and smoother customer experience. 50

51 51 CONTENTS Business Profitability Treasury Operations Asset Quality Capital & Shareholding Digitalization Way Forward

52 P N Profit A A Asset Quality R I T V A R New Relationships Recovery Increase Credit Vigilant Alternate Delivery Channels Retail Business Turn Around Time Ambience 52

53 53 Thank you

FINANCIAL RESULTS HY 1 / Q2 FY 18

1 FINANCIAL RESULTS HY 1 / Q2 FY 18 2 EMERGING ECONOMIC & BANKING SCENARIO Domestic Economy Reset in New Normal Govt s Mega Recapitalization Plan Improved Economic Macros Credit Growth shows green shoots