FINANCIAL RESULTS 9M / Q3 FY 17

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Gertrude Gilmore
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1 FINANCIAL RESULTS 9M / Q3 FY 17 1

2 PNB s Key Strength Reducing stressed assets formation Commanding share in CASA Sustaining Growth, Profitability & Strength Strong Retail Base Fast pace of Digitalization 2

3 Major Economic Events affecting the Economy in General and Banking Sector in particular Event Implication Demonetization Vast Network & Manpower managed crowds. Huge cash flowed in CASA. Credit demand remained low. Retain CASA is on. FCNR Deposits Redemption US Yield scenario & impact Market Interest Rate Scenario Union Budget FY18 There was outflow of FCNR Deposits. which was covered by fresh CASA hedging against Cost & Exchange Rate fluctuation. The Bank has retained high yield portfolio as a conscious decision giving priority to Long Term Stability & Return on Investment Portfolio over short term Treasury gain. PNB resorted to prompt reduction in MCLR & Base Rate as an outcome of reduction in Cost of Funds. Union Budget FY 18 paves the path for Agri credit & MSME. The likely spurt in Rural consumer demand to drive business growth. 3

4 Products and reach to take the advantage of Rural Focus of the GOI Demonetization, Rural Focus of GOI and our vast network in Rural Areas i.e. 40% is an opportunity for PNB. Rural Business Encashing Business Opportunity in Rural market by leveraging Rural focus of GOI Job creation, focus on Agriculture and Good sowing shall boost the Rural demand. Agri. Business Small Enterprises Housing Finance Investment Credit in Agriculture i.e. Irrigation and Tractor financing Food and Agro Processing Sector Taking lead in MSE Business through various GOI Scheme i.e. PMMY, Stand Up India. PNB has Increased the limit for working Capital loans from 20% of turnover to 25% for enterprises. Capture new opportunities in housing finance market. Capture housing finance market in Rural areas by leveraging PMAY scheme.

Impact of Demonetization Demonetization Improved Market Share Total Cash Collection CASA Deposits A/cs Loans Over Rs. 95000 Cr. Rs. 53000 Cr. Rs. 14000 Cr.

5 Impact of Demonetization Demonetization Improved Market Share Total Cash Collection CASA Deposits A/cs Loans Over Rs Cr. Rs Cr. Rs Cr. CASA Share zoomed to 47% in Dec 16 from 42% in Sep % Agg. Deposits 4.89% 4.88% 5.11% Cost of Deposit came down to 5.38% as on Dec 16 compared to 5.92% in corresponding period last year. Mar'16 Jun'16 Sep'16 Dec'16

6 NEW LANDMARKS 01 Global Business Rs Cr. 02 Global Deposits Rs Cr. 03 Domestic Deposits Rs Cr. 04 CASA Deposits Rs Cr. 05 Savings Deposits Global Business of the Bank has crossed Rs Cr. Rs Cr. 06 Domestic CASA Ratio 47 % 6

7 MAJOR HIGHLIGHTS 01 Gross NPA Below Mar 16 Level GNPA=Rs cr. 02 Net NPA Below Mar 16 Level NNPA= Rs cr. 03 PCR up From 51.06% in Mar 16 to 54.96% in Dec Cash Recovery & Up-gradation in 3 quarters reaches at Rs cr. 05 Encashing Global Business Opportunity in Rural & Semi-Urban areas of the Bank has Branches=4376; crossed Rs Business Cr. Growth % =19.4% 06 Operating Profit up from Rs 2918 Cr. in Q3FY 16 to 3155 in Q3 FY 17 7

8 8 Higher Low Cost Deposits supporting margins Absolute CASA Average CASA CASA % to Dom. Dep % 41.63% 41.39% 42.10% 47.09% CASA % to Dom. Dep % 39.62% 37.38% 37.57% 40.77% Dec'15 Mar'16 Jun'16 Sep'16 Dec' % 5.85% Cost of Deposits 9M Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Net Interest Margin 9M-Domestic 3.27% 5.46% 5.41% 5.38% 2.95% 2.80% 2.82% 2.76% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

9 9 Growing Share of Savings Deposits in CASA Dec'15 Dec'16 18% 16% 82% 84% Current Savings Current Savings

10 Improvement in Assets Quality Reduced NPL formation [Slippages came down from Rs cr. In Q2 to Rs cr. in Q3FY17} War Room Intensified Real time Monitoring Increased Cash Recovery & Up-gradation [From Rs cr. in Dec 15 to Rs cr. in Dec 16] Focus on new Resolution Windows Improved Provision Coverage Ratio [From 51.06% in Mar 16 to 54.96% in Dec 16] Stepped up efforts on Joint Lenders Forum

11 Emerging Banking Dynamics: Three Ds to Five Cs D Demonetization D Deposit D Digitalization Three Ds Enhanced Brand Equity Enhancement of stable Low Cost Deposit Base Actively involved in Digitalization C C CD C C Cost C Capital Credit Growth Leveraging Vast branch network in hinterland areas Focus on qualitative ratio deployment dispersed and low risk Credit Quality to Income Ratio Conservation Five Cs Sharp focus on improving RWA Credit Density Two way acceleration i.e. low cost & higher Income Optimization of Risk Weighted Assets

12 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 12

13 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 13

Capital Adequacy (Basel III) (Rs. Cr.) Sl.

Equity 35937 33435 36569 Additional Tier I 1777 2283 2343 2 Tier II

Assets 442538 424868 440424 11.25% 11.28% 11.62% 2.73% 0.40% 2.87% 0.

14 Capital Adequacy (Basel III) (Rs. Cr.) Sl. Particulars Dec 15 Mar'16 Dec 16 1 Tier I Common Equity Additional Tier I Tier II Total (Tier I+II) Risk-weighted Assets % 11.28% 11.62% 2.73% 0.40% 2.87% 0.54% 2.78% 0.53% 8.12% 7.87% 8.31% Dec 15 Mar 16 Dec 16 Common Equity Additional Tier I Tier II Total (Tier I+II)

15 Improving RWAs Density Capital Conservation Composition of RWAs (Rs. Cr.) Dec 15 Mar'16 Jun'16 Sep'16 Dec 16 YoY Variation % Credit Market Operational Total RWAs Total Assets RWAs to Total Assets Ratio Despite increase in Total 68.2% Assets, RWAs of the Bank 63.7% 64.9% 65.5% declined resulting in improvement in RWAs 61.7% density. Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

16 Share Holding Pattern as on 31 st Dec 16 GoI 65.01% Insurance 13.65% FIIs 10.39% Non-Institutions 6.27% MF & UTI 4.55% FIs/Banks /Others 0.13% 16

17 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 17

18 Business Performance Major Components (Rs. Cr.) Sl. Parameters Dec'15 Mar 16 Dec 16 Dec 16/Dec 15 Amt. (%) 1 Global Business Domestic Business Overseas Business Share of Overseas Business 12.14% 11.61% 10.43% 2 Global Deposits Gross Advances Net Advances CD Ratio [4/2] 71.63% 74.55% 63.01% 6 CASA Deposits Savings Deposits

19 19 Business Performance (Terminal Level ) Rs. Lac Cr Business Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Deposit Credit Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

20 20 Business Performance (Daily Average ) Rs. Lac Cr Business Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Deposit Credit Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

21 Business Performance -Deposits (Rs. Cr.) Dec 16/Dec 15 Sl. Parameters Dec'15 Mar 16 Dec'16 Amt. (%) 1 Global Deposits Domestic Deposits Overseas Deposits CASA Deposits Current Deposits SB Deposits Share of CASA To Dom. Dep. (%) 40.38% 41.63% 47.09% 7 Term Deposit Differential Rate Dep. Incl. CD Share of DRI Dep. to Total % 0.53% 0.24% 0.12% 21

22 % 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Business Performance CA SA Deposits (Rs. Cr.) % Current Growth % yoy Savings Growth % yoy % 7.7% 1.4% -2.1% 11.8% 12.5% 12.8% 14.4% 14.2% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 CASA Growth % yoy % 14.3% 11.9% 12.1% 11.1% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

23 Credit Directional Change to De-risk Portfolio Rural & MSMEs are focus of Govt. of India Rural & Semi-urban 63% Network of Bank as Driver of Growth Large Retail Franchise is base for Expanding Retail Credit Low cost of funds instill capacity to compete on Interest on loans IPPB is an added opportunity to expand credit

24 Advances - Sectoral Classification (Rs. Cr.) Advances Portfolio-Dec'16 Retail-Composition 11% 28% 12% 15% 15% 19% Agri. MSME Retail Large Corp. Others Dom. Overseas Housing Car/vehicle Education Mortgage Others Agriculture MSME Retail Dec'15 Dec'16 Dec'15 Dec'16 Dec'15 Dec'16 24

25 Small Ticket Portfolio (Rs. Cr.) Small Ticket Advances as %age to Domestic Credit 56.6 Parameters Dec'15 Mar'16 Dec'16 YoY Gr. % Agriculture & Allied SMF* MSME MSME Manuf MSME Services Retail Credit Housing Car/vehicle Education Total Small Ticket Dec'15 Mar'16 Dec'16 *Small & Marginal Farmers 25

26 Sl. Advances to Industry - Breakup Major Industry Amt. Share % DC* Amt. Share % DC Amt. Share % DC 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 (Rs. Cr.) 26

27 Advances to Infrastructure Sector- Breakup (Rs. Cr.) Sl. Major Industry Amt. Share % DC Amt. Share % DC Amt. Share % DC 11 Infrastructure Power Tele-Communication Roads & Ports Others DC i.e. Domestic Credit 27

28 Treasury Operations (Rs. Cr.) Investment Portfolio Parameters Portfolio M Duration Gross Domestic Investment SLR Non SLR Held To Maturity (HTM) Available For Sale (AFS) * Held For trading (HFT) 331 Investment by overseas branches 4489 Total (Global) Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 * Excluding Cash Management Bills (CMB) = Cr 28

29 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 29

30 Profitability Performance Highlights Sustained Higher Operating Profit Decline in Cost of Deposits Constantly growing Operating Income Constantly growing Treasury Income Increase in Fee Based Income Constantly growing Fee Income from Rural and Semi Urban Areas

31 Profit (Rs. Cr.) Sl. Parameters Q3 FY 16 Q2 FY 17 Q3 FY 17 YoY Gr. % 9M Dec'15 9M Dec'16 YoY Gr. % 1 Interest Income Interest Expenses NII (Spread) (1-2) Other Income Operating Income (3+4) Operating Expenses Contribution (4-6) Operating Profit (3+7) Provisions Net Profit (8-9)

32 Consistently Higher Operating Profit & Operating Income (Rs. Cr.) Operating Profit (9M) Operating Profit (3M) Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 Dec'16 Q3 FY'12 Q3 FY'13 Q3 FY'14 Q3 FY'15 Q3 FY'16 Q3 FY' Operating Income (9 M) Operating Income (3 M) Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 Dec'16 Q3 FY'12 Q3 FY'13 Q3 FY'14 Q3 FY'15 Q3 FY'16 Q3 FY'17 32

33 Provisions (Rs. Cr.) Sl. Parameters Q3 FY 16 Q2 FY 17 Q3 FY 17 YoY Gr. % 9M Dec'15 9M Dec'16 YoY Gr. % 1 Provision towards NPAs Standard Advances incl. Standard Restructured Depreciation/Provisions on Investment Income Tax Others Total Provision

34 Break-up : Income (Rs. Cr.) Sl. Parameters Q3 FY 16 Q2 FY 17 Q3 FY 17 YoY Gr. % 9M Dec'15 9M Dec'16 YoY Gr. % 1 Interest Income (2+3+4) Interest on Advances Interest on Investments Other Interest Income Other Income ( ) of which : 6 Fee Based Income Recovery in W/Off a/cs Trading Profit Residual Total Income (1+5)

35 Break-up : Fee Based Income (Rs. Cr.) Sl. Parameters Q3 FY 16 Q2 FY 17 Q3 FY 17 YoY Gr. % 9M Dec'15 9M Dec'16 YoY Gr. % 1 Processing Fees LC/LG Income Bills & Remittance Incidental Charges Inc from ATM operations Income from Ins & MF Govt. Business Misc Income Exchange Profit Fee based income

36 Break-up : Expenditure (Rs. Cr.) Sl. Parameters Q3 FY 16 Q2 FY17 Q3 FY 17 YoY Gr. % 9M Dec'15 9M Dec'16 YoY Gr. % 1 Total Interest Paid (2+3+4) Intt. Paid on Deposits Intt. Paid on Borrowings Others Operating Expenses (6+8) Estb. Expenses Of Which 7 Employee Benefits (AS-15) Other Operating Expenses Total Expenses (1+5)

37 Cost & Yield Ratios (Annualized) Sl. Particulars Q 3 FY 16 Q 2 FY 17 Q 3 FY 17 9M Dec 15 9M Dec 16 1 Cost of Deposit [%] Cost of Fund [%] Yield on Advances [%] Yield on Investment [%] Yield on Fund [%] Net Interest Margin [%] -Global Domestic

38 Profitability Ratios (Annualized) Sl. Particulars Q 3 FY 16 Q2 FY 17 Q 3 FY 17 9M Dec 15 9M Dec 16 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]

39 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 39

40 Improvement in Assets Quality Reduced NPL formation [Slippages came down from Rs cr. In Q2 to Rs cr. in Q3FY17} War Room Intensified Real time Monitoring Increased Cash Recovery & Up-gradation [From Rs cr. in Dec 15 to Rs cr. in Dec 16] Focus on new Resolution Windows Improved Provision Coverage Ratio [From 51.06% in Mar 16 to 54.96% in Dec 16] Stepped up efforts on Joint Lenders Forum

41 Non-Performing Assets (Rs. Cr.) Parameter FY16 Q1FY17 Q2FY17 Q3 FY17 1 NPA as at the beginning of Yr Cash Recovery Up-gradation 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 Parameter (%) FY16 Q1FY17 Q2FY17 Q3 FY17 1 GNPA Ratio NNPA Ratio Provision Coverage Ratio

42 % 18.40% 18.20% 18.00% 17.80% 17.60% 17.40% 17.20% 17.00% 16.80% 16.60% 16.40% % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Declining NPA and improving PCR (Rs. Cr.) Total Stressed Assets GNPA GNPA % % 18.00% 17.94% % 13.75% 13.63% 13.70% 17.55% 8.47% 17.11% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec' % Net NPAs Net NPAs % % 9.16% 9.10% 9.09% 53.85% Provision Coverage Ratio 51.06% 52.50% 53.32% 54.96% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 42

43 % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Industry wise O/S Restructured Accounts (Rs. Cr.) Standard Restructured Adv. Dec'15 Dec' Amt. Share % Amt. Share % Power % % 8.64% Road & Port % % Iron & Steel % % Sugar % % % 4.59% % 4.21% Construction % % Cement % % Textiles % % Telecom % % Manufacturing % % Hotel % % IT park/logistic % % Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Others % % Std. Rest. Adv Std. Rest. Adv % Total % % 43

44 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 44

45 %share 120% 100% 80% 60% 40% 20% 0% No. of Branches Network Domestic Branches ATM % 16% 16% 16% 16% 21% 21% 21% 21% 21% Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 24% 24% 24% 24% 24% Overseas Presence 40% 39% 39% 39% 39% Type of office Destination Branches (4) Mumbai, Hong Kong Main, Kowloon Hong Kong, DIFC, Dubai Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Rural Semi-Urban Urban Metro Branches Specialized Branches 1. Large Corporate Branches: SME Focus Branches : Agri. Focus Branches : Assets Recovery Branches : 17 Other Touch Points 1. BCs : Customer Service : Subsidiary (3) Joint Venture (1) Representati ve Office (4) PNBIL, UK (7 branches), DRUK PNB Ltd., Bhutan (6 Branches), One Associate at JSC SB PNB, Kazakhstan (4 Branches) Everest Bank Limited, Kathmandu, Nepal ( 61 Branches), Bank also provides Managerial Support to EBL. Shanghai(China), Dubai (UAE), Sydney (Australia), Dhaka (Bangladesh)

46 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 46

47 Fast pace of Digitalization UPI Users Internet Banking Users (in Lacs) ATM Network Mobile Banking Users (in Lacs) Oct'16 Nov'16 Dec' Dec'15 Mar'16 Jun'16 Sep'16 Dec' Dec'15 Mar'16 Jun'16 Sep'16 Dec' Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Branch Network Dec'15 Mar'16 Jun'16 Sep'16 Dec'16

48 Contents Capital & Shareholding Business Profitability Asset Quality PAN India Presence Digitalization Way Forward 48

49 49 People Development People Development through Upskilling HR to align HR Policy & Strategy with business Strategy & Goals is the main focus of Bank to improve Customer Service, Commitment, Competencies and Culture. Higher number of employees promoted compared to last year. An Onboarding & Mentoring Program titled PNB Navodaya has been introduced for newly recruited employees as well as for those recently promoted and first time Branch Heads. PNB Univ (E-learning App and web based portal) has been launched for all PNB Parivar Members to provide high quality e-learning 24x7.

50 People Development With the sole motive to bridge the gap, amongst different sections of employees coming from different strata of the society or having biological diversity, 3 Development Cells have been created. The process of Competency Mapping of critical roles has been initiated with a view to identify and develop key competencies in the employees. Bank has constituted a Committee to look into all matters related to succession planning. Appreciating the need for employee engagement, Bank has embarked on a series employee engagement initiatives e.g. Employee Surveys, PNB Samadhaan, Exit Interviews etc. 50

51 People Development Building Blocks Digitalization Healthy Growth in Credit Resolution of Stressed Assets Improved Earnings

52 52

FINANCIAL RESULTS. Quarter & FY Ended March 2017

FINANCIAL RESULTS. Quarter & FY Ended March 2017 1 FINANCIAL RESULTS Quarter & FY Ended March 2017 2 01 MAJOR HIGHLIGHTS Higher Operating Profit : Rs. 14565 Cr 02 Gross & Net NPA below March 16 as well as Dec 16 Level GNNPA = Rs. 55370 Cr. NNPA= Rs.