Any specific reason on why the provision was not released? You don't want to release it or any other reason because other banks seem to have released this.
No, no, no. We do not want to release -- it is not like that. We are still looking for that. And maybe we'll take a call at the right time. Maybe in the Q4, we may take the call. But that is -- provision is still -- we are holding it more than around INR900 crores, that is there in the standard.
Interest on investment, that has declined. Is there any one-off? Or you think that could be the new normal basis, the interest rate environment?
No, no, no. It is not -- it is in line with the market scenario. Nothing else. You can't -- you should not read anything else other than this.
We have done very good on treasury gains over the past 2 years. Now incrementally, the yields are kind of steady or rising. So how should one understand treasury gains in F '27?
I think you are talking about the next year, let us wait for another -- it is a very, very dynamic situation now. So one more MPC will come in between, and then we will see how the impact comes. And anyway, I think March, we are also coming out with the strategy paper for '26-'27. And definitely somewhere in the March, April, we will discuss about the '26-'27.
Sir, assuming in FY '27, deposit growth is 9%, 10%, would you grow at 15% plus?
I'm giving you the thought process. I'm telling you my thought process because 1 or 2 quarters more, I will take for in the '26-'27 also to reduce my low-yielding corporate loan book. And afterwards, definitely, bank will grow at more than 12% to 13%.
Can you explain why the tax rate was a bit lower at 19%? This INR9,000 crores to INR10,000 crores ECL impact which you quoted, is that the provision shortfall? Or is that the post-tax impact on capital? And your progress on PSL compliance seems to be quite good - do you expect to purchase any PSL certificates in the next year?
First of all, I will touch that part, PSLC. I think this year, we have made good progress under that PSLC. And I'm expecting that at least around 50 to 60 basis point cut should be happening in the next year. More than that, we are already targeting in that direction now. And we are already compliant as far the RBI regulatory guidelines are concerned. We don't have any issues related with the PSLC compliant. ECL, Post-tax impact.
Last quarter, we had discussed that there's going to be a write-back of provisions from an account which other banks like Union has already written back in the second quarter, and we were supposed to take that write-back on provisions in the third quarter. That was roughly around INR7 billion to INR9 billion. So why wasn't the floating provision offset against that?
First of all, I will give you the clarity that provision, we have not released. That account, you are right, that account was -- became a standard in the last quarter, but the provision which we are holding in the standard account is still we are holding it. We have not yet released that amount. This INR955 crores floating provision which we have made, it is from the -- other than whatever the profitability was available in our system. From that, we have made this floating provision, keeping in mind that ECL implementation is going to happen from 1st April 2027. So, the pressure will not be there in our balance sheet going forward. Since we had a good profitability, good operating profit and net profit, we have made this provision. If we would not have made this provision, our profit would have been more than INR6,000 crores.
Most PSU banks seem to suggest a 40 to 50 basis points credit cost run rate under ECL. What would that be for PNB? What will be the run rate of provisions, say, once the ECL is implemented? Also, if you could spell out the SMA-1, SMA-2 below INR5 crores?
First of all, I will give you some clarity about the ECL calculation. Bank has done a rough calculation, it comes to around INR9,000 crores to INR10,000 crores total capital required for the full implementation in 5 years. Of this, INR1,775 crores already provided as floating provision. At Stage 1, we are already providing 0.40%. Stage 3 with 97% PCR, no impact. Stage 2 only, 5% elevated provision, impact will come. INR10,000 crores divided over 20 quarters = INR500 crores per quarter, hardly 10-15 basis points credit cost increase. With this implementation, around INR500 crores per quarter required.
Sir, this floating provisions of INR1,750 crores, have they been netted off to arrive at net NPA or they are not part of specific PCR?
No, no, no. They are not part of net NPA. That's why you are seeing the absolute number, INR3,834 crores in the net NPA.
If you have the number separate for SMA 0, 1, 2, that will help because maybe you need not provide for SMA-0 as per the draft regulation, but the 1, 2 on a continuous basis, bank may have to provide.
SMA-0 is INR34,176; SMA-1, INR9,439; and SMA-2, INR13,122.
Would you have also done a calculation that, let us say, if in this quarter itself, you were to apply for ECL norms, what would be the credit cost?
See, if 5 years implementation period is there as per the RBI guidelines, so it means I have 20 quarters to implement it. And a rough calculation, which we have done, it comes to around INR10,000 crores. It means, sir, INR500 crores every quarter, we need to provide for ECL implementation for 5 years. It's INR500 crores, hardly it comes to around 15 basis points down, 0.15%. And since INR10,000 crores is required, out of that, INR1,775 crores I have already provided. So, since we had a cushion in this quarter and we had a good profitability, we took a conscious decision that let us make the provision floating. And as per the RBI guidelines, this floating provision will get adjusted against the ECL when it gets implemented. So, it is -- for a strengthening of our balance sheet, this provision has been made this year, this quarter.
A few banks have sounded some RBI compliance on PC Agri crop loan PSL requirement, that the criteria for maybe PSL tagging has been tightened. Has that exercise been over for our bank?
No, no, no. We don't have any such challenge. And the bank, which you are quoting, their RBI supervisory review had happened. In our bank also, every bank, RBI supervisory review happens every year. And we are totally compliant in that. We don't have any such challenge.
This quarter, the interest income that has gone to NII from TWO recovery is more or less similar, right, INR400-odd crores. So that has no material impact, right?
No, no. It almost around INR400 crores to INR500 crores RI recovery every quarter happens. So that has remained the same. Because whatever recovery we do in TWO, generally, it goes in our operating profit straight away, not through the interest route.
On margins, there would have been some impact of repo repricing and we have like 50% EBLR portfolio. But in terms of deposit repricing, when should we actually start to see the deposit repricing benefit? When does that happen? And in fact, we revised our margin guidance also down. So was it purely the repo rate cut, which is leading to the revision in the guidance?
It is only because of the 125-basis point repo cut. Since 50% and above the Repo Linked rates were there -- so that we have passed on immediately. But to that extent, we have not gone for the deposit repricing. We are very mindful of the deposits keeping the customers' interest also because we have 18 Crore plus customers. We had one special scheme where we had mobilized more than INR 248,000 crores. That deposit was for 440 days. That scheme was there till March 2025. Now from 1st April 2025, this scheme was withdrawn. Now those deposits are getting repriced. 70% repricing has already happened by December'25. And 21% is going to be repriced in the fourth quarter, this quarter and 9% still it will get repriced in the first 2 months of first quarter of '26-'27. So entire deposit repricing will happen by somewhere in the month of May 15. By that time, this entire thing, which is there at 7.25%, it will at least 60 to 70 basis points, the reduction will happen. I am expecting that by Q2FY '27, at least the impact of these things will be visible in the system.
With respect to growth, so still in terms of the guidance, we are at 11% to 12%-odd, while maybe year-to-date growth itself is like, say, 10.5% to 11%. So would we be seeing some kind of traction on the corporate side?
Credit growth, I am expecting that as of now, 9 months credit growth is 10.9%. And I am confident that this 11% to 12% guidance which we have given by March also, we will be crossing this guidance. Deposit growth guidance also 9% to 10% we have given. And as of now, we are at 8.5%. 100%, we are going to touch around 9% of the deposit growth. So there has been good momentum in the system. At the same time, there are some low-yielding advances are there in the corporate book. That also we are selling it and we are replacing it with high-yielding advances. Otherwise, our corporate loan book would have grown more than 11% to 12%. And that is the reason corporate loan book is still at around 9.5%.
This would continue even in the next quarter. So that's the reason like even after 11%-odd we are saying that 11% to 12% is the only guidance and not revising it to like 13%, 14%-odd or so?
Yes. In this quarter also, we are going to shed some deposits, corporate loan book. And that is the reason I am still holding that 11% to 12% growth will be there, overall credit growth.
What was your average LCR for this quarter?
125% -- yes, 127%. At September, it was more than 125% -- 130%. It is 130%. 130%.
There is a change in guidelines of LCR from 1st April 2026. How much of that impact will have?
I think around 5.25% impact will be there, yes. Positive impact.
This quarter, we had a good treasury gain. Does it include the stake sale of Canara HSBC Life? How much was it?
Yes, yes, yes. That includes that. Net gain was around INR912 crore. That is actual impact of that sale. And one more point, there has been a hit of INR400 crores MTM also, despite that INR300 crores now.
Why not increase our loan growth guidance to 15% when the opportunity is so good and LDR is at only 74%, 73%?
See, if you see, MSME, we are growing at 18%. Retail, excluding IBPC, we are growing at more than 18.5%. IBPC, every quarter, we are reducing it. And December '24 to December '25, the net reduction in the IBPC book is more than INR 13,000 crores. So what is happening, we are growing in the credit scenario. But at the same time, there are some low-yielding advances are there, including this IBPC. We want to come out of those things so that going forward, we will have the good quality high-yielding advances, and that will be sustainable for a longer period. So that is the reason we are not revising this 11% to 12%.
Any guidance on your recovery from written-off for 4Q and next year? Would FY '27 be broadly similar to FY '26 or lower?
Yes. For the Q4 also, we are likely to grow more than INR4,000 crores of total recovery and around INR1,500 crores to INR1,600 crores, TWO recovery we are expecting, and that is a thing which we have targeted. It will be -- I think let us wait for that '26-'27 number. But definitely, I think the last year also, if you see around INR12,000 crores to INR13,000 crores. So definitely between INR13,000 crores to INR15,000 crores, we will be aiming for another 2 years.
On the treasury income that we have around INR1,300 crores of treasury income, including the INR900 crores of the Canara HSBC gains. So normalized treasury income is only INR400 crores approx. Am I -- is my thinking, right?
Yes, yes. You are absolutely right. See, what has happened, there is an MTM loss was there for one account, INR400 crores. In the last quarter, there was a gain of MTM was there of around INR350 crores in the same account. So, there is a fluctuation in the re -- in that sometimes loss happens, sometimes profit happens, but the treasury gain will be in the line of around INR1,300 crores to INR1,500 crores.
On the new labour code. So how much impact we have -- like onetime impact we have taken here?
No impact on implementation of labour code. Bank was already implementing all those clauses which the labour code has provided and absolutely nil impact.
On the fee-based income, why our fee-based income is almost in a similar line of Q2? Like will it increase in Q4 and like next year or will be in the same range?
Generally, what happens in the fee-based income, there are some components like processing charges, the ATM charges, the locker rent, all these things we collect in the very first quarter of every financial year. So first quarter, there will be very good collection. And afterwards, all the renewals whatever happens for the new proposal which we source, to that extent, only the fee-based income will increase. So it will be muted in the Q2, Q3, Q4. But first quarter of every year, it will be substantially, it will be high. But we have come out with 3 new streams. One is the supply chain vertical, which we have created in this financial year. And there is a INR4,500 crores is a sanction book under the supply chain. Second vertical, which we have created is the cash management services, which is totally it is a fee-based income only. And third vertical, which we have created headed by General Manager is credit card vertical now. And we have also launched a first-time metal credit card, very high net worth individuals, the PNB LUXURA. Through all those things, I want to see that on a sustainable basis, on a regular basis, there has to be improvement in the fee-based income in the '26, '27 financial year.
What explains the sharp fall in your investment yield? And how do you see margins on a quarter-on-quarter basis?
The yield, you are all knowing that it is a totally market driven now. And we are all seeing that as of today also yield is quite tough now, very hard now. So it all depends upon the market scenarios and what opportunities that comes in that particular segment. And the -- I'm not seeing that sharp decline is happening. It was 6.87% December '24 and today, it is 6.76% now. So decline is hardly around 11 basis points Y-o-Y. September, it was 6.9%. And see, when the average yield is coming down, so definitely, it will have the impact here also. But there is no concern -- as far as the revenues are concerned and the total contribution from the treasury book, I think it is -- contribution is intact, INR1,300 crores to INR1,700 crores every quarter we are getting it.
Is there any labor code impact that you have taken during the quarter? Or is it very negligible for the public sector bank because you do not have any contractual labor?
Yes, yes, correct. We don't have any impact because of the same reason what you have mentioned. So we are already being guided by the salary revision of IBA. And we are already paying to whatever that has been mentioned in the labor code. More than that, we are doing it. So absolutely, there is no impact.
During the current quarter, you have had a very strong recovery from written off pool. Is there any large specific account that you can talk about which has been recovered? And do you expect similar kind of a trend in fourth quarter as well?
Yes. Out of this INR4,100 crores recovery, there is one account where we got more than INR700 crores. So other than that, all was below INR100 crores recovery. All small, small accounts were there. This quarter, we are also expecting around INR400 crores to INR500 crores one single account. And all other accounts are below INR100 crores, and that momentum is there in this particular quarter also. So, we have already set the target for this quarter that more than INR4,000 crores of recovery overall and INR1,500 crores TWO recovery should happen in this quarter also.
And the tax rate?
Actually, we have made a tax provision of INR1,231 crores this time. And there was a reversal of provisions to the extent of INR506 crores in the tax provisions because when the actual computation of the tax liability, it come up to be less, which we envisaged during the 31st March 2025. So there was a reversal of INR506 crores. So net change to about INR1,230 crores, which may be giving you a percentage of 19%.
On the margin front, you had guided last quarter that it would improve by 5 basis points Q-o-Q. I understand a couple of things would have changed. One is the repo rate cut, which I assume would have had an impact of about 5, 6, 7 basis points. The second one, which you mentioned was on TD rates that you have not cut in this quarter. So what exactly changed as per your earlier expectation?
No. It was -- one is that the 25 basis points, the rate cut has happened, definitely, that has put some impact. And the repricing, which we were expecting that will happen and that too, with the revised rate, we were expecting that we'll cut some rate in the month of October and November, but we have not done that. Now that exercise we have done on the 1st of January. We have cut some deposit rate in the different bucket now around 20 to 30 basis points. If you would have cut that, definitely some impact would have come. See INR100 crores to INR200 crores is still impact the NIM now. So 3 to 4 basis points. So that is the impact it brings in the overall calculation. Overall, if you see, our total NII is greater than the September quarter. So I'm expecting that this repricing is going to be fully complete by end of April, somewhere 15th of May. Entire INR2,48,000 crore, which we had mobilized at a very high rate last year, the retail term deposits, 7.05 and 7.25, I think that is going to be repriced with the revised rate. And I think another 3, 4 months, it will take to bring down the NIM. I'm expecting that somewhere from the Q1 and Q2 onwards, definitely, the NIM will improve, and we will be back to the original scenario.
What will be your net guidance for net NPAs and net GNPAs now for quarter 4 and for whole FY '26?
Gross NPA, it will be below 3%, which we have already given the guidance in the beginning of this financial year. We will be below 3%. Net NPA below 0.35%. We are already at 0.32%. So definitely, this guidance which we have given, we are going to do and we are going to achieve that. No, I think we are trying to bring it below 0.30. We'll try to do it. But guidance which we have given, we are already -- we have done that. Somehow we'll try that. We'll try to bring it below 0.30.
PNB delivers numbers like one quarter good, other quarter the momentum is not keeping like this quarter, you have done a provision like last quarter slippages elevated happen. How an investor which is invested in PNB for years, how it could feel safe after 1 or 2 quarters? Sir, can you please assure your investor that is invested in you?
Sir, we have full confidence. I will tell you, you should have full confidence in the performance. First of all, you see none of the parameters, the guidance which we have given in the beginning of the financial year, despite the strain in the system, despite 125 basis point cut in the system, we have not revised any of my guidance. We gave the guidance that gross NPA below 3%, net NPA 0.35%. Credit cost, our guidance was below 0.5% in the entire year. In this particular quarter, we are at 0.46%. We have given a guidance of above 1% on ROA. We are at 1.06%. Slippages ratio, below 1%, we are at 0.7% in this particular quarter, we are at 0.67%. And 9 months, if you see, we are at 0.56%. Credit growth, we gave a guidance of 11% to 12%. We are at 10.9%. So all the parameters, we are maintaining the guidance. Operating profit, we gave a guidance of 8% to 9%. We are at 13%. We are very mindful that for the investor, there has to be consistency. This quarter also, you see except the NIM, all parameters, there has been improvement. Every parameter improvement is there.
On investments. So could it be that the investment yield has declined because of treasury profits booked over the last few quarters?
That is also one of the reasons. Second reason is, in the Q2, there was one-time income of INR60 crores was there from one company that was booked in that particular quarter. So there was another one dividend income there to an extent of INR130 crores, which was booked in the Q2, which has not... Yes, income on investment. These are all income on investments. Otherwise, there is a consistency there in the treasury income also and INR1,300 crores to INR1,500 crores income will be there from this particular treasury.
How much of HTM would we have sold in the first 9 months?
Out of 5% cushion, we have just used around 1.5%. We have not sold. HTM, I'm talking, yes. We have utilized only about 1.5%.