Punjab & Sind Bank — Q3 FY25 earnings call

Call held 16 Jan 2025

Management summary

Punjab & Sind Bank delivered an exceptional Q3 FY25 performance characterized by triple-digit net profit growth and significant margin expansion. The bank is successfully rebalancing its portfolio toward the higher-yielding RAM segment while aggressively improving asset quality through robust recoveries. Management has provided clear, ambitious targets for FY25-26, including a planned ₹2,000 crore QIP to fund growth and meet regulatory norms.

Highlights

  • Net Profit grew by 147.37% YoY to reach a quarterly high, with 9M profit up 54.17%.

  • Net Interest Income (NII) increased by 27.06% YoY for the quarter, driven by a 24 bps expansion in NIM to 2.78%.

  • Advances grew by 14.73% YoY, led by RAM segment growth of 20.85%, while deposits grew at 7.64%.

  • Asset quality improved significantly with Gross NPA falling to 3.83% and Net NPA to 1.25%.

  • Provision Coverage Ratio (PCR) improved to 89.53%, a rise of 137 bps YoY.

  • Operating Profit surged by 74.73% YoY during the quarter.

  • Cost-to-Income ratio decreased by 1,274 bps YoY to 62.10% for the quarter.

  • Robust recovery and upgradation of ₹565 crore in Q3, totaling ₹944 crore for the nine-month period.

Key financials

  1. Net Interest Income — +27.1%YoY
  2. Net Profit — +147.4%YoY
  3. NIM 2.8%
  4. Gross NPA 3.8%
  5. Net NPA 1.3%
  6. Credit Growth 14.7% +14.7%YoY

What they filed

Q1 FY27: revenue up 10.4%, net profit up 23.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,739 2,931 3,159 2,911 2,999 +9%3,042 +4%3,030 −4%3,213 +10%
Net profit240 282 313 269 295 +23%336 +19%422 +35%332 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • RAM (Retail, Agri, MSME)
    20.8% Growth54.2% Portfolio Share
  • Corporate
    4.5% Growth

Guidance & targets

Volume

  • Credit Growth Volume · Q4 FY25 · High confidence 14-15%
    We expect that this will continue to grow, and we expect that we will be within the range of 14%-15% by the end of the current quarter.

    — Shri Swarup Kumar Saha, MD and CEO

  • Deposit Growth Volume · FY25 · Medium confidence 8-9%
    We are estimating that in the deposit side, we will be around 8 to 9% in the deposit growth.

    — Shri Swarup Kumar Saha, MD and CEO

Margin

  • NIM Margin · FY25 · High confidence 2.75% to 2.80%
    our NIMs should be between 2.75% to 2.80%

    — Shri Swarup Kumar Saha, MD and CEO

  • Cost-to-Income Ratio Margin · by FY27 · Medium confidence 56-58%
    in another two years down the line, we should be around 56% to 58%.

    — Shri Swarup Kumar Saha, MD and CEO

Profitability

  • RoA Profitability · FY25 · High confidence 0.65% to 0.70%
    the ROA should be between 0.65% to 0.70%.

    — Shri Swarup Kumar Saha, MD and CEO

Other

  • Gross NPA Other · March 2025 · High confidence Below 3.5%
    by the end of March 25, we should be below 3.5 in Gross NPA

    — Shri Swarup Kumar Saha, MD and CEO

  • Net NPA Other · March 2025 · High confidence Below 1%
    Net NPA we should be below 1.

    — Shri Swarup Kumar Saha, MD and CEO

  • Provision Coverage Ratio (PCR) Other · FY25 · High confidence 90-91%
    the PCR should be above 90%, it should range between 90 to 91%

    — Shri Swarup Kumar Saha, MD and CEO

  • Bad Loan Recoveries Other · FY25 · High confidence >₹1,000 crore

    Previously ₹1,000 crore → >₹1,000 crore

    we had given that Rs.1,000 crore is our guidance. We have already achieved Rs.944 crore in nine months. So, we will surpass that

    — Shri Swarup Kumar Saha, MD and CEO

  • QIP Capital Raising Other · Q4 FY25 · High confidence ₹2,000 crore
    at an appropriate time in the quarter, we will like to make an effort to garner Rs.2,000 crore by way of QIP.

    — Shri Swarup Kumar Saha, MD and CEO

Risks & concerns

  • Deposit Mobilization Lag

    medium

    Credit growth (14-15%) is significantly outpacing deposit growth (8-9%), putting pressure on the CD ratio.

    Both acknowledged

  • MSME Segment Stress

    medium

    Management noted 'a bit of a stress still there in the MSME segments' and is focusing on collection efficiency.

    Management acknowledged

  • Pricing Competition in Corporate Lending

    low

    Bank is losing AAA accounts to competitors due to aggressive pricing, forcing a shift to mid-corporate and RAM segments.

    Management acknowledged

Areas of evasion (1)

  • Specific names of mid-corporate accounts that were recovered/upgraded.

Q&A highlights

2 direct
Telecom Sector Slippage Direct
Yeah, this is that industry telecom company you all know about... for our bank it did not slip [in previous quarter]. We did provide adequately in September but the actual slippage happened in 8th October of this quarter.

Management clarified that a ₹167 crore slippage from a major telecom player (likely Vodafone Idea) was recognized this quarter, but was already anticipated and provided for.

Asked by Ashlesh

Decline in AAA Rated Exposure Direct
It's a conscious call that we are rebalancing... we have got repaid some low-yielding assets in the AAA category. It is not due to the downgrade, but it is due to the repayment that has happened in a big AAA rated account as the pricing was not adequate for our bank.

Reveals a strategic shift where the bank is willing to sacrifice top-tier volume to protect margins and yields.

Asked by Rohan

CD Ratio and Deposit Mobilization Partial
I agree with you that there is a lag between the deposit and the credit growth... we are estimating that in the deposit side, we will be around 8 to 9% in the deposit growth and between 14 to 15% on the credit side.

Highlights the industry-wide challenge of deposit growth lagging credit growth, leading to a rising CD ratio (75.25%).

Asked by Ashok Ajmera

2 min read 5 chapters

Detailed narrative

Exceptional Profitability and Margin Expansion

Punjab & Sind Bank reported a massive 147.37% YoY jump in Net Profit for Q3 FY25, driven by robust Net Interest Income growth of 27.06%. The Net Interest Margin (NIM) expanded to 2.78%, up 24 bps YoY, as the bank successfully repriced assets and shifted its mix toward higher-yielding segments. Operating profit also saw a significant surge of 74.73% during the quarter, reflecting improved operational efficiency.

Asset Quality Trajectory and Recovery Success

The bank's asset quality continues to improve, with Gross NPA falling below the 4% mark to 3.83% and Net NPA at 1.25%. A key driver has been the robust recovery and upgradation momentum, which reached ₹565 crore in Q3 alone. Management is confident of surpassing its annual recovery target of ₹1,000 crore, having already achieved ₹944 crore in the first nine months of the fiscal year.

Strategic Portfolio Rebalancing Toward RAM

PSB is consciously de-risking its balance sheet by increasing the share of the RAM (Retail, Agri, MSME) segment, which now stands at 54.20% of the total book. RAM advances grew by 20.85% YoY, significantly outperforming corporate growth. Management noted they are intentionally letting go of low-yielding AAA corporate accounts where pricing is not adequate, prioritizing profitability over pure volume.

Digital Transformation and Operational Efficiency

Digital adoption has reached a milestone with 92% of total transactions now happening digitally. The bank has implemented STP (Straight Through Processing) journeys for vehicle and housing loans, with 60% of vehicle loans now sanctioned through assisted digital journeys. To support this, the bank has planned a ₹400-450 crore CapEx investment in technology and infrastructure over the next five years.

Capital Raising and Future Growth Funding

To support its 14-15% credit growth target and meet SEBI's minimum public shareholding norms, the bank plans to raise ₹2,000 crore through a QIP in Q4 FY25. Capital adequacy remains comfortable at 15.95% (excluding 9M profits), and would be near 17% if profits were included. The bank also successfully raised ₹3,000 crore in infra-bonds during the quarter at competitive pricing.

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