Punjab & Sind Bank · Material risks, their source context, and severity in the latest available quarter.
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Two state government accounts (originally Rs 1,500 crore and Rs 1,200 crore exposures, now reduced to Rs 1,000 crore and Rs 627 crore) slipped to SMA-1/SMA-2 status with sequential uptick in SMA books. Management provided excess provisioning (20-30%) despite stating low delinquency risk. Analyst directly questioned whether these will eventually slip to NPA or resolve beforehand, with management unable to provide definitive timeline.
Credit growth (15.05%) significantly outpacing deposit growth (9.27%) has pushed CD ratio to 79.24%, though below industry levels of 82-83%. Management acknowledges deposit mobilization as critical and is repricing savings rates aggressively (from 7.45% to 6.60%) to reduce cost of funds while maintaining growth.
Analyst raised concern about unallocated segment expenses jumping to Rs 269.58 crore from the typical Rs 50-70 crore range, compared to segment-wise profitability of Rs 863 crore. Management deflected to CFO for separate follow-up, leaving the explanation unresolved on the call.
NIM stable at 2.59% (flat sequentially from Q2) despite 123bps repo rate cuts, indicating limited pass-through benefits. Management expects NIM to bottom out by Q4 FY26. Declining CASA proportion and competitive retail/agriculture lending compress margins while management prioritizes shifting portfolio mix to higher-yield segments.
