PNB to hike repo-linked lending rate from next month says CEO Atul Kumar Goel

Atul Kumar Goel, the CEO of Punjab National Bank (PNB), announced on Thursday that the bank will boost repo-linked lending rates from next month, as per PTI reported.

The decision comes after the Reserve Bank of India (RBI) raised the repo rate by 40 basis points (bps) last week in response to growing inflation.

According to PTI, Goel, the MD and CEO of the state-owned lender, told reporters that interest rates will almost certainly rise further.

"With 40 bps rise in repo rate... So according to our policy, from June 1, the same quantum raise in lending rates will be there. So there will be some increase in the loan rate for sure," Goel said.

The repo rate is the cost of borrowing short-term money from the RBI.

The city-headquartered lender hiked interest rates on term deposits in specified buckets up to 0.60 percent starting on May 7, said PTI.

Following the RBI rate hike, a number of banks have already raised repo-linked lending rates for their customers. Some have raised their deposit rates as well.

Goel said the bank's quarterly income decreased due to an increase in provisioning in the quarter and fiscal ended March 2022, PTI said.

The bank's net profit plunged 66% to Rs 202 crore in the March quarter. However, the net profit for fiscal 2021-22 increased by 71% to Rs 3,457 crore.

According to Goel, the economy's demand has returned to pre-pandemic levels, and sectors like as steel, cement, and road infrastructure are performing well.

The automobile segment has a strong demand. Everyone wants to buy their own car because of COVID-19. It is for this reason that the car market grew by around 25%. (segment loans). There is also good demand in the home sector. In addition, we estimate a 15% increase in house loan demand, PTI said.

"As I told you earlier also, there is a good demand in the steel, cement industries... Lot of road projects are coming. We have very hopeful, this year will be very good as far as the credit growth is concerned," he said.

On the asset quality front, the lender saw an improvement, with gross non-performing assets (GNPAs) decreasing to 11.78% of gross advances in March 2022, down from 14.12% a year earlier, PTI said.

Net nonperforming assets, or bad loans, fell to 4.8 percent from 5.73 percent. However, the lender set aside Rs 4,851.47 crore for bad loans and contingencies in Q4 FY22, up from Rs 3,540.32 crore previously.

However, provision and contingencies for the March quarter were increased to Rs 4,851.47 crore from Rs 3,540.32 crore the previous quarter, said PTI.

"As far as NPA addition is concerned, in whole year FY2021, it was Rs 28,100 crore which has reduced to Rs 24,744 crore (in FY22). In terms of quarterly addition, it was Rs 10,506 crore in March 2022 quarter," Goel added.