PNB bets big on Phygital strategy to drive 20-30% business growth
Atul Kumar Goel, the current MD & CEO of Punjab National Bank (PNB), will demit office by December end this year.
He spoke to businessline on PNB’s latest Q2 performance and also the bank’s major transformation during his nearly three-year stint at the helm of the country’s second largest public sector bank.
Excerpts:
How do you see your tenure as MD and Chief Executive of PNB since February 2022?
It was really a wonderful experience. PNB is a solid bank. If you look at the past results, especially in the last 2.5 years, there has been a lot of transformation – HR and Digital.
The asset quality has improved considerably — how Gross NPA moved from 12-13 per cent couple of years back to 4.48 per cent now. There has been a complete transformation of the bank across the board.
What do you count as your main achievements in your tenure?
The biggest achievement is the change in the perception about the bank in the last few years. Market capitalisation of the bank has grown to over ₹ 1 lakh crore as of December 2023. Market cap is a result of the confidence of investors.
You can judge the confidence of investors in us from the recent QIP issue. We had gone to the market for a QIP of ₹5,000 crore, but we received bids worth ₹41,000 crore.
Any other significant achievements?
Yes, I would count digital transformation and HR transformation — both are now completed — as significant achievements. The improved asset quality is also noteworthy. We have reached a milestone of a business mix of ₹25 lakh crore. The credit for all this should go to PNB employees as transformation of the bank is a complete team effort. I don’t want to take any credit.
Is PNB now best placed to give PSBs a run for their money?
I will not comment on this. Our achievements are a result of teamwork. Potential was available. Our team is very good.
So how has PNB grown in recent years?
Initially, we saw an ₹11,000 crore increase in business in a year (FY 20-21), then ₹40,000-50,000 crore (FY 21-22). Today, we are adding more than ₹80,000- 83,000 crore in a quarter.
In the first quarter after I took charge, the profit was around ₹400 crore. Today, it is ₹4,300 crore per quarter. NPA used to be around 12 per cent. We were at the bottom earlier – both in terms of GNPA and NNPA. The GNPA is at 4.48 per cent now. It is a satisfaction for me that we are not at the bottom in terms of NPA in today’s time. The Provision Coverage Ratio (PCR) is 97 per cent.
Which is a bigger achievement – focus on Digital Mantra and HR transformation or focus on recoveries?
My team. My people. It is the effort of my 1 lakh employees. I will give them the entire credit. They are the facilitators. If we are making a HR transformation, they are the enablers. But if you are not in a position to take the team along with you, then what will happen? They only have to do the digital transformation. Now, entire workforce is in sync with me, and they give their best shot.
For a bank of your size – is there any unfinished agenda that you feel can be taken up?
The main thing is how to better the current strategy. Now we have to utilise the branch network. In other words, how we can leverage 10,000-branch network for better business.
We can increase the business mix (from current ₹25 lakh crore) by 20 or 30 per cent within the existing branch network set up.
What about Branch expansion plans?
We plan to add 150 more branches this fiscal, majorly in South. If you see last year, we opened 90 branches, of which 40 were in South. So, the number of 150 is important and so is geography.
You will continue to focus on South this year as well?
Yes, where we don’t have existing branch presence.
Do you see PNB now ready to do more acquisitions to grow size? You are still not there in the global 100?
If you look at the history of PNB, the maximum acquisition/mergers were with this bank compared to other private and nationalised banks.
New Bank of India, OBC and United Bank of India were all merged with PNB. There is no issue in terms of cultural integration and IT integration as those have been addressed. Yes, we are nowhere in the top 100 right now globally. But there is definitely potential for the bank to keep growing.
So how do you plan to scale up?
It will be through a phygital strategy. We will do both — physical expansion and be a digital player. See the size of the country (140 crore people). If you think only digital or physical branch will serve the purpose, it will not. It has to be a mix of both.
How confident are you in sustaining financial performance of bank?
The results are already with you for the last 12 quarters. Every quarter you are seeing a growth in business, operating parameters – whether it is the operating profit, net profit, even the reduction of the NPA.
How do you see PNB playing a role in the Viksit Bharat plan? Is there a roadmap?
Yes, definitely PNB will be a part of Vikshit Bharat. Driving financial inclusion through loans to MSMEs and the other government schemes is a part of Viksit Bharat. Even whatever the growth we are achieving, whether 80,000 crore per quarter, there is a lot of potential to increase this growth.
Do you see PNB playing a catalytic role in days to come for Viksit Bharat?
Definitely. The future is very bright.
Is there a strategic roadmap or a strategy paper at the board level?
Yes, that is very much there.
With just two months remaining, which areas will you lay the maximum emphasis on?
Every area. I am an all rounder. I will focus on all areas – be it retail, agriculture, MSME (RAM), recovery, underwriting, corporate lending etc. if you will focus on recovery and not do new business, then recovery will be good. Profitability will come but growth will take a hit. NII will be impacted. We have to view it from all angles. It is a financial institution so everything we have to see.