FUTURE PNB Chairmans Speech

Dear Shareholders,


It gives me a great pleasure to share with you the Annual Report of the Bank for FV17. The year in review was marked by two major macro-economic developments. The first was the action to demonetize the two highest denomination notes and the second was paving the way for implementing the Goods and Services Tax (GST).


Demonetization holds huge potential benefits in the medium to long-term and has paved the way for faster digitalization. The Implementation of a unified GST Is viewed as one of the most far-reaching indirect tax reforms, as it is likely to create a common Indian market, improve tax compliance and governance.


Consequent upon demonetization, CSO reduced the estimated GDP growth for FV17 to 7.1% from 7.6%. The GDP numbers for Q3FV17 grew at 7% allaying fears of any major effect of demonetization. As an immediate aftermath there was a moderate growth in industrial and service sector but the agriculture grew on the back of improved monsoon. The stickiness in service inflation paused the southwards momentum of the rate cut cycles as RBI changed its stance from accommodative to neutral in the Sixth Bi-monthly Monetary Policy Review.


The immediate financial impact of withdrawal of Specified Bank Notes (SBNs) was a surge In bank deposits with a commensurate fall in currency in circulation. Deposit grew at a faster pace this year as compared to that of last year. The retention of these deposits and carrying forward the momentum although shall remain challenging. However, the credit growth was Impacted as demand slowed down.


The expectations are that the medium and long-term determinants of economic growth are likely to hold the centre stage in the FY18. Stronger economic fundamentals, supportive monetary and fiscal policy, expectation of passage of GST and continuation of key structural reforms are expected to support GDP growth. With the economy slated to expand fast, the growth is likely to build its own momentum, subsume minor disruptions and there would be revival In Investment cycle and credit growth.


PNB''''s Performance during FY''''17


During FY''''17, the bank achieved various milestones i.e., 710.41 lakh crore Global Business, 76.22 lakh crore Global Deposits, 75.66 lakh crore Domestic Deposits, 72.60 lakh crore CASA Deposits, 72.14 lakh crore Savings Deposits and Domestic CASARatlo of45.97%.


Some of the key performance highlights of FY''''17 are:


- Net Advances of the Bank at 74.19 lakh crore grew 1.7% onYoYbasls.


- In terms of Bottom-line parameters, the Bank''''s Operating Profit stood at 714565 crore during FY’17 and Net Profit at 71325 crore.


- In terms of key financial ratios, the Bank''''s Domestic Net Interest Margin was at 2.69% during FY''''17. The Cost of Deposits moved southward from 5.85% in FV16 to 5.33% in FY''''17.


- The Bank has been able to maintain its Capital Adequacy Ratio above the regulatory requirement. The Bank''''s CRAR stood at 11.66% which constitutes Tier I ratioof8.91%andTlerll ratio of 2.75%.


- As a result of efforts taken towards resolution of NPAs, the GNPA ratio declined to 12.53% in FY''''17 from 12.90% in FY''''16, while the NNPA ratio declined from 8.61% In FY''''16 to 7.81% In FY''''17. The slippages declined from 742252 crore in FV16 to 722415 crore in FY''''17. The Provision Coverage ratio increased to 58.57% in FY''''17 from 51.06% in FY''''16.


Brand Visibility


1. Besides having its presence on Twitter and Linkedln, the Bank''''s Facebook page in the name of ''''Punjab National Bank, HO, New Delhi'''' has also become operational.


2. Mr. Vlrat Kohll, an energetic young cricketer and captain of Indian team having mass appeal to the youth of our country, has been chosen as Brand Ambassador of the Bank.


Continuing the Digital Journey


To make banking experience more pleasurable, more convenient and more rewarding, PNB wallet named as “PNB Kitty” was launched In the month of Dec”16. This online wallet serves as a virtual account that holds money online and can be used Id perform various transactions like sending or receiving money, online utility bill payments, Moblle/DTH Recharge ete. without sharing sensitive credentials of the Bank Account.


“PNB Yuva" is another interactive user interface to engage young customers in the age group of 14-25 years.


BHIM Is a Mobile App developed by National Payments Corporation of India (NPCI), based on the Unified Payment Interface (UPI) In which we are actively participating. It allows the user to Instantly transfer funds between the bank accounts.


Financial Inclusion


The bank has been pursuing the financial Inclusion objectives for long. These measures resulted in impressive gains in enhancing the outreach of banking services and extent of credit to the population. As a result, Department of Financial Services (DFS), Ministry of Finance (MOF), Government of India (GOI) has affirmed PNB as first among all banks in deposit mobilized through PMJDY accounts end second in overall implementation of PMJDY.


Corporate Social Responsibility


The distribution of wealth is as important as its legal and ethical creation. A strong sense of social responsibility is therefore an Integral part of our value system. Under PNB Vikas, Village Adoption Scheme, the Bank has adopted 169 villages for Integrated Rural Development. Under Swachh Vidyalaya Campaign the bank provides financial assistance for construction of toilets in government schools of these adopted villages. The Bank popularizes education among the girls In rural and semi urban areas through PNB Ladli. Also, education is being popularized among children of poor agriculture borrowers under PNB Kisan Balak Shlksha Protsahan Yojana. PNB''''s Farmers'''' Welfare Trust, PNB Centenary Rural Development Trust and


Financial Literacy Centers running across the country provides free of cost training, organize health check up and undertake development activities In their prevailing areas.


Awards and Recognitions


During FY17, the Bank has won many prestigious awards from influential domestic and overseas awarding Institutions. The Bank won Vigilance Service Excellence Award FY''''17 by Institute of Public Enterprises (IPE) Hyderabad, BFSI Tech MaestroAwards2016 in Application category for four node cluster by Bitstream Mediaworks Pvt. Ltd and National Payments Excellence Awards 2016 for Aadhaar Enabled Payments System (AEPS) by National Payments Corporation of India (NPCI). The Bank was also declared Runner up in Education Loan Provider of the Year 2016 by Outlook Money.


Recently, PNB was also awarded the Best MSME Bank Award (Large Category) and CSR Initiatives & Business Responsibility Award-Runner-Up (Large Category). PNB regained its Number One slot amongst Nationalized Banks with overall rank at 175th amongst Top 1000 world banks by The Banker1. Amongst nationalized banks, PNB lopped the chert of India''''s Most Trusted Brand as per The Brand Trust Report2016'''' launched by Trust Research Advisory.


Looking Ahead


The year 2017-18 on most counts is expected to be better for the economy as the new currency notes in required quantities have come back into circulation and economic activity is seen setting to ''''New Normal''''.


The expectation of “Normal Monsoon" and resultant good crop, better rural Income and Initiatives Ilka "Housing for All" offer vast scope for expansion of credit in rural and semi-urban areas where Bank has vast network of branches. The Bank plans to leverage its vast branch network for acquiring higher market share in Agriculture, MSME and Retail Credit.


Bank would also leverage technology to integrate financial inclusion and its association with India Post Payment Bank Is llkaly to provide fresh credit linkages. The strengthening of JLF mechanism will help resolve large accounts and improved climate for recovery will help ease the problem of stressed assets. Bank will remain proactive to encash the opportunities as they emerge.


In the end, on behalf of the bank, I thank all our shareholders for their continued faith in our strength and capabilities, customers for their valuable support and trust and our employees for their tireless efforts towards achieving our goals. I am confident that with this support and bust, the bank will achieve many more milestones and newer heights ahead.


Yours sincerely,


(Sunil Mehta)

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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