… the name you can BANK upon!

Performance Highlights Q1 FY09

¾ PNB - Performance Highlights

¾ Operations Review
¾ Focus Area & Strategy

1
 PNB - India’s Leading Nationalised Bank
170 Scheduled Commercial banks Among the Nationalised
in the Indian Banking System Banks (Jun’08)
100 90
80
60
40 29
20 23
8 Highest
20 Highest
Total
0 Business
Asset
SBI & Nationalised/ Private Foreign Regional Largest
Associates Other PS Sector Banks Rural Banks Branch
Banks Banks Network

Overtime the share of the Public Sector banks

As at March’08 Public Sector Banks in total business of banking system has
(ie Nationalised Banks + SBI & eroded from more than 93% in 1993 to about
Associates) constituted 71% of the 71% in 2008.
Total Business of the Scheduled However PNB has been able to maintain its
Commercial Banks. share in the total business of banking system
at around 5.0 - 6% during the same period.

Performance Highlights ..Q1 FY’09

„ Net Profit : Rs. 512 Cr (Increase by 20.55 %)

„ Total Assets : Rs. 206458 cr ( increase by 24.88%).

„ Total Business : Rs. 287504 cr ( Increase by 20.67%)

„ Total Deposits : Rs 173074 cr ( Increase by 21.36%)

„ Net worth : Rs. 12825 cr ( Increase by 18.11%)

„ Capital to Risk Asset Ratio: 12.96%( Basel II)

2
 Growing Size (Rs. Crores)

YoY
Growth
Jun’08 Jun’07 (%) Mar’08
Deposits 1,73,074 1,42,609 21.36 1,66,457
Advances 1,14,430 95,640 19.65 1,19,502
Total Business 2,87,504 2,38,249 20.67 2,85,959
Investments 60,421 48,942 23.45 53,992
Net Worth 12,825 10,858 18.12 12,318
Assets 2,06,458 1,65,319 24.88 1,99,020

Highest Asset, Highest Business & Highest Deposits

among Nationalized Banks 5

OPERATING PROFIT
(Rs.Cr)
982
1,000
933

877

800

600
Q1 FY07 Q1 FY08 Q1 FY09

¾Bank able to post YoY increase of 5.28% in Q1 of 2008-09

despite the challenging environment characterized by
9Increased preemptions under CRR
9No revision in lending rates
9Adverse G-sec and equity market conditions
Core Operating Profit (excluding trading income from Treasury)
registered growth of 21.02% to Rs.970 cr. (Jun’08) from Rs.801 cr. (Jun’07).6

3
 NET PROFIT
(Rs.Cr) 512
500 425
450
365
400

350

300

250

200

150

100

50

0
Q1 FY07 Q1 FY08 Q1 FY09

¾Net profit registered YoY growth of 20.55%, driven by

improved asset quality and steps taken earlier for
derisking the investment portfolio 7

Income and Profitability (In Rs. Crores)

Apr- Apr- YoY
Jun’08 Jun’07 Growth (%) FY’08

Total Income 4,595 3795 21.08 16263

Total Expenses (excl provisions) 3612 2862 26.21 12256

Net Interest Income 1445 1301 11.05 5534

Non Interest Income 456 509 -10.41 1997

-Commission Exchange &
Brokerage 316 275 15.15 1106
-Net Profit on Sale of
Investment 13 132 -90.22 442

Operating Profit 982 933 5.28 4006

Operating Profit (excl. Trading
Profit from Treasury) 970 801 21.02 3564

Provisions & Contingencies 470 508 -7.48 1957

Net Profit 512 425 20.55 2049

8

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 Provisions & Contingencies
(in Rs. Crores)

Jun-08 Jun-07
1. Provisions for Depreciation on Investment
(Net) 151 154
- Transfer of securities from AFS to HTM 328 497
- Depreciation on Investments -177 -343

2. Provision towards NPAs (Net) 48 138

3. Provisions made toward Income Tax
(Including FBT & Wealth Tax) 259 201
4. Others 12 15

Total 470 508

Key Financial Ratios

Mar’07 Mar ’08 Jun ’07 Jun ’08
Return on Assets (%) 1.03 1.15 1.02 1.00
Net Interest Margin (%) 3.85 3.58 3.59 3.27
Cost to Income Ratio (%) 47.90 46.81 48.45 48.32
Yield on Advances (%) 9.17 10.36 10.23 10.74
Avg. return on funds (%) 7.48 8.01 7.91 8.08
Avg. cost of funds (%) 4.01 4.90 4.78 5.26
MARKET VALUATIONS
EPS (Rs.) 48.84 64.98 53.92 65.00
BVPS (Rs.) 321.65 341.98 335.13 358.23
Return on Equity (%) 15.19 19.00 16.09 18.15
PE* 9.64 7.25 8.73 7.25
P/BV* 1.46 1.38 1.41 1.31
*Calculated on the closing price of Rs.471 as on 19 th August’08

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 ¾ PNB - Performance Highlights
¾ Operations Review
¾ Focus Area & Strategy

11

CREDIT PORTFOLIO
CREDIT GROWTH
Advances rose to Rs. 1,14,430 Cr. at the end
of Jun’08 from Rs. 95,640 Cr. at the end of 140,000 35.0%
Jun’07 , showing a YOY growth of 19.65%.
120,000 29.4% 30.0%
Seven Large Corporate Branches (LCBs)
account for around 22% of Bank’s net credit 100,000
23.7%
25.0%
23.5% 23.3%
19.7%
Bank has 10 Mid Corporate Branches
R s . C ro re s

80,000 20.0%
(MCBs) & 35 SME branches to cater to mid
sized and small size business segments 60,000 119501 114430 15.0%
respectively. 96597 95640
40,000 10.0%
Outstanding Retail credit (excluding 74627
traders) grew YOY by 16.92% to Rs. 18,893 20,000 5.0%
Cr. as on 30th Jun’08 from Rs. 16,159 Cr. as on
30th Jun’07. 0 0.0%
Mar'06 Mar'07 Mar'08 Jun'07 Jun'08
Education loan grew YOY by 62.38% to
Rs.1187 Cr as at end Jun.’08 from Rs. 731 Cr ADVANCES (LHS) Growth YoY (RHS)
as at end Jun’07.

Average Return on Advances improved to 10.74% as at end Jun’08. 12

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 Investment Portfolio
• As at Jun’08, the gross Composition of Investment P'folio
investment portfolio was Rs. Jun'08
60,421 Cr. Of this about 80% of
Shares Subsi.
portfolio in Govt. & other 1.6% & JVs
approved securities. Bonds/
1.3%
Deb.
• During Q1 FY’09 Bank 6.3%
Others
transferred Rs. 2105 Cr. 10.9%
securities to HTM category,
booking a loss of Rs. 328 Cr. Govt. &
Other
• The Bank proactively managed App.
interest rate risk & has de-risked Sec.
the portfolio to a large extent. 79.9%

• In respect of SLR securities the AFS portfolio has been reduced

from 44% as at Mar’06 to 13% as at Jun’08
• Reduction in duration/ modified duration of the AFS portfolio
from 4.37/ 4.19 in FY 06 to 1.85/ 1.73 in June’08
98% of the Rated Non SLR Bond portfolio is rated ‘A and above’ 13

Deposits
DEPOSIT GROWTH PNB accounts for around
(% )

200000 21.71% 25%

180000
21.36% 5.0% of System’s Deposits.
160000 19.02% 20%

140000 16.01%
16.86%
Deposits at end Jun’08 grew
(R s. C r..)

120000
100000
15%
at 21.36 % to Rs. 1,73,074 Cr.
80000 173074 10% From Rs.1,42,609 Cr at end
60000
40000 119685 139860
166457
142609 5%
Jun’07.
20000
0 0% Share of low cost Current and
Mar'06 Mar'07 Mar'08 Jun'07 Jun'08 Savings deposits (CASA) in
DEPOSITS (LHS) Growth YoY (RHS) total deposits stood at 41.31%
Deposit Constituents
as at Jun ’08.
CASA
Average Cost of Deposits as
Fixed
59% 41% on Jun’08 was 5.88%
Renewed focus being given
to increase CASA.
14

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 Improving Asset Quality
Jun’ Jun’ (Rs.Cr)
(In Rs. Crores)
08 07 4,000 3,708

Gross NPA (Opening balance) 3319 3391 3,500 3,319 3,265

Add: Additions during the 3,000

quarter 601 648
2,500
Less Reductions during the
quarter 656 330 2,000

Gross NPAs (closing 1,500

Balances) 3265 3708 926
1,000 754
715
Gross NPAs as % of Gross
Advances 2.82 3.81 500

0
Net NPAs (Closing Balance) 715 926
Jun'07 Mar'08 Jun'08
Net NPA as % of Net
Gross NPA Net NPA
Advances 0.63 0.98
15

Movement of NPA (Quarter Wise)

(Rs. in cr)

Jun-07 Sep-07 Dec-07 Mar-08 Jun-08

Opening 3391 3708 4716 4251 3319
Reduction 330 520 846 1444 656
Additions 648 1528 381 512 601
Closing 3708 4716 4251 3319 3265

NPA coverage ratio increased to 78.10% (Jun’08)

from 75.04% (Jun’07)
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 Capital & Financial Ratios
Comfortable Capital Adequacy Ratio
Share holding pattern -
Jun’08 Jun’ 07 30th June2008
Non
Capital to Risk Assets institutions,
Ratio (%) (As per 5.63
Basel I) 12.29 12.41 FIs/Banks, 0.13
FII , 19.83

Tier I 8.30 9.16

Tier II 3.99 3.25 Insurance Co. ,

11.77

Financial Ratios (%)

Govt. 57.80
MF &UTI, 4.84
Avg. return on Advances 10.74 10.23

Avg. Cost of Deposits 5.88 5.46

Strengthening Capital Base well above the regulatory requirement. As per the
BASEL II , CRAR is 12.96 (Tier I- 8.87%) as at end Jun-08. 17

¾ PNB - Performance Highlights

¾ Operations Review
¾ Focus Area & Strategy

18

9
 Technology Initiatives….
• 100% Computerization of all branches.
• CBS implemented at 4000 SOLs across 18 centres covering more
than 91% of Total business
• RTGS has been implemented at 3347 branches. PNB is the First
Public Sector Bank to offer RTGS through Internet Banking.
• NEFT has been implemented at 3347 branches. PNB is the First
Bank to launch NEFT
• SFMS has been Implemented in 1395 branches for intra bank
funds transfer
• Bank has 1581 ATMs.
• Online Share Trading: The customers can trade through this
facility and subscribe to IPOs, Mutual Funds, debt instruments
etc.
• Centralisation of Back end Operations: To leverage Core Banking
Solution technology across the Bank. Back end operations are
being taken out of CBS branches and centralized at city/national
level.
Bank introduced Mobile ATMs to reach out to unbanked slum/rural areas 19

Global Presence
Opened branch at Hong Kong in December 2007.
Bank upgraded its Representative Office at London (UK) into a
wholly owned subsidiary called PNBIL. Profitable in its first year of
operations.
First Indian Bank to open branch in Kabul. Branch became
profitable in the first year of operation.
Bank has Representative Offices at Almaty (Kazakhstan), Shanghai
(China) & Dubai (UAE)
Bank has an equity stake in Everest Bank in Nepal
Process underway for opening
Representative Office at Norway
Subsidiary at Canada
Upgrading RO Shanghai into branch
Offshore banking unit at Singapore
Branch at Dubai International Finance Centre
Joint Venture in Bhutan
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 Reaching Out…Tapping future growth potential
„ Financial Inclusion: More than 49% of population financially
excluded offers immense opportunity to bank.
„ Bank opened more than 7.68 lac “No Frills Accounts”
„ Bank using Biometric Technology and Smart Card proposes to Cover
30,000 villages, 75 milion people by 2010.
„ Pursuing financial inclusion both at geographical & functional levels
„ Geographical : Bank launching technology enabled financial inclusion
through Business Correspondents/ Business Facilitators Financial
Inclusion Model on Pilot basis at 27 identified sites (20 in rural +7 in
urban) and would replicate it later in other places.
„ Functional : Comprehensive scheme covering finance, insurance (health
and life) launched for rickshaw pullers, project for empowering women
weavers, vegetable vendors etc.
„ Focus on microfinance / SHGs
Catering to niche segments through 109 Specialised Branches 21

Strategic Investments/Alliances/Joint Ventures

„ 100% subsidiary in the form of a housing finance company –
‘PNB Housing Finance Limited’
„ Majority owned listed subsidiary PNB Gilts Limited which is a
leading primary dealer
„ In India, the bank has strategic investments in:
… Leading mutual funds and asset management companies
… Trustee Companies
… Asset Reconstruction company
„ Overseas Joint Venture
… Everest Bank Limited in Nepal
„ In addition, the Bank has sponsored (alongwith GoI and State
Governments) six Regional Rural Banks (RRBs) in six of its
key states.
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 PNB – Key Highlights
„ 114 years of sound and prudent banking
„ Extensive customer base of 37 mn
„ Second largest branch network which facilitates a strong pan India
presence through 4601 offices.
„ 2/3 of PNBs branch network is in rural and semi urban areas,
giving it an unparalleled reach in less banked locations
„ PNB - 3rd largest Bank in India, constituting around 5.0% of the
total business done by Scheduled Commercial Banks
„ Accounts for about 17-18% of the total banking business in the rich
and fertile Northern, Indo-Gangetic belt.
„ Ranks among the stronger public sector banks, with one of the
highest Net Interest Margin (NIM) and Current and Savings
Account (CASA).
„ Thrust on increasing international footprints
„ Successfully migrated to Basel II Accord w.e.f 31st March 2008

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The Way Ahead…..

• Bank restructured and streamlining organizational set up by
removing one layer to make it a 3 Tier structure.
• Major technology up-gradations to be brought about this year
to establish capability for having 100,000 terminals under the
Core Banking Solutions.
• Setting up Data warehouse to help in meeting customer
requirements and in cross selling bank’s products.
• Financial Inclusion to be given greater thrust by introducing
innovative delivery channels especially leveraging the
technology initiatives of the bank
• Focus will be on retaining and further improving Low Cost
Deposits, lending to Agriculture and SME sectors.
• Repositioning of Subsidiaries/Joint Ventures.
Bank proposes to bring ALL branches under CBS network by March’09 24

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 PNB – A SNAPSHOT
•• 33rd
rd largest
largest bank
bank in
in India
India with
with Pan
Pan India
India Presence
Presence && predominant
predominant presence
presence in
in
Market the
the fertile
fertile Indo
Indo Gangetic
Gangetic belt,
belt, thereby
thereby enabling
enabling it
it to
to capture
capture 16-17%
16-17% ofof
Market business
business in in the
the region
region
Position
Position •• Franchise
Franchise valuevalue supported
supported byby very
very large
large customer
customer base,
base, second
second largest
largest
branch
branch network
network in in the
the country
country and
and aa long
long history
history of
of operation
operation
•• 58%
58% Government-owned,
Government-owned, with
with significant
significant oversight
oversight through
through Board
Board
Ownership
Ownership representation
representation
•• Higher
Higher than
than industry
industry NIM
NIM due
due to
to aa combination
combination of
of improving
improving yields
yields and
and low
low
Profitability cost
Profitability cost funding
funding base
base

Market •• Book
Book substantially
substantially derisked
derisked with
with reduced
reduced duration/
duration/ modified
modified duration
duration and
and
Marketrisk
risk less
less proportion
proportion of
of AFS
AFS

Asset •• Relatively
Relatively strong
strong asset
asset quality
quality Strengthening
Strengthening risk
risk management
management systems
systems
AssetQuality
Quality •• Continually
Continually declining
declining gross
gross NPA
NPA ratio
ratio and
and net
net NPA
NPA consistently
consistently below
below 1%
1%
•• Strengthening
Strengthening capital
capital adequacy
adequacy ratios
ratios through
through internal
internal accruals
accruals and
and by
by
accessing
accessing to
to capital
capital markets
markets
Capitalization
Capitalization •• Continuous
Continuous increase
increase in
in Tier
Tier II capital
capital
•• Improving
Improving Capital
Capital Adequacy
Adequacy at at 12.96%
12.96% (June
(June 2008)
2008) comfortably
comfortably above
above the
the
minimum
minimum requirement
requirement
•• One
One ofof the
the healthiest
healthiest Low
Low cost
cost current
current account
account savings
savings account
account ratio
ratio (CASA)
(CASA)
Funding ratio
ratio of
of 41.31%
41.31%
Funding
•• Highest
Highest rating
rating by
by all
all four
four domestic
domestic rating
rating agencies
agencies and
and one
one of
of the
the few
few banks
banks
to
to enjoy
enjoy aa AAA
AAA rating
rating on
on its
its perpetual
perpetual debt
debt issue
issue

25

Thank You
Disclaimer
This presentation is made purely for information. We have tried to give relevant information which we believe
will help in knowing the bank. The viewers may use their own judgment and are advised to make their own
calculations before deciding on any matter based on the information given herein. While every care is taken to
verify the accuracy of the information given in this presentation , neither the bank nor its officials would in
any way be liable for any action taken or not taken by the viewers or the users of this presentation or any
other claims, losses etc.
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