International banking is going to be a very clear focus for us

Written by Simran Arora | Updated: Nov 8 2009, 03:23am hrs
K R Kamath, who recently took over as chairman and managing director of state-owned Punjab National Bank (PNB), says that international banking will be a very clear focus for the bank. Before joining PNB, he was the chairman and managing director of Allahabad Bank. In the quarter ended September this year, PNB registered 31.1% growth in net profit at Rs 927, which was fuelled by higher interest and treasury income. Kamath in an exclusive interview with FEs Simran Arora, talks about the banks expansion plans, interest rates and credit growth. Excerpts:

How are you looking at expanding your operations abroad

International banking is going to be a very clear focus for us. To expand our presence in central Asia, we are acquiring a controlling stake in a Kazakhstan-based bank, Dana Bank. Soon, the bank is opening a joint venture bank in Bhutan and a branch at Dubai International Finance Centre in UAE. The bank has also received RBIs approval for setting up a subsidiary at Vancouver and to upgrade our representative office at Shanghai to a branch.

How much stake are you planning to acquire in Kazakhstan-based Dana Bank And what is the status

We are acquiring 63.64% stake in Kazakhstan-based Dana Bank, which is subject to regulatory approval by Reserve Bank of India. Our board has already cleared the proposal and we are approaching RBI for this.

What is the size of Dena Bank

It is a five-branch operation. There will be a lot of bilateral trade between India and Kazakhstan. Since the economy in that country is under pressure, it gives us a good opportunity to take a controlling stake in the bank. The deal size is expected to be $24 million.

What are your financial expectations in the next few quarters

There has been a robust growth in our normal business. The business has grown by 25% on the deposited advances. Compared to other public sector banks, our growth has been around 18%. Of course, there has been some opportunity available in the treasury, which we are used to. But we have used this extra money, which was available through treasury to add value to the balance sheet. Our provision coverage ratio has gone to 91.11%.

What are your plans about opening branches in Pakistan and the US

As far as Pakistan in concerned, it is a bilateral arrangement which has to be decided by both the governments together. It is more for the governments to decide than us.

Are you thinking to open more branches in India, too

We are planning to take the number of our branches to 5,000. It should happen by March 31 next year. At present, we have around 4,700 branches.

What is the status of your stake sale in PNB Housing Finance Ltd, a wholly owned subsidiary of PNB

Let us wait. It is going to be price sensitive information and we would like to get the best value for our stake. But we will sell 26% of our stake and hope to cover this transaction by December 3, if all approvals come in time.

With inflation rising, do you think interest rates are likely to go up

In the short term I hold a view that the interest rates will remain stable unless inflation picks up suddenly. RBI has revised its inflation projection from 5% to 6.5%. It has said that in case there is a sudden spurt in inflation, it will come out with necessary measures. If anything like that happens, interest rates would rise. Otherwise, I expect it to remain stable till December this year.

Are you looking at acquisitions in India or abroad

If good opportunities come our way, we will definitely think about it. There is nothing on the drawing board as of now.

What kind of credit growth is PNB targeting for this financial year

We have year-on-year growth of 25% of credit. But Reserve Bank of India has recently brought down their guidance from 20% to 18%. So, when the regulator is saying that the credit growth is slowing down, we are taking note of the projection and acting accordingly..

How are you going ahead with your ambitious Project Namaskar

We have launched this project under which one lakh touch points will be established in unbanked villages by 2013 to extend the banks outreach and create a large customer base.