Punjab National Bank (PNB) doesn’t intend to raise more capital from the market at this juncture when borrowing costs are rising, as the state-run lender’s capital adequacy remains more than comfortable, managing director and chief executive Atul Kumar Goel said on Friday.
The bank’s board had in late March approved a proposal to raise as much as Rs 12,000 crore through issuance of bonds (AT-1 bonds up to Rs 5,500 crore and tier-II bonds up to Rs 6,500 crore) in one or more tranches. Of this, PNB garnered about Rs 2,000 crore through tier-I bonds earlier this month. PNB’s capital adequacy stood at 14.8% as of June 30, against 14.5% in the previous quarter.
Goel exuded confidence that the lender will be able to bring down its net NPA ratio to 3.5% by the end of this fiscal from 4.3% as of June 30. A lot of efforts are being made to improve recovery—which is set to average Rs 8,000 crore per quarter this fiscal (including Rs 6,506 crore from cases before the National Company Law Tribunal), against Rs 7,057 crore in the April-June period, he said. This would ensure that recovery is higher than slippages, Goel said.
PNB has zeroed in on eight NPA accounts worth Rs 2,486 crore for transfer to the National Asset Reconstruction Company (NARCL). The bad bank is expected to begin its operation by September, said Goel. He said stressed loans worth Rs 50,000 crore would be transferred to NARCL in the first phase and more such accounts would be shifted in phases later.
Goel said PNB is likely to record a 11-12% growth in its operating profit this fiscal, adding that the credit growth could be to the tune of 10-11% and deposit growth at around 7-8%.
Commenting on the potential rise in interest rates, Goel said both deposit and lending rates may increase by 40-50 basis points by March 2023.
PNB Housing Fin’s Rs 2,500-cr rights issue by Dec
Goel said the Rs 2,500 crore-rights issue of PNB Housing Finance, an arm of the bank, is expected to conclude as early as December or latest by March. Once the rights issues is over, PNB’s shareholding as a promoter will drop below 30% from the current 32.57%.
To weigh hike in NRE deposits today
Goel said the bank is considering a proposal to hike the interest rate on [FCNR(B)] deposits. PNB’s asset liability committee (ALCO) would be meeting on Saturday to take a call on raising the rate. Few banks have already hiked the interest rate on FCNR(B) after the regulator permitted banks to increase the rate for a limited period to boost inflows of foreign funds.