Hit by NPAs, PNB to focus on lending to better-rated firms

By: | Published: July 29, 2016 10:12 PM

Impacted by asset quality woes, state-run Punjab National Bank today said it will focus on lending to better-rated corporates for credit growth.

Punjab National Bank bse sensex“However, the preference is always for the higher rated corporates,” the bank’s Managing Director and CEO Usha Ananthasubramanian told reporters here. (Reuters)

Impacted by asset quality woes, state-run Punjab National Bank today said it will focus on lending to better-rated corporates for credit growth.

“We are looking for highly rated accounts like AAAs and AAs, but it does not mean we will shy away from the B-rated accounts.

“However, the preference is always for the higher rated corporates,” the bank’s Managing Director and CEO Usha Ananthasubramanian told reporters here.

She said even if income is going to be less from such accounts, there is stability in this segment as the capital charge is reduced.

“We also encourage the B-rated companies because that rating does not mean they are bad. The only thing is that where the capital charge is more, we re-look and want them to be supported by collateral,” Ananthasubramanian said.

Although the bank gets proposals from sectors which are not performing well, it takes a conscious decision not to get into them, she said.

“We do not want iron and steel but where we are already in, it is difficult to come out. Thermal power, gas-based power plants are some of the sticky areas. The old projects we have to continue and should support but we are not keen on incremental fresh exposure,” she said when asked which sectors the bank is more cautious about.

The bank had yesterday reported a 58 per cent decline in net profit to Rs 306 crore for April-June period on account of rising bad loans.

Provision for NPAs jumped almost three-fold to Rs 3,620 crore from Rs 1,291 crore in the same period a year ago. GNPA ratio shot up to 13.75 per cent.

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