Plans to raise Rs 7k crore: PNB expects less than 3% of entire loan book to come up for rejig

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November 4, 2020 4:00 AM

The bank will raise Rs 7,000 crore through QIP in the second or third week of December, Rao said. The lender also plans to raise Rs 1,500 crore in tier-II capital and Rs 3,000 crore in additional tier I (AT-1) capital from the market before the end of November.

It aims to keep gross non-performing assets (NPA) ratio under 14% and net NPA ratio under 5%.It aims to keep gross non-performing assets (NPA) ratio under 14% and net NPA ratio under 5%.

Punjab National Bank (PNB)’s managing director and chief executive officer SS Mallikarjuna Rao is expecting less than 3% of the entire loan book to come up for restructuring. The bank, which expects credit growth to be within 4-6% in the second half of the current fiscal, is also looking to raise capital before the end of the calendar year. The bank plans to raise Rs 7,000 crore through qualified institutional placement (QIP) in December this year.

Rao said Tuesday that the bank is estimating Rs 20,000 crore of loans to come up for restructuring, half of what it had expected three months ago. “Originally, we had estimated Rs 40,000 crore to come up for restructuring. However, the response has been very low, people have started paying the money,” Rao said. He also said that many corporates have told the bank that if they undertake the restructuring, probably their ratings will be under pressure for a period of two years. The bank has already undertaken a few restructuring applications, he said. It aims to keep gross non-performing assets (NPA) ratio under 14% and net NPA ratio under 5%.

“As on today, in the retail, micro, small and medium enterprises (MSME) segment, restructuring at the end of September was Rs 42 crore. We have received applications of another Rs 32 crore from retail and MSME till October-end. In terms of corporates, we have received 15 applications amounting to Rs 2,022 crore,” Rao said. The Reserve Bank of India had earlier allowed restructuring of corporate and personal loans impacted by Covid-19.

On the outlook for NPAs, Rao said that PNB was expecting gross NPA ratio to be less than 14% and net NPA ratio of less than 5%. The lender reported net NPA at 4.75% and gross NPA at 13.42% at the end of the September quarter. “During June and September quarter, because of moratorium, there has not been any NPA addition. Our guidance is maximum slippage will be Rs 10,000 crore during entire financial year.”

Rao also said that bank was looking at a credit growth of 4-6% in the second half of this fiscal, even as loan growth in the first half remained muted. Advances remained flat in the September quarter at Rs 7.16 lakh crore, compared to Rs 7.12 lakh crore as on September, 2019. “We expect demand to increase. The demand is 75-80% as compared to last year and may improve in the days to come. We see corporate demand in road segment, steel, cement and expect the demand to improve further, ” he said.

The bank will raise Rs 7,000 crore through QIP in the second or third week of December, Rao said. The lender also plans to raise Rs 1,500 crore in tier-II capital and Rs 3,000 crore in additional tier I (AT-1) capital from the market before the end of November.

“As of today, we already have approvals from the board and the government to raise Rs 14,000 crore,” he said. The bank had already raised Rs 2,500 crore during the September quarter, he said. The capital adequacy ratio of the lender stood at 12.84% at the end of September quarter, compared to 12.63% in the June quarter.

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