Punjab National Bank plans aggressive recoveries to contain gross NPA below 12%

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Published: August 1, 2019 8:22:52 PM

"In this fiscal, we expect two NCLT accounts--Essar Steel and Bhushan Power & Steel--worth Rs 7,000 crore to get resolved. If our normal recovery is Rs 15,000 crore this fiscal then our total recovery will be Rs 22,000 crore with these two accounts. This will help in the reduction of NPAs," managing director Sunil Mehta told reporters here.

Punjab National Bank, PNB gross NPA, NCLT, Essar Steel, Bhushan Power & Steel, NCLT accounts, retail sectorIn the quarter to June, the bank’s gross NPAs came down to 16.49 percent at Rs 77,000 crore from 18.26 percent or Rs 82,889 crore.

State-run Punjab National Bank (PNB) is looking to reduce its gross non-performing loans at under 12 percent this year with better recoveries. In the quarter to June, the bank’s gross NPAs came down to 16.49 percent at Rs 77,000 crore from 18.26 percent or Rs 82,889 crore.

“In this fiscal, we expect two NCLT accounts–Essar Steel and Bhushan Power & Steel–worth Rs 7,000 crore to get resolved. If our normal recovery is Rs 15,000 crore this fiscal then our total recovery will be Rs 22,000 crore with these two accounts. This will help in the reduction of NPAs,” managing director Sunil Mehta told reporters here. In FY19, the bank’s recoveries stood at Rs 20,000 crore, which included Rs 2,100 crore through an one-time settlement scheme. “We have extended the scheme and expect to recover same amount in this year,” he added.

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He said the target is to contain gross NPAs below 12 percent and net NPAs at 6 percent in FY20 from 7.17 percent. The bank is also targeting a loan growth of 10 percent, he said. The bank also managed to arrest fresh slippages at Rs 4,711 crore in the June quarter from Rs 5,250 crore. During the reporting quarter, the bank turned black with a net profit of Rs 1,019 crore as against a net loss of Rs 940 crore and attributed lower provisioning for this.

“We reduced the provisioning requirement substantially in the June quarter. In the last two years, we had an impact of a fraud (Nirav Modi and Mehul Choski) for which we had to make a provision of Rs 15,000 crore spread over two years. In this fiscal, we don’t have any legacy provisioning requirement,” Mehta said.

The lender will continue to focus on retail loans, which accounts for 54 per cent of its total loan book. In the first quarter, retail loans grew 22 percent led by a 30 percent spurt in housing loans and Mehta expects the ongoing “NBFC crisis to open larger window for banks for growing in the retail sector.”

The bank has a board approval to raise Rs 5,000 crore through a rights issue or qualified institutional placement. That apart it is also looking to raise Rs 3,500 crore through tier 1 bonds in this fiscal. The bank is planning to sell non-core assets, which include its erstwhile headquarters at the Bhikaji Cama Place in south Delhi and some of its investments, and mop up Rs 1,000 crore.

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