Punjab National Bank (PNB), the country’s second largest public sector bank, will raise ₹7,000 crore through Qualified Institutional Placement (QIP) in the second or third week of December, SS Mallikarjuna Rao, Managing Director & CEO, has said.
The state-owned lender also plans to raise ₹1,500 crore in Tier-2 capital and ₹3,000 crore in AT-1 capital from the market before this month-end, Rao said at a virtual press briefing to discuss the Q2 results of the bank.
“As of today, we already have approvals from the Board and the Government to raise ₹14,000 crore. The ₹14,000 crore comprises of QIP of ₹7,000 crore; AT-1 capital of ₹3,000 crore and ₹4,000 crore of Tier-2 capital. In Tier-2, we have already raised ₹2,500 crore in July and September,” he said.
PNB has not requested the government for any capital and would first go to the market to meet its capital needs, Rao said responding to a question on whether the bank has sought any capital support from the government, given that Parliament had recently approved ₹20,000-crore capital infusion in public sector banks.
NPA recovery
In the first half of this fiscal, cash recovery stood at ₹2,900 crore ( ₹700 crore in Q1 and ₹2,200 crore in Q2). “We expect in the second half to do another recovery of ₹5,100 crore in normal accounts. We are expecting NCLT reduction of not less than ₹8,000 crore. Reduction of NPA will be more than ₹13,000 crore. Our cash recovery in H2, including NCLT, will be ₹10,000 crore.”
On recovery from fraud declared accounts, Rao said there is “aggressive monitoring” in those accounts as multiple stakeholders and agencies are involved.
“While we are concentrating on other accounts, we are also undertaking close monitoring on the fraud accounts by liaisoning with the multiple agencies involved in the exercise. In the case of Nirav Modi, the court in London has refused bail application to him. He has been put behind bars for more than one-and-half years and the process of liquidation of his assets in the US are in progress. We have received some amount (small amount) of recovery on this front. All efforts are in progress. Even in domestic matters, we have filed in the CBI court for giving us control of property for sale of about ₹1,000 crore,” Rao said.
Credit growth, NPA
Rao said the bank is looking at credit growth of 4-6 per cent in the second half of this fiscal, although the credit growth in the first half has been flat. “We are expecting growth in retail, corporate and SMEs,” he added.
On the outlook for NPAs, Rao said that PNB is expecting gross NPA to be less than 14 per cent and net NPA of less than 5 per cent. As of end September, net NPA was 4.75 per cent and gross NPA was 13.42 per cent.” “During Q1 and Q2, because of moratorium, there has not been any NPA addition. Our guidance is maximum slippage will be ₹10,000 crore during entire financial year,” he said.
Subsidiary, associates
Rao said PNB had no plans of unlocking value in any of its subsidiaries or associates during this fiscal. As for capital infusion in PNB Housing Finance, Rao said the bank was awaiting for RBI approval to undertake the capital infusion transaction.
Q2 performance
Rao said that PNB had been able to more than double the net profit performance in Q2 to ₹621 crore (from ₹308 crore in Q1) through proper balance sheet management besides achieving marginal increase in yield on advances. “We had taken some bold and conscious decisions in April. We were carrying high cost deposit of ₹16,000 crore and CDs of ₹11,000 crore. Both were carrying high cost and were maturing in May and June. We had allowed them to mature and they were not renewed. Better management of resources had brought down interest on deposits and helped improve operating profit,” he said.