Punjab National Bank (PNB) on Tuesday said it is planning to raise Rs 7,000 crore through share sales next month to shore up its capital base for meeting business plans.
The country’s second largest state-owned lender expects the credit growth to pick up slightly in the second half but it would be less than 5% for the entire fiscal.
The bank has already taken approval from the board for raising Rs 14000 crore by way of Tier II, Additional Tier 1 (AT-1) bonds and QIP (Qualified Institutional Placement), PNB Managing Director S S Mallikarjuna Rao said in a virtual interaction with the media.
“Of this, Rs 4000 crore is for Tier II. Against this, we have raised Rs 2500 crore, and remaining Rs 1500 crore and additional Rs 3000 crore from AT-1 bonds will be raised before November 30. With respect to QIP of Rs 7000 crore, we are planning to go to the market in the second or third week of December. It would depend on the book running lead manager (BRLM) and roadshows,” he said.
With this fund mobilisation, capital-to-risk-weighted assets ratio, which was at 12.8% at the end of September 2020 quarter, would go up to 13.5-14%.
“With respect to unlocking value in subsidiaries, as on today we don’t have any plan. We will be looking at proposals in future if anything is required. We are adequately capitalised,” he said.
On the other avenues of fund mobilisation, he said, the bank is looking to raise Rs 500 crore from sale of real estate during the current fiscal.
He also said the bank has decided to infuse Rs 600 crore in its mortgage arm PNB Housing Finance through preferential issue or rights issue subject to Reserve Bank of India (RBI) approval.
On the recovery front, Rao said the bank is aiming about Rs 16000 crore for this fiscal keeping in mind the pandemic’s impact.
In the first half of the current fiscal, he said, the bank has done cash recovery of Rs 3200 crore and another Rs 5000 crore is to be made by March 2021.
Besides, he said, the bank is expecting Rs 8000 crore from the resolution cases before the National Company Law Tribunal.
Asked about the outlook for the current financial year, Rao said, the bank aims to earn moderate profit in every quarter.
“We like to be in profit in every quarter though moderately. We do not like to have high profit because we want to strengthen the balance sheet by creating more and more provisions by showing marginal profits,” he said.
The bank posted a profit of Rs 308 crore in June quarter which increased to Rs 621 crore in the second quarter.
With respect to credit growth, PNB chief said it should be 4-6% in the second half but the annual growth should be around 3-4% in 2020-21.
Deposit growth, he said, would be 4-6% in the current fiscal and the bank was conscious in controlling deposits.
The bank was having excess liquidity of Rs 30000-32000 crore as deployment opportunity was muted during the first half due to lockdown, he said, adding, with festive season setting in there are opportunities in retail, MSME, road and corporate projects.
Position with respect to deposit accretion will be reviewed during the third quarter based on deployment opportunities, he said.