Confident of achieving 10% credit growth this fiscal: PNB chief

Punjab National Bank, the country’s second-largest public sector bank by assets, is targeting credit growth of 10 per cent this fiscal and is well on course to achieving it, a top official said.

“I don’t see a turnaround in credit growth for the banking industry as a whole, but for my bank, I am optimistic about achieving the targeted growth of 10 per cent,” Sunil Mehta, Managing Director and CEO, PNB, told BusinessLine .

This will be achieved through a mix of both retail as well as corporate credit, he added.

His optimism over achieving credit growth of 10 per cent — which is substantially higher than the 2.1 per cent growth achieved in 2016-17 — comes from the fact that the two-to-three strategies devised by the public sector bank had started yielding results this year.

One of the key strategies has been the creation of a ‘Loan Syndication Cell’, which is delivering results.

“When every bank is shying away from corporate credit due to asset quality concerns, we see an opportunity there as there are still several good corporates to whom we can provide credit to. That is where the loan syndication cell plays a role,” Mehta said.

PNB is also looking to fill in the space vacated by some of the weaker public sector banks.

“We are not looking to take away their existing business. We will be catering to the incremental requirements of their existing customers. This is the model we are working on and we have got good success on this,” Mehta said.

Coupled with the “Mission Parivartan” and increase in low-cost of funds (CASA of 45 per cent), PNB has recorded a much better performance in the second quarter than in first, on credit as well bottomline growth, Mehta said.

Mehta said that PNB was also eyeing 20 per cent retail credit growth this fiscal after recording 17 per cent growth in the first quarter.

Mehta said PNB right now was not considering acquisition as a strategy for growth.

“We are consolidating our own strength so that we get a good capital base and tomorrow when an opportunity arises we can manage the opportunity better,” he said.

Mehta said that PNB is currently in talks with the government to decide on the ideal route for raising equity capital of up to ₹3,000 crore. “It could be a QIP, follow-on public offer or a rights issue. We are under no compulsion and not in dire need for capital,” he said.

The PNB board had recently given its approval to raise equity of up to ₹5,000 crore.

“Although we are looking to raise equity capital of only up to ₹3,000 crore, we had obtained nod for up to ₹5,000 crore so that we don’t need to go to the board again in case an opportunity arises to raise beyond ₹3,000 crore,” he said.

PNB will wait for the right opportunity to unlock value in the non-core subsidiaries (PNB Housing Finance and PNB Metlife Insurance) and this would depend on market conditions.

“We (PNB) are only looking for capital for growth. Otherwise, we are comfortable on the capital front. If we get good valuation for our non-core assets, we may sell it. Otherwise, we may not sell it. This is an idea we have. It is not necessary we have to do it,” Mehta said.

Mehta also did not rule out a listing of PNB’s UK subsidiary to unlock value for the bank.

He said the subsidiary reported profits in the first quarter and is likely to be profitable for the entire fiscal.

Last fiscal, this subsidiary had reported a net loss. PNB had pumped ₹600 crore into the subsidiary last fiscal.

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