Punjab National Bank (PNB), the second largest public sector bank in the country, expects its bottomline in current fiscal to be atleast ₹ 6,000 crore, Ch S.S.Mallikarjuna Rao, MD and CEO has said.

This estimate is nearly three fold increase to the net profit of ₹ 2,022 crore recorded by the bank last fiscal.

“Last fiscal was a year of consolidation for us because of the amalgamation with two other banks. There were also Corona induced lockdown issues. This fiscal our conservative estimate is that bank will record net profit of not lower than ₹ 6,000 crore. This will, however, depend on the economy growing at 9.5 per cent as projected by RBI and Covid second wave impact getting eliminated by June 30”, Rao said at a press conference to announce the financial results for March quarter and entire FY’2020-21.

At the same time, Rao acknowledged that the ongoing first quarter was tough for the banking industry due to the impact of the second wave of the pandemic.

Credit growth

On the issue of credit growth, Rao said that he expects credit in the banking system to grow 8-10 per cent this fiscal and credit growth of PNB to be atleast 8 per cent. He highlighted that credit growth was very muted

Meanwhile, on the issue of PNB role in the proposed National Asset Reconstruction Company — which is expected to begin with take on board nearly ₹ 90,000 crore of stressed assets (NPA) from the banking system—Rao said that PNB has identified stressed assets worth ₹ 8,000 crore in bank’s book to be transferred to this asset reconstruction company. While public sector banks together are expected to pick up 51 per cent stake in the national ARC, Rao said that PNB shareholding will be less than 10 percentage points.

Rao said that he expected the proposed National Asset Reconstruction Company to be operational from July this year. “We are expecting everything to be put in place by June 30 and from July 1 onwards things will start functioning. The Indian Banks Association has already indicated this”, he said.

Capital mobilisation

To a question on capital raising, Rao said that the bank was adequately capitalised now (capital adequacy of 14.62 per cent after May QIP) and an assessment would be made after June quarter. “As of now we are not looking to come to market. There is some headroom in AT-1 bonds. Even there no decision has been made. There is no timeline at our end”, he added.

Last year, PNB had set for itself target of raising ₹ 14,000 crore of capital from the market comprising of ₹ 4,000 crore from Tier II bonds, ₹ 3,000 crore from AT-1 bonds and ₹ 7,000 crore from QIP. Already the bank has raised ₹ 3,994 crore out of ₹ 4,000 crore Tier II bonds, QIP raised in two tranches at ₹ 5,577 crore and AT1 bonds of ₹ 500 crore. In all, about ₹ 10,077 crore out of targeted ₹ 14,000 crore has been raised from the market by the bank.

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