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May 10, 2024

Punjab National Bank’s Strategic Moves: CEO Plans Institutional Share Sale within 6 Months

Punjab National Bank Aims to Conclude Institutional Share Sale in 6 Months: CEO

Punjab National Bank, one of India’s leading state-run lenders, is gearing up to close a planned share sale aimed at large institutional investors within the next six months, according to the bank’s Chief Executive Officer. This move comes as part of the bank’s strategy to fortify its capital position in response to the escalating demand for loans in Asia’s third-largest economy.

In December, Punjab National Bank’s board greenlit a fund raise of Rs 7,500 crore ($898 million) through equity capital. The planned qualified institutional placement (QIP) entails selling shares to institutional buyers without offering them to the public. “For the QIP, we are trying to get all the approvals, but within six months we will try to raise the money from the market,” stated PNB’s Managing Director and Chief Executive Officer, Atul Kumar Goel, in an interview.

Steady Loan Growth and Capital Enhancement

Punjab National Bank is optimistic about its growth prospects, targeting a loan growth of 11% to 12% for the financial year 2025, compared to an 11.2% year-on-year rise in January-March. Additionally, the bank aims to increase its deposits by 9% to 10% during the fiscal year, a significant uptick from the near 7% growth observed in January-March.

The bank’s corporate loan pipeline currently stands at approximately Rs 1 trillion, of which Rs 60,000 crore to Rs 70,000 crore has already been sanctioned, according to the CEO.

Focus on Asset Quality and Expansion

With the bank’s net profit more than doubling in January-March alongside a decrease in loan-loss provisions, Punjab National Bank has set its sights on further enhancing its asset quality in 2024-25. CEO Atul Kumar Goel envisions bad loan recoveries reaching around Rs 18,000 crore. The bank aims to reduce its gross and net non-performing asset ratios to less than 5% and 0.5%, respectively, by March 2025, down from 5.73% and 0.73% at the end of March.

Moreover, Punjab National Bank plans to expand its network by adding 150 branches in the current fiscal year.

Infrastructure Loan Provisions

In addition to its internal strategic goals, the bank is closely watching developments in the Indian banking sector, particularly regarding infrastructure project loans. Goel stated that Indian banks would soon provide feedback on a central bank proposal aimed at tightening rules for such loans.

Conclusion

Punjab National Bank’s strategic moves underscore its commitment to strengthening its financial position and enhancing its operational capabilities. With a focus on capital infusion, loan growth, asset quality improvement, and expansion, the bank is poised to navigate the dynamic landscape of India’s banking sector effectively.

Jhumpa Lahiri

Jhumpa Lahiri

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