TheNFAPost Podcast

Chennai, NFAPost: The economy would recover “more effectively” from October this year onwards, said Public sector bank Punjab National Bank (PNB) MD and CEO SS Mallikarjuna Rao.

He also said that there would not be layoffs of employees due to the merger of Oriental Bank of Commerce and Union Bank of India with PNB. He also spoke about MSME, QIP, net interest margin (NIM), besides other important economic and financial subjects at a virtual press conference held recently.

The bank reported a net profit of Rs 308 crore in the first quarter ended June 30, 2020, against the expectation of a net loss. The country’s second largest lender had reported a net profit of Rs 1,018.63 crore in the corresponding quarter of the last fiscal, but the figures are not comparable as PNB merged two banks with itself effective April 1, 2020.

PNB expects credit costs to remain around 2.5% for FY21 and it has guided that around 5-6% of its loan book may be restructured, the final figure would depend on the contours of the scheme that the expert committee under KV Kamath prescribes.

The outstanding provisions are down by 1.5% during the June quarter. PNB CEO said despite the Covid-19 pandemic, the lender is not expected its Net Interest Margin (NIM) and Net Interest Income (NII) to get adversely impacted this fiscal.

PNB CEO maintained that overall credit growth would be 4% to 6% this fiscal and with this ambit, the MSME and retail segment will grow 8-10%. MSMEs are expected to do well as they will have a great opportunity from the restrictions on Chinese goods. Sectors like hospitality, tourism and aviation will take a longer period to bounce back, the bank said.

On the proposed asset restricting window, the bank board is expected to approve the scheme in the coming days and by September an idea will emerge on the number of accounts that will be eligible for this facility, it said. PNB plans to go in for Qualified Institutional Placement (QIP) by the end of the third quarter or early fourth quarter.

At the end of June 2020, PNB’s loan book size stood at Rs 7.21 lakh crore. So, the bank expects loans worth Rs 36,000-Rs 38,000 crore to avail the restructuring window provided by the RBI. Out of the total loan book of Rs 7.21 lakh crore, Rs 1.27 lakh crore belongs to the MSME category. Out of this, around 14% is under the non-performing assets (NPA) category.

PNB has a strength of 1.03 lakh employees and, as the business grows, this employee strength will further grow. PNB’s loan book of Rs 30,000 crore has not opted for RBI’s moratorium scheme (with only 20-22% of account holders opting for it).

On Tuesday afternoon, the bank’s shares were trading at Rs 35.20, down 0.28%.

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