PNB expects a recovery of Rs 14,000 crore of bad debts in the three quarters


The state-owned National Bank of Punjab (PNB) said on Tuesday it expects a recovery of Rs 14,000 crore on bad debts over the three quarters and a profit of 4,000 to Rs 6,000 crore in 2021-2022, driven by spending rationalization and a robust recovery. .

Expenditure control has multiple dimensions, one of which is the rationalization of branches, PNB Managing Director SS Mallikarjuna Rao told reporters.

“We have successfully rationalized over 500 branches. We plan to rationalize 1,000 branches by March 2022, which will result in a significant reduction in operating expenses,” he said.

Currently, the bank has around 10,641 branches across the country.

On the recovery side, he said, the bank expects Rs 5,000-5,200 crore to come from NCLT cases by March 2022. This will help reduce bad debts or unpaid assets. producing around 12,000 crore of Rs.

“In normal recovery we usually get around Rs 3,000 crore per quarter. So we expect another Rs 9,000-10,000 crore in normal recovery,” he said.

Rao exuded confidence that the bank is expected to make an annual profit between Rs 4,000 crore and Rs 6,000 crore thanks to a strong recovery and cost rationalization during the current fiscal year.

“The direction for 2021-2022 would be Rs 4,000-6,000 crore … on the balance sheet, the cost of deposits has been drastically reduced, the cost / income ratio has been reduced, the yield on advances has declined “, did he declare.

In addition, recoveries from APMs for which the provision coverage rate is 80% will be resumed, he said.

“So 50 percent of the profit will be contributed by the recovery during the year. The profit would therefore come from a mixture of cost rationalization and recovery,” he said.

Regarding new fundraising, he said, if you look at the capital adequacy ratio, it’s 15.19, which is enough for credit growth of 8 to 10. %.

“However, PNB, being a large bank, in order to insulate itself from the capital requirement for the future and not depend on the government, we will definitely consider discussing this in a month or so and take a call to this topic, “he said. noted.

This exercise would aim to generate buffers that would not meet business needs, he said. Currently, the government owns 73.1 percent of the bank.

Regarding the perceived threat to the telecommunications sector due to the Supreme Court’s AGR order, he said all telecommunications players are asking the government to consider it. “The developments of the last few days are therefore matters of concern for the banking sector,” he said.

The exposure to GNP is not very high which will impact the balance sheet, he said, adding “However, we will definitely discuss with other bankers to see what kind of action we need to take. in the future given the statement by KM Birla yesterday. “

Last month, the Supreme Court said it would issue orders on claims filed by telecommunications majors Vodafone Idea, Bharti Airtel and Tata Tele Services Ltd, raising the issue of alleged miscalculations in the related dues figure. adjusted gross income (AGR).

The Supreme Court in September last year gave 10 years to telecommunications service providers who struggled to pay Rs 93,520 crore in AGR-related dues to settle their debt to the government.

Rao also said that PNB will sell its stake in Canara HSBC OBC Life Insurance Company within the next 12 months.

The state-owned bank headquartered in the city had acquired a stake in the life insurer after the former Oriental Bank of Commerce (OBC) merged into itself during the previous fiscal year. The former OBC held 23 per cent of the capital of the life insurer which, due to the merger, became PNB.

Canara Bank holds 51% of the capital, while HSBC Insurance (Asia Pacific) Holdings Ltd as a foreign partner holds 26%.

It is also a sponsor of another insurer PNB Metlife Insurance, holding the highest 30 percent stake. The company was formed in 2001, other shareholders of which include US company Metlife with 26 percent, Elpro (21 percent) and M Pallonji & Company (18 percent).

In accordance with the current insurance guidelines of the Insurance Regulatory and Development Authority of India (Irdai), a promoter cannot own more than 10% of the capital of two insurance companies.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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