Punjab National Bank (PNB) is basically planning to hit the capital markets in the fourth quarter in this fiscal to raise the funds for helping meet growth needs and also regulatory requirements as well. At that moment, the bank is sufficiently capitalized with the capital adequacy ratio of around 14.14% at the end of March 2020, as the PNB Managing Director SS Mallikarjuna Rao told PTI in an interview. “Although, we would finalize the opening of the balance sheet of an amalgamated entity in the next board meeting in July. Probably then the bank would get an actual estimate of the capital requirement,” as he told. “We would be planning the capital raising which somewhere around the end of the 3rd quarter or the beginning of the fourth quarter as well. By this time we would have declared two quarterly balance sheets of the amalgamated entities,” he said.
Besides that, he told, the bank has a lot of headroom available in the terms of AT-1 and Tier-II bonds. PNB amalgamated Oriental Bank of the Commerce and United Bank of India with itself effective 1st April this year. With the merger, the bank now has around of 11,000 branches, more than around 13,000 ATMs, one lakh employees, and a business mix of over of Rs 18 lakh crore. The total domestic business of the PNB at the end of March 2020 that stood over of Rs 11.81 lakh crore.
Rao said that both the amalgamated entities Oriental Bank of Commerce and the United Bank of India have booked losses in the fourth quarter ended March 31. The losses were mainly because of the provision against bad loans, as he told, without giving the numbers as they have not been made public as well. In the last 2 financial years, most of the public sector banks got the major financial support from the govt in the terms of capital infusion thereby eliminating the need for raising capital from the markets.
For example, the govt infused around Rs 16,091 crore capital in PNB during 2019-2020 and around Rs 5,908 crore in the preceding year. As a result, the govt holding in the bank post-September rose to around 83.19% as against around 75.41% at the end of March 2019.
However, after a gap of two years, the Nirav Modi fraud hit a bank posted a profit of Rs 363.34 crore in 2019-20. He also said that the bank has scaled down its loan growth target to 6% for the current fiscal due to the Covid-19 crisis.
However, he said, the bank has a treasury advantage due to a reduction in interest rates resulting in Rs 1,000 crore gain in the first quarter of 2020-21.