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PNB plans Share Sale to Boost Capital, will open 150 new branches this year


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Punjab National Bank, one of India’s largest state-run lenders, intends to conclude a share sale to major investors within the next six months, according to the bank’s CEO. The move is aimed at strengthening the bank’s capital base to meet the growing demand for loans in Asia’s third-largest economy. The State Bank of India, the country’s largest lender, is also open to raising equity capital. In December, Punjab National Bank’s board approved a fund raise of 7,500 crore rupees ($898 million) through equity capital. Read: PNB Q4 Financial Results

Qualified Institutional Placement (QIP) and Loan Growth

The bank plans to conduct a qualified institutional placement (QIP), which involves selling shares to institutional buyers without offering them to the public. The CEO stated that the bank is working to obtain all the necessary approvals for the QIP and aims to raise the funds from the market within six months. Punjab National Bank expects its loan growth for the fiscal year 2025 to be between 11% and 12%, compared to an 11.2% year-on-year rise in January-March.

Deposit and Corporate Loan Growth

The bank aims to achieve a deposit growth of 9% to 10% in the fiscal year, compared to a near 7% growth in January-March. Additionally, Punjab National Bank’s corporate loan pipeline stands at around 1 trillion rupees, of which 60,000 to 70,000 crore rupees have been sanctioned, according to the CEO.

Improving Asset Quality and Branch Expansion

Punjab National Bank, which experienced a more than doubling of net profit in January-March due to a decrease in loan-loss provisions, aims to enhance its asset quality in 2024-25. The CEO expects bad loan recoveries to be around 18,000 crore rupees. Furthermore, the bank plans to reduce its gross and net non-performing asset ratios to less than 5% and 0.5%, respectively, by March 2025, from 5.73% and 0.73% at the end of March.

Branch Expansion and Feedback on Proposed Guidelines

The bank intends to add 150 branches in the current fiscal year. Additionally, the CEO mentioned that Indian banks will soon provide their feedback on a proposal by the central bank to tighten rules for infrastructure project loans. However, he stated that if the guidelines are implemented as proposed, they will not impact project financing, and the bank will be able to comply with them.

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