Punjab National Bank Plans to soon open a Representative Office in Dubai

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Punjab National Bank (PNB), a state-owned bank, has announced its plans to expand its global presence by opening a representative office in Dubai. This move is part of PNB’s strategy to increase its international footprint and attract more customers from around the world.

PNB has already obtained the approval of its board of directors to open the representative office in Dubai. Currently, the bank is in the process of seeking regulatory clearance for this expansion. PNB’s managing director, Atul Kumar Goel, has expressed hope that the representative office will be operational during the current financial year, provided that all necessary regulatory approvals are obtained.

Existing International Presence

As of March 31, 2024, PNB already has a presence in six countries through its subsidiaries, joint ventures, and representative offices. The bank operates subsidiaries in London, UK, and Bhutan, a joint venture in Nepal, and representative offices in Myanmar and Bangladesh.

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Strategy for Profitability Improvement

When discussing the bank’s strategy to improve profitability, Goel emphasized several key areas of focus. PNB aims to expand its retail, agriculture, and MSME (micro, small, and medium enterprises) portfolio. Additionally, the bank plans to extend good corporate loans, control slippages, and improve recovery.

Focus on Non-Interest Income

In order to augment its non-interest income, PNB intends to focus on improving its forex income and generating higher fee income from selling third-party products. These efforts are aimed at diversifying the bank’s revenue streams and reducing its reliance on interest income.

Increasing Low Cost Deposits

To improve its interest income, PNB will concentrate on increasing its low-cost deposit base, particularly its CASA (Current Account Savings Account) deposits. As of the end of March 2024, CASA accounted for 41.4% of the bank’s total deposits. PNB’s target is to raise this percentage beyond 42% by the end of the current fiscal year.

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Credit Growth and Business Outlook

PNB anticipates credit growth of 11-12% in the current financial year, with a deposit growth rate of 9-10%. To support this business growth, the bank has obtained approval to raise capital of Rs 17,500 crore through Tier I and Tier II bonds and share sales through private placement during the year.

Recapitalization Efforts

During the previous financial year, PNB successfully raised Rs 10,000 crore through Tier I and Tier II bonds at competitive rates. This recapitalization has bolstered the bank’s financial position and provided the necessary funds for its ongoing and future business activities.

Outlook for Profitability

With the implementation of its strategic initiatives, PNB expects its Return on Assets (ROA) to increase to 0.8% during the year and reach 1% by the end of March 2025. This projected improvement in profitability is expected to result in a significant increase in the bank’s overall profit.

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Overall, PNB’s plans to open a representative office in Dubai and its comprehensive strategy for growth and profitability demonstrate the bank’s commitment to expanding its international presence and providing enhanced financial services to its customers.

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