Joining the race to enter the capital market, Punjab National Bank (PNB) is planning to to raise around Rs 2,000 crore. In the process, government’s holding in the bank will come down to 51 per cent from 57.1 per cent.
In an attempt to bolster the net worth and to expand aggressively in preparation for 2009, when the Reserve Bank of India is expected to relax norms on bank mergers, more than half a dozen banks are entering the capital market to mop up around Rs 50,000 crore.
Although, PNB managed to increase its capital-to-risk asset ratio to 12.29 per cent at the end of March 2007 from 11.95 per cent in Mach 2006, the bank needed another Rs 2,000 crore to meet higher provisioning (Basel II) norms set out by the Bank for International Settlements, said SC Gupta, chairman and managing director of PNB.
Announcing the annual results for 2006-07, Gupta said the capital would be raised through a combination equity and long-term subordinate capital.
The rising interest rates have severely affected the bank’s performance, including profitability and a rise in non-performing assets (NPAs), during the year. PNB’s gross NPAs over the year increase increased by Rs 253 crore to Rs 3,391 crore. Its net NPAs also increased to 0.76 per cent (Rs 725 crore) from 0.29 per cent at the end of previous financial year.
PNB reported a 17.55 per cent decline in net profit to Rs 238 crore in the fourth quarter ending March 2007 from the Rs 288.67 crore in the corresponding period of last year. However, its total total income grew by 26.84 per cent to Rs 3,712.79 crore from the Rs 2,926.93 crore in the corresponding quarter a year ago.
The PNB board declared a 60 per cent final dividend at Rs 6 on shares of Rs 10 each for 2006-07.
The country’s second largest public sector bank has reported a marginal increase of 7 per cent in its net profit to Rs 1,540.08 crore for the year ended March 31, against Rs 1,439.31 crore in the previous year. The total income during the period under consideration increased to Rs 12,579.78 crore from Rs 10,857.65 crore.