Aiming to recover Rs 5,000 cr, bring net NPAs under 4.5% by March: PNB MD

The lender is also looking to further monetise its 15% stake in UTI AMC as part of its non-core asset sale plan to shore up its capital base.

The second largest state-owned lender Punjab National Bank (PNB) is targeting to bring down its net non-performing assets (NPA) below 4.5 per cent by March 2022 from 4.9 per cent currently, on the back of Rs 5,000 crore recovery during the ongoing Jan-March quarter, MD and CEO S S Mallikarjuna Rao said. The bank is also targeting "on a conservative level" to bring down gross NPAs under 12 per cent from 12.88 per cent reported in the December quarter.

The lender is expecting recoveries to the tune Rs 5,000 crore in the ongoing quarter from cases that are being resolved through National Company Law Tribunal (NCLT) and otherwise, as well as small accounts, Rao said. Out of this, recovery of Rs 1,000 crores is expected from NCLT cases, and Rs 2,300 crore would be recovered from non-NCLT cases, Rao said. In small accounts, the bank is expecting a recovery of Rs 2,000 crore, taking the overall recovery of Rs 5,000 crore in January-March, 2022. In the first nine months of the financial year, the lender has recovered Rs 17,500 crore, Rao said.

“In the next quarter as well as we do not have many accounts in the corporate segment which would become NPA, it is only a matter of controlling collections and asset quality in terms of the RAM (retail, agriculture & MSME) segment, which we are confident during the next financial year,” Rao said at a post earnings interaction

The lender reported a two-fold jump in standalone net profit to Rs 1,127 crore in October-December, as bad loans declined marginally. The profit of the bank would be more than Rs 4,000 crore for the entire year ended March 2022 due to average advances growth, Rao said Friday.

Rao also said the net interest margin (NIM) for the bank would be 2.75-2.8 per cent for the financial year ended March 2022. The lender reported a global NIM of 2.93 per cent in October-December from 2.39 per cent in the quarter ago. Domestic NIM was 2.75 per cent in the quarter-ended December.

Non-core asset sale

The lender is also looking to further monetise its 15 per cent stake in UTI Asset Management Company as part of its non-core asset sale plan to shore up its capital base.

The state-owned bank sold 3 per cent stake in UTI AMC in October 2020, and booked a profit of Rs 160 crore, Rao said. “There is still scope to monetise that," Rao added.

The bank also intends to divest its stake in Canara HSBC OBC Life Insurance Co Ltd, an associate of the bank, within the regulatory guidelines to monetise it, he said.

The lender is also looking to divest its stake in asset reconstruction companies during 2022-23. The bank has also monetised real estate assets including one of the floors in Bhikaji Cama Place at Delhi.