Excepting Sbi, Pnb Growth Is Highest Among Scheduled Commercial

Punjab National Bank has recorded the highest rate of growth among scheduled commercial banks other than the State Bank of India in 1996-97. It has emerged out of the red and made a net profit of Rs 238 crore, the third highest after Bank of India and Bank of Baroda.

The net profit made in 1996-97 represents an increase of Rs 333.92 crore over the results of 1995-96 when it made a net loss of Rs 95.92 crore. In that sense, PNB has thrown up more profits this year than even Bank of Baroda, which has been ranked second because of a net profit of Rs 276 crore. Bank of India has made a net profit of Rs 360 crore.

 

Rashid Jilani, PNB chairman cited three reasons for the better performance of the bank. They are improved return on assets, a Rs 104 crore increase in non-interest income which stood at Rs 469 crore and better fund management. Non-interest income of two of its main rivals, BoB and Canara Bank has actually declined. BoBs fund based income was Rs 458 crore in 1996-97 compared to Rs 479 crore the previous year while this form of income of the Canara Bank fell from Rs 467 crore to Rs 455 crore. Only the BoI has shown a marginal increase in non-interest income from Rs 421 crore to Rs 490 crore.

PNB recorded the highest growth in operating profit which has risen by 61 per cent, from Rs 384 crore in 1995-96 to Rs 620 crore in 1996-97. This compares well with the actual decline in the operating profits of its two rivals.

BoBs operating profit has dropped from Rs 877 crore to Rs 776 crore and that of Canara has slipped from Rs 684 crore to Rs 654 crore. Only BoI has recorded a sharp improvement in operating profit from Rs 473 crore to Rs 573 crore. The high net profit has been achieved despite a decision to mark to market 70 per cent of its investments in government and other approved securities against 50 per cent made in the previous year.

Some of the crucial reasons for the high level of profitability are na higher level of non-food credit which was 12 per cent as compared to the banking industrys average of 10.9 per cent average return on advances grew from 12.5 per cent to 14.5 per cent non-interest income rose from Rs 365 crore to Rs 469 crore total income grew by 18.4 per cent to Rs 4,123 crore the banks capital to risk asset ratio improved from 8.23 per cent in March, 1996 to 9.15 per cent in March, 1997 the ratio of net non-performing assets to net advances fell from 12.7 per cent in 1995-96 to 10.38 per cent in 1996-97, resulting in an improvement in the overall asset quality ong pending promotions of officers were made last year removing the sense of uncertainty and demoralisation witnessed in earlier years. Litigations between the management and a section of employees was also resolved. Thus, staff productivity measured in terms of business per employee rose from Rs 59.2 lakh to Rs 67.7 lakhs. nexposure to high cost certificate of

deposits was reduced from Rs 227 crore in March, 1996 to a mere Rs 5 crore in March, 1997.

At the end of March, 1997, total deposits with the bank stood at Rs 30,806 crore showing an increase of 13.6 per cent over the previous year.

Current and savings deposits accounted for 42 per cent of aggregate deposits.Average cost of deposits rose from 7.78 per cent to 8.25 per cent in 1996-97. The bank could also contain establishment expenses at 7 per cent. Export credit at Rs 1,801 crore accounted for 12 per cent of net credit.

Total reserves and capital with the bank stood at Rs 1,342 crore compared to Rs 1,161 crore in the previous year. Reserves and surplus grew by 24 per cent entirely on the strength of internal generation.