Punjab & Sind Bank (PSB) has come out of the red after four years of losses and showed a net profit of Rs 20 crore in 1996-97. Besides, it has recorded the highest level of profit in its 90-year old history. It had a net loss of Rs 132 crore in 1995-96. The bank plans to raise Rs 100 crore via unsecured bonds this fiscal.
Announcing the financial results for the previous fiscal in New Delhi yesterday, S S Kohli, chairman and managing director, said the bank has set a target of Rs 100 crore as net profit for the current year.
Much of this profit will be achieved by reducing the non performing assets (NPAs), he said.
We were able to make profit by reducing the cost of raising deposits in 1996-97. This year we will try and reduce the NPAs from the current 12 per cent to about nine per cent.
The bank's capital adequacy ratio now stands at 9.23 per cent. As it plans to go for a public issue of shares in the next financial year, the bank needs to return some of the capital infused by the government. The writeback will reduce its capital adequacy, which in turn, will constrain business growth and also effect its plans to go public. Hence, the plan to issue unsecured bonds for Rs 100 crore as a measure to boost tier II capital, Kohli explained.
But we have to work out the details. It is still premature to determine the exact size of write back and bond issue required, he clarified. Kholi said PSB has taken a policy decision to reduce the high cost funds this year and further improve its income spreads. We have been able to make the turnaround due to good yield and investments in government securities, public sector bonds and investments in the secondary market, he pointed out.
The bank's business volumes stood at Rs 9,900 crore, Rs 6,400 crore as deposits and Rs 3,550 crore as advances in March, 1997, PSB executive director B D Narang said.
The bank has fully computerised 30 branches and partially computerised 120 branches. It plans to go in for full computerisation of 20 branches in the current year. Our export credit is 13.83 per cent of net bank credit against 12 per cent stipulated by the Reserve Bank of India, Narang said.
We were able to make profit by reducing the cost of raising deposits in 1996-97. This year we will try and reduce the NPAs from the current 12 per cent to about nine per cent. the bank has set a target of Rs 100 crore as net profit for the current year. Much of this profit will be achieved by reducing the NPAs
S S Kohli, CMD Punjab & Sind Bank
