State-owned Punjab National Bank (PNB) is expecting recoveries worth Rs 8,000 crore ($1.05 billion at current exchange rate) from large resolutions by September-end as the lifting of the lockdown fast-tracks the process under the Insolvency and Bankruptcy Code (IBC), said managing director and chief executive SS Mallikarjuna Rao.
For 2019-20, the bank made recovery of Rs 10,000 crore and recorded fresh slippages of Rs 18,235 crore, he said on Saturday.
He added that the bank aims to limit slippages to Rs 20,000 crore. Recovery, delayed due to tribunal hearings being stalled because of Covid-19, will gather momentum from October, he added.
This includes the lumpy Bhushan Power and Steel debt resolution that is likely to fetch over Rs 4,000 crore to PNB, its lead lender.
“We will be reviewing our recovery targets after assessing first and second quarter developments,” Rao said.
In February, the National Company Law Appellate Tribunal (NCLAT) had given JSW Steel Ltd immunity from all criminal investigations for its takeover of Bhushan Power & Steel Ltd, pushing the deal closer to the finish line.
Billionaire Sajjan Jindal-led steel firm had already received the lower insolvency court nod to acquire Bhushan Power and Steel for Rs 19,700 crore ($2.7 billion).
JSW Steel is now waiting for the Supreme Court to decide whether the Enforcement Directorate (ED) should end its attachment of Bhushan Power & Steel’s assets or not.
Capital raising
PNB, which recently absorbed two of its smaller peers -- Oriental Bank of Commerce and United Bank of India – as part of the public sector banks’ consolidation initiated by the government, also hopes to raise money from the market by the end of this year.
PNB’s capital adequacy ratio bumped up to 14.14% as on March-end compared with 9.73% a year before.
Rao also hopes to monetise some non-core assets including those of merged lenders.
“Real estate asset sale is being planned and we are hoping to sell it by December. We have identified the properties, one of them is the erstwhile headquarters of PNB situated at the Bhikaji Cama Place in New Delhi,” he said.
Financials
On Friday, PNB reported its standalone net loss at Rs 697 crore for the fourth quarter ended March, due to lower provisioning against bad loans.
The second-largest public sector lender’s loss had narrowed from Rs 4,750 crore in the same quarter a year ago. However, it had reported a lower loss of Rs 492 crore for the December quarter.
The bank's total income during the March quarter rose to Rs 16,388 crore from Rs 14,725 crore for the year-ago period.
Its asset quality improved as it reported a decline in gross non-performing assets (NPAs) and net NPAs at 14.21% and 5.78% of total loans at the end of the March quarter as compared with 16.30% and 7.18% in the December quarter.
While credit growth had slipped to an abysmal figure of 1%, the lender has revised credit growth target from earlier 12% to 6% for the full fiscal year ending March 2021. “The third and fourth quarters will be key in getting back growth,” Rao added.
