Punjab National Bank (PNB), the 102-year-old public sector bank, has chalked up an operating profit of Rs 758.20 crore for the year ended March 31, 1997, up about 42.5 per cent over the previous fiscal. In the current fiscal, the bank hopes to achieve an operating profit of at least Rs 1,000 crore.
With this performance, the bank is all set to stage a turnaround in fiscal 1997. In 1995-96, PNB had posted a loss of Rs 95.92 crore.
This was the first time in its history the bank had posted a net loss. In 1996-97, as reported earlier in Business Standard, the bank hoped to make a net profit of at least Rs 300 crore.
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"Though the results are yet to be audited, the bank will easily reach its target with a leeway of over Rs 450 crore against its operating profit," a PNB official said. According to PNB, three factors had helped it claw back from its dismal performance in 1995-96.
These include, a high growth in deposits, higher credit offtake and sharp fall in non-performing assets (NPAs).
The banks deposits have surged from the level of Rs 27,000 crore as on March 31, 1996, to over Rs 31,000 crore as on March 31, 1997 - a growth of about 15 per cent. PNB's total credit offtake has increased by from Rs 12,680 crore as on March 31, 1996 to over Rs 15,000 crore as on March 31, 1997.
However, it has fallen marginally short of its priority sector lending target of 40 per cent of the total deposits, though it has met its export credit target of 12 per cent. PNBs NPAs have also fallen significantly from Rs 2,517 crore as on March 31, 1996. The exact NPA position of the bank at the end of fiscal 1997 will not be known till its results are announced. But, it is expecting the ratio of NPAs to total assets to reduce from about 18.7 per cent as on March 31, 1996 to about 12-13 per cent by March 31, 1997.
According to bank officials, PNB registered a net loss in 1995-96 because of an additional provision of Rs 200 crore which it had to make. This year with the yield to maturities (YTMs) on government securities falling significantly, the provisioning requirements of the bank will be substantially lower. Punjab National Bank sources feel it has not staged a turnaround because the loss in 1995-96 was in the nature of a "technical loss." The bank also has plans to tap the capital market with a public issue of Rs 800 crore in this fiscal. However, PNB will approach the Securities and Exchange Board of India (Sebi) for permission only after its results are finalised.