PNB profit grows 16% to Rs 429 cr

BS 200 SCORECARD

Punjab National Bank (PNB), the country's second largest public sector lender, today reported a 16 per cent increase in net profit at Rs 429 crore in the third quarter ended December 2006. The bank's board approved a plan to raise capital through equity and bonds.

PNB may hit the market with its third equity offer to raise about Rs 2,000 crore after March this year, according to sources. The bank will also raise Rs 1,000 crore "� Rs 500 crore before March "� through bonds.

The bank is raising the funds to meet higher capital requirement under Basel-II norms by March 2008. The money will also be used to set up four overseas offices, for life insurance and credit card joint ventures and increase equity stake in Everest Bank of Nepal.

"The board approval has been obtained to consider reduction of government shareholding from 57.8 per cent to 51 per cent," said PNB Chairman and Managing Director S C Gupta, announcing the third quarter results here.

Gupta said the equity sale could be through follow-on public offer or placement with qualified institutional bidders. The bank will soon approach the Reserve Bank of India and the government for their approval to raise capital. The bank also announced an interim dividend of 40 per cent to its shareholders.

Gupta said operating profit was up 75 per cent at Rs 956 crore during the third quarter, but net profit was only up 16 per cent due to provisioning of Rs 357 crore for non-performing assets and depreciation in value of government securities.

The total income of the bank grew 21 per cent during the quarter under review to Rs 3,271 crore.

The total business (deposits and advances) of the bank was at Rs 2,17,874 crore as on December 31, 2006, a growth of 26 per cent over the year-ago period. Deposits rose by 23 per cent at Rs 1,30,225 crore, while loan growth was 30 per cent at Rs 87,649 crore.