After being hit by a Rs 14,000-crore fraud a quarter ago, Punjab National Bank (PNB) aims to bounce back with bad loan recoveries of Rs 11,500 crore by September and funds of Rs 8,600 crore for the full year from the sale of non-core assets.
The second largest public sector lender is in negotiations with a few government departments, including income tax and central excise, to sell its erstwhile headquarters situated at the Bhikaji Cama Place in New Delhi.
"It (talks) is at the stage of negotiation. There are three government agencies that we are in discussion with. Now we are negotiating for better valuations because we are finding good interest in it," PNB’s Managing Director and CEO Sunil Mehta told reporters in Mumbai a day after announcing the bank’s financial results.
PNB expects to raise nearly Rs 700-800 crore from the sale of its earlier head office in the national capital, said the bank’s Executive Director LV Prabhakar.
He said the first valuation of the property was done five to six months ago but property rates have gone up since and the demand has also increased. The bank is, therefore, going for revaluation.
Other non-core assets
In the April-June quarter, PNB raised Rs 167 crore from sale of offices and its investment in ICRA, Crisil and BSE.
It also appointed a merchant banker for selling its stake in PNB Housing Finance and should be able to finalise a buyer by August end. About Rs 7,000 crore would be monetised through it, Mehta said.
PNB owns 32.79 percent stake in PNB Housing Finance and the bank will look at either selling its entire shareholding in it or up to 26 percent.
Mehta also said the bank will dilute its minority four percent stake in PNB Metlife Insurance in a bid to seek price discovery.
As part of the consolidation in its international book, PNB is also looking to shut its four representative offices in Sydney, Dhaka, Dubai, and Shanghai soon.
Recoveries
Mehta said the bank has targeted recoveries worth Rs 11,500 crore for the second quarter ending September with the help of a “stressed asset management vertical with 3,000 well-trained staff” working towards it.
“We have a target of Rs 20,000 crore for the first half and we have already recovered Rs 8,445 crore in Q1 and further Rs 11,500 crore will be recovered in this quarter (Q2),” Prabhakar said.
PNB also expects slippages into bad loans to the tune of Rs 17,000 crore for the full year (Rs 5,250 crore in Q1) along with resolution of nine large power assets under the Samadhan scheme and sending four accounts to the insolvency courts.
On Monday, the bank reported a lower-than-expected net loss of Rs 940 crore for the quarter ended June. The loss was contained on the back of healthy interest income and fall in non-performing assets (NPAs).
Mehta said he was confident of a turnaround to make profits in the current fiscal year.
“…Now the bank is totally geared up to bounce back in FY19. We will be back in black this year as we have non-core assets to back up, to optimise our capital utilisation, to augment it with employee stock purchase options and first quarter results are an indication of things to move ahead,” Mehta said highlighting the improvement in the bank’s operating profit and gross and net NPAs in the June quarter.
If not for the Rs 1,800-crore provisions made towards the fraud related to the Nirav Modi case, Mehta noted the bank would have made a profit, much higher than Rs 343.40 crore made in the June quarter a year ago.
Also Read: Will PNB chief Sunil Mehta’s favourite book help him weather the storm?
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