PNB Housing Finance's ₹2,500 crore rights issue expected to be complete by December: Official

Representational image only

Representational image only | Photo Credit: Reuters

State-owned Punjab National Bank on July 29 said the ₹2,500 crore-rights issue of its subsidiary PNB Housing Finance is expected to conclude earliest by December.

Following the rights issue, the shareholding of Punjab National Bank (PNB) as a promoter of the company would come down from the current level of 32.57% to below 30%.

"RBI has given approval for infusion of ₹500 crore in PNB Housing Finance. Post rights issue, the holding of the bank would come down below 30% but would be higher than 26% so that bank retains promoter status," PNB Managing Director A. K. Goel said.

PNB will not be subscribing to the rights issue proportionate to its current holding in the company as the Reserve Bank of India (RBI) has allowed the bank to invest only up to ₹500 crore in the rights issue. Consequently, the lender's stake in the mortgage firm will come down below 30% from the current level. Mr. Goel said the rights issue process is expected to conclude by December or latest in the March quarter.

The housing finance company was looking to raise equity capital worth ₹4,000 crore and had entered into a deal with joint venture partner Carlyle Group, among other investors, in May last year.

However, in October 2021, the mortgage lender decided to terminate the ₹4,000 crore stake sale citing delays due to pending legal proceedings.

About the financial performance of PNB, Mr. Goel said the bank intends to bring down the gross Non-Performing Assets (NPAs) to single digit and net NPA to 3.5% by the end of March 2023.

The gross NPAs of the bank stood at 11.2% while net NPA at 4.26% of the total advances as on June 30, 2022. He said the bank aims to increase its credit growth to 11-12% during the current fiscal.

Retail, agriculture and MSME percentage in overall loan book would increase to 54% from current 52.6% by the end of FY23, he said. The bank is comfortable as far as capital adequacy ratio is concerned to take care of 12% loan growth, he said. Still, the bank proposes to raise ₹12,000 crore from Tier I and Tier II bonds, he noted.

According to him, operating profit is expected to witness a growth of 10-15% during the current fiscal with a focus on recovery, reduction in fresh slippages and improvement in net interest income.

The bank had earned an operating profit of ₹20,761.82 crore while net profit was ₹3,456.96 crore in the last financial year.

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Printable version | Jul 29, 2022 6:06:20 pm |