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Informist, Tuesday, Feb. 4, 2025

 

--PNB ED Paramasivam: Canara HSBC Life IPO may materialise in next 2 qtrs

--CONTEXT: Comments by PNB ED Paramasivam in an interview to Informist

--PNB ED Paramasivam: Will exceed INR 170-bln recovery target for FY25

--PNB ED:Aim to raise share of retail, agri, MSME loans by 200 bps in Jan-Mar

 

By Shubham Rana and Kshipra Petkar

 

MUMBAI – Punjab National Bank expects to reduce its stake in Canara HSBC Life Insurance by 10% through an initial public offering in the next two quarters, according to the bank's Executive Director M. Paramasivam. "That (Canara HSBC IPO) is being handled by Canara Bank now. We have given the mandate to them. Maybe next two quarters it should definitely materialise," Paramasivam told Informist in an interview Monday.

 

PNB holds 23% in the insurer, which is a joint venture between Canara Bank (51% stake) and HSBC Insurance (Asia Pacific) Holdings Ltd. (26%). Canara Bank had informed the exchanges in December that it would begin the IPO process for the subsidiary after the Reserve Bank of India allowed it to divest its stake in the insurer by 14.5%.

 

On Friday, PNB reported a net profit of INR 45.08 billion for the quarter ended December, double from a year ago, aided by a 90?ll in provisions for bad loans and a write-back of INR 2.85 billion. According to Paramasivam, the bank's underwriting standards have improved, and with "proper sanctioning", the need for additional provisions has reduced. The bank's profitability is also expected to get a boost in the future from recoveries made from technically written-off accounts, which amount to almost INR 915.00 billion.

 

"Every quarter we are focusing to recover around 2,000 crores (INR 20 billion) from that kitty because it consists of NCLT (National Company Law Tribunal) also. So, we will recover around 2,000 to 2,500 crores (INR 20 billion-INR 25 billion) from technical written-off accounts, which will add directly to our profit," he said. While no recovery target has been set for 2025-26 (Apr-Mar), PNB expects to exceed its FY25 target of around INR 170 billion, Paramasivam added.

 

On the business front, PNB intends to bring down the share of corporate advances further such that loans to retail, agriculture, and micro, small, and medium enterprises--or the RAM segment--make up at least 58% of the total book by the end of March. As on Dec. 31, the state-owned bank's RAM loans were up 16.4% on year, accounting for 56.3% of the domestic advances.

 

In terms of resource mobilisation, Paramasivam said PNB is focused on getting salary accounts from corporates. Further, the bank plans to add 40-50 new branches in the current quarter and 200 in FY26, with the focus of the latter on the western and southern parts of the country. As on Dec. 31, the bank had 10,168 domestic branches.

 

Paramasivam also expects PNB to exhaust its annual technology budget of INR 32 billion. "(In the next) three months, the remaining budget will be utilised because we are purchasing EFRM (Enterprise Fraud Risk Management) solutions," he said. In the first three quarters, PNB had spent INR 20 billion from its technology budget.

 

At 1057 IST, shares of Punjab National Bank traded 1.5% higher at INR 99.84 on the National Stock Exchange.  End

 

Edited by Namrata Rao

 

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