The Hindu Business Line : PNB examines funding options for housing finance arm

Dr K.C. Chakrabarty, CMD, Punjab National Bank (right), with Mr K. Raghuraman, Executive Director, at a press conference in the Capital on Thursday.

Our Bureau

New Delhi, Jan. 24 Punjab National Bank (PNB) may take its wholly owned subsidiary PNB Housing Finance Ltd (PNBHF) public in the coming months to help fund its business growth, the Chairman and Managing Director of the bank, Dr K.C. Chakrabarty, has hinted.

“We are examining as to whether we should take PNB Housing public or induct a strategic partner. A decision on this is expected by June. But we have no plans to merge it with the bank,” Dr Chakrabarty told reporters here on Thursday.

The PNB’s Executive Director, Mr J.M. Garg, told Business Line that PNB Housing needs more capital to scale up its operations and that the bank does not want to infuse more capital in the subsidiary. “The choice therefore is to go in for a public offering or bring in a strategic partner,” Mr Garg pointed out.

Dr Chakrabarty said that PNB was re-examining its relationship and role with its subsidiaries and joint ventures and would take appropriate decisions on each one of them in the coming days. He indicated that PNB would like to exit from its existing life insurance joint venture with Principal Group of the US even while stating that the bank’s association with Principal Group would continue for the asset management business.

For PNB Gilts, he said that it was for the subsidiary to examine the issue and take a decision on the matter. “We feel it should be merged,” Dr Chakrabarty said.

Meanwhile, PNB on Thursday reported a 26 per cent increase in net profit for the third quarter ended December 31, 2007 at Rs 541.46 crore as compared to net profit of Rs 429.87 crore in the same quarter the previous year.

For the nine-month period ended December 31, 2007, PNB reported a net profit of Rs 1,505.01 crore, registering a 15.6 per cent increase over net profit of Rs 1,302.37 crore in the same period the previous year.

NPA signs

Dr Chakrabarty also said that he wants to bring down the gross non-performing assets (NPA) as percentage of advances to 3 per cent level and net NPA to 1 per cent level by March from the current levels of 4.11 per cent and 1.33 per cent respectively.

“Earlier, there was a lot of concern about NPAs. For the quarter under review, there has been absolute as well as percentage terms decline in NPA, which is a good sign. We expect even better results in coming days,” he said.

Gross NPA of the bank as on end-December 2007 stood at Rs 4,251 crore, which is lower than the level of Rs 4,717 crore as at end-September 2007. Net NPA as on end-December 2007 stood at Rs 1,339 crore. This represents a decrease of Rs 527 crore from net NPA level of Rs 1,866 crore as on end-September 2007.