Overview

Punjab National Bank (NSE:PNB), India’s first Swadeshi Bank, commenced its operations on April 12, 1895 from Lahore, with an authorised capital of Rs 2 lac and working capital of Rs 20,000. The Bank was established by the spirit of nationalism and was the first bank purely managed by Indians with Indian Capital. During the long history of the Bank, 9 banks have been merged with PNB. 1

Post amalgamation of eOBC & eUNI w.e.f 01.04.2020, PNB has expanded its presence across India with a network of 10925 branches, 13914 ATMs & 12346 Business Correspondents as at the end of 31st December’2020. PNB is the second largest Public Sector Bank (PSB) in the country with Global Business at Rs.18,09,587 crore. The Bank continues to maintain its forte in low cost CASA deposits with a share of 44.66%. Bank’s focus has been on qualitative business growth, recovery and arresting fresh slippages.

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Company History

PNB was born on May 19, 1894. The Bank opened for business on 12 April, 1895. Lala Lajpat Rai was the first to open an account with the bank which was housed in the building opposite the Arya Samaj Mandir in Anarkali in Lahore. His younger brother joined the Bank as a Manager. Authorised total capital of the Bank was Rs. 2 lakhs, the working capital was Rs. 20000. It had total staff strength of nine and the total monthly salary amounted to Rs. 320. 2

The first branch outside Lahore was opened in Rawalpindi in 1900. The Bank made slow, but steady progress in the first decade of its existence. Lala Lajpat Rai joined the Board of Directors soon after. in 1913, the banking industry in India was hit by a severe crisis following the failure of the Peoples Bank of India founded by Lala Harkishan Lal. As many as 78 banks failed during this crisis. Punjab National Bank survived. Mr. JH Maynard, the then Financial Commissioner, Punjab, remarked...."Your Bank survived...no doubt due to good management". It spoke volumes for the measure of confidence reposed by the public in the Bank`s management.

The years 1926 to 1936 were turbulent and loss ridden ones for the banking industry the world over. The 1929 Wall Street crash plunged the world into a severe economic crisis.

In 1951, the Bank took over the assets and liabilities of Bharat Bank Ltd. and became the second largest bank in the private sector. In 1962, it amalgamated the Indo-Commercial Bank with it. From its dwindled deposits of Rs. 43 crores in 1949 it rose to cross the Rs. 355 crores mark by the July 1969. Its number of offices had increased to 569 and advances from Rs. 19 crores in 1949 to Rs. 243 crores by July 1969 when it was nationalised.

Branch Network

Domestic Presence

The Bank has one of the largest networks of 7041 branches as on 31.03.2020 comprising of 1259 Metropolitan, 1430 Urban, 1753 Semi Urban and 2599 Rural branches. Rural and Semi Urban Branches (RUSU) comprise around 62% of the Total Branch Network.

International Presence

At present Bank has its overseas presence in 6 Countries by way of 2 branches(1 at Hong Kong and 1 at Dubai), 2 Subsidiaries (London and Bhutan), 1 Associate (Kazakhstan), 1 Joint Venture( Nepal).

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Products

Personal

  • Deposit
  • Loans
    • Retail
    • MSME
  • Insurance
  • Government Business
  • Agriculture Banking
  • Financial Inclusion
  • Priority Sector

Corporate

  • Corporate Loans
  • EXIM finance
  • Cash Management Services
  • Gold Card Scheme for Exporters
  • Doorstep Banking Services

International

  • LIBOR TRANSITION
  • FX RETAIL PLATFORM
  • Schemes
  • NRI Services
  • Help Desk For Forex Services
  • World Travel Card
  • Foreign Office Details
  • Trade Finance Redefined Portal

Capital Services

  • Depository Services
  • Mutual Funds
  • Merchant Banking
  • ASBA

Industry Overview

The financial year 2019-20 witnessed several path breaking developments amid a tumultuous journey, as far as the Indian economy is concerned. Banking sector being the lifeline of the economy did not remain an exception. In the year 2019, India completed the 50th anniversary of the bank nationalisation which was undertaken in the year 1969. Since Nationalization, Banking sector has been playing an exceptionally crucial role in the economy through contribution of the vital input of credit to various productive sectors. 3

The year was also significant in view of the announcement of amalgamation of 10 Public sector Banks into 4, aimed at making them stronger and bigger so as they are better positioned to meet the credit needs of a growing economy.

During 2018-19, the asset quality of Scheduled Commercial Banks (SCBs) turned around after a gap of 7 years. The banking sector returned to profitability in the first half of 2019-20 with a concomitant reduction in provisioning requirements, while recapitalisation helped public sector banks in shoring up their capital ratios. However, turbulence in the NBFC sector had a contagion effect on the Financial Services industry. This added to the challenges on the Asset Quality front despite various regulatory reforms. Notwithstanding the enhanced resolutions through the Insolvency and Bankruptcy Code (IBC), the overhang of NPAs remained. The health of the banking sector hinged around a turnaround in macroeconomic conditions. At this cusp, however, the evolving macroeconomic scenario, presents a challenge. The COVID-19 related lockdowns and social distancing since the end of March 2020 has severely impacted the economies world wide. The GDP growth for FY’20 slowed down to an eleven year low of 4.2% slowing from 6.1% in FY’19. Both investment activity and private consumption have suffered precipitous decline. Going forward, the economic scenario is marked with uncertainty, while the Government, and the Regulator have come up with lot of measures to meet the emerging challenges of the economy.

Financial Overview

The Domestic deposits of the Bank increased to Rs 6,86,493 crore as at the end of Mar’20 with a YoY growth of 4.9%. The share of CASA deposits in Domestic Deposits stood at 44.05%.

In the current banking scenario of mounting competition, Retail Banking products play a major role in enhancing the business growth of the Bank as a whole. In order to remain competitive, PNB My SALARY Account scheme has been modified by incorporating Personal Accidental Insurance (PAI) Cover, Sweep Facility and Overdraft facility. As on 31.03.2020, Rs.15,098 crore have been mobilized under the scheme. Further, modification in UTTAM and SUGAM Fixed Deposits have been carried out by incorporating days variants. As on 31.03.2020, Rs 33,710 crore have been mobilized under UTTAM FD Scheme and Rs 1,62,097 crore have been mobilized under the Sugam FD Scheme.

Credit Deployment and Delivery

Gross Domestic Advances of the Bank increased to Rs 4,95,045 crore in March’20 from Rs 4,89,812 crore in March’19 with a YoY growth of 1.1%. Fresh Sanctions with external rating ‘A’ and above formed a major part of the sanctions. Similarly, Bank has improved its quality of exposures as indicated by a decline in domestic credit risk-weighted assets (RWA) by Rs 6,469 crore during the year despite increase in domestic credit outstanding advance by Rs  24,212 crore.

Loan Syndication

During FY’20, the Bank gave approval for syndication/ appraisal of debt aggregating Rs .513 crore with share of PNB at Rs.174 crore. Further Technical Cell conducted TEV Study/Vetting report of debt aggregating Rs 2,868 crore with Bank’s share at Rs 2,098 crore.

Retail Credit

During the year FY’20, Total Retail credit portfolio of the Bank increased from Rs 78,656 crore to Rs 83,479 crore registering a YoY growth of 6.1%. Housing Loan, in absolute terms increased from Rs 44,874 crore to Rs 51,267 crore showing a YoY growth of 14.2%.

In an endeavor to give best price to credit worthy customer, pricing of Housing loan has been linked with the credit score of the customer. Bank has on-boarded Housing Loan and Personal Loan in the PSBloansin59minutes portal from 01.09.2019. Subsequently Auto Loan was also on boarded w.e.f 19.10.2019.

Priority Sector

As at the end of March’20, credit to Agriculture Sector Rs 79,707 crore, MSME (Priority) Rs 65,171 crore, Credit to Weaker Sections Rs 50,850 crore, Credit to Women Beneficiaries Rs 30579 crore, Loan to Small & Marginal Farmers Rs 40,512 crore and Loan to Micro Enterprises Rs 31, 506 crore.

Micro, Small and Medium Enterprises (MSME)

As at the end of March’20, credit to the Micro, Small and Medium Enterprises segment stood at Rs 70,284 crore. The advance to Micro & Small Enterprises stood at Rs 60,278 crore with outstanding in Micro segment at Rs 31,478 crore. Bank sanctioned Rs 5,956 crore under Pradhan Mantri Mudra Yojana (PMMY) during the FY 19-20.

Assets and Liabilities

Total Assets of the Bank increased YoY by 7.2 % to Rs 8,30,666 crore as at 31st March 2020 from Rs 7,74,949 crore as at 31st March 2019. During the period, the Net Advances of the Bank increased by 3.0% to Rs 4,71,828 crore from Rs 4,58,249 crore.

Investment increased YoY by 19% to Rs. 2,40,466 crore from Rs. 2,02,128 crore as at 31st March 2019.

On the Liabilities side, Deposits rose by 4.1% YoY from Rs 6,76,030 crore to Rs 7,03,846 crore during this period. Borrowings increased YoY by 27.7% to Rs 50,225 crore from Rs 39,326 crore in March 2019.

Net Interest Income

The Net Interest Income of the Bank increased YoY by 1.6% to Rs 17,438 crore during FY’20. While Interest Income grew 4.9% YoY to Rs 53,800 crore, Interest Expenses growth was at 6.5% to Rs. 36,362 crore.

Operating Profit

Operating Profit of the Bank grew by 13.4% YoY during the FY to Rs 14,739 crore. Total Income of the Bank increased by 7.5% YoY from Rs. 58,688 crore in FY’19 to Rs. 63,074 crore during FY’20. Total Expenses increased from Rs. 45,692 crore in FY’19 to Rs. 48,336 crore in FY’20.

Net Profit

Bank has earned a Net Profit of Rs. 336 crore in FY’20 against a Net Loss of Rs.9,975 crore during FY ’19.

Provisions and Contingencies

Total provision declined YoY by 37.3% to Rs. 14,402 crore in FY’20 from Rs. 22,971 in FY ‘19. Provision for NPA stood at Rs 14,464 crore in FY’ 20 and Provision for Income Tax was at Rs. 403 crore. Provision Coverage Ratio of the Bank improved to a robust 77.79% as at Mar ’20 from 74.50% in Mar ’19.

Bank’s Global Business reached the mark of Rs 12,20,775 crore in 31.03.2020.

CASA Deposits at Rs. 3,02,475 crore remained one of the highest amongst nationalized banks with 44.05% share in Domestic Deposits.

Retail Advances grew by 6.1% YoY to Rs. 83,479 during the year with 14.2% growth in Housing Loan Segment.

Domestic Cost of Funds declined from 4.29% in March 2019 to 4.25% in March 2020.

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PNB Consolidated December 2020 Net Interest Income (NII) at Rs 8,463.42 crore, up 89.42% Y-o-Y 4

February 09, 2021, Reported Consolidated quarterly numbers for Punjab National Bank are:

Net Interest Income (NII) at Rs 8,463.42 crore in December 2020 up 89.42% from Rs. 4468.08 crore in December 2019.

Quarterly Net Profit at Rs. 747.29 crore in December 2020 up 294.12% from Rs. 384.96 crore in December 2019.

Operating Profit stands at Rs. 6,556.87 crore in December 2020 up 72.47% from Rs. 3,801.64 crore in December 2019.

PNB EPS has increased to Rs. 0.78 in December 2020 from Rs. 0.65 in December 2019.

References

  1. ^ https://www.pnbindia.in/profile.html
  2. ^ https://www.pnbindia.in/origin-of-PNB.html
  3. ^ https://www.pnbindia.in/downloadprocess.aspx?fid=hV/u/IBzVrSwn93cTHHINQ==
  4. ^ https://www.moneycontrol.com/news/business/earnings/pnb-consolidated-december-2020-net-interest-income-nii-at-rs-8463-42-crore-up-89-42-y-o-y-6475011.html
Tags: IN:PNB
Created by Asif Farooqui on 2021/03/08 16:44
     
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