Punjab National Bank Housing Finance has allotted 5,500 equity shares of the face value of Rs10 each under the employee stock ownership plan scheme of the Company, according to the allotment, the paid-up equity share capital of the Company would stand at approx. Rs. 168 crores consisting of 16, 81,92,408 equity shares of Rs. 10 each. The PNB will be participating again in the non-deal roadshow and meeting potential investors on December 7th and 8th 2020. The ICRA Ratings had upgraded the ratings of bonds issued by the Bank and reaffirmed the rating of CD (certificate of deposit) on November 20th. The PNB has taken approval for raising Rs 7000 crore through a qualified institutional placement route this fiscal.
The bank’s rating upgrade is based on the current improvement in solvency profile and capital position, which is likely to sustain on the back of lower than previously estimated Covid-19 induced asset quality stress for the bank. Accordingly, credit provisions and the capital requirements for the bank are estimated to be manageable for the bank.
The Indian government has announced a capital infusion of rupees twenty thousand crores for public sector banks for FY2021, a part of which could also be allocated to Punjab National Bank. Also, the ability of public sector banks including PNB to raise Additional Tier-I bonds has improved after they have proposed to set-off their accumulated losses against their additional paid-in capital account, which could improve the bank’s ability to improve its Tier-I capital position.
Fitch Rating affirmed Punjab National Bank’s long-term issuer default rating (IDR) at ‘BBB-‘, with a negative outlook on December 3rd, 2020. Fitch Ratings believes a rapid economic recovery is critical for the sector to rebound meaningfully, without which we expect a quite worse landscape for the banking sector of India in 2021 on the back of poor prospects for new business and revenue generation.
The Punjab National Bank collection efficiency has improved from September onwards, as of November 30th, 2020 the collection efficiency stood at 92 %. The Punjab National Bank’s officials said that from next year it is expected that the GDP will grow around 10 % and the credit growth could be between 12 % and 14 %. To look for the opportunities in the next and coming years, the bank would like to raise the capital at this point and concentrate on the business opportunities during the next 24 months.
