PNB to enter Pakistan; branches in Islamabad

Mumbai, Aug 24 (UNI) The public sector Punjab National Bank (PNB) is set to make a foray into Pakistan with a subsidiary titled 'PNB Pakistan' with an office in Islamabad.

Replying to a UNI poser, PNB Chairman&Managing Director S C Gupta said the above proposal is, however, subject to clearance from the RBI. ''Currently, we are waiting for the RBI clearance. Once cleared, we may start operations in Islamabad followed by Lahore, after we have had 18 branches in Pakistan before the partition of the country'' Mr Gupta said while addressing a press conference here today.

In its endeavour to expand international operations, Mr Gupta said the Bank has already filed an application with the UK regulator, Financial Services Authority (FSA) to upgrade the representative office at London into a wholly owned subsidiary, called 'PNB International Limited'.

The Bank would shortly file an application with the Office of Superintendent of Financial Institutions (OSFI), Ottawa (Canada) to open a subsidiary called 'PNB Canada'. In this context, PNB CMD said his bank plans to infuse around Rs 41 crore into the subsidiary to carry out full fledged banking business.

Further, Mr Gupta said the Bank is also in the process to file an application with the concerned authorities MAS, Singapore to open an Offshore banking unit (OBU) and set up a branch in Hong Kong.

Replying to a query, he said the Bank augmented its capital base by Rs 1,000 crore of lower Tier - II bonds during the current fiscal to meet the future capital requirement on account of implementation of Basel II norms and growth in assets. To further increase the capital base, Mr Gupta said, the Bank proposes to raise additional Rs 1,000 crore from lower&upper Tier-II bonds.

He also pointed out that the Bank has crossed the mark of total business of Rs 2,00,000 crore at the end of July 2006. Yet, he added, with interest margins remaining under pressure, the Bank veers towards other revenue streams through diversification of business. As part of diversification, Mr Gupta said the Bank plans to sell Gold coins with PNB logo.

Commenting on the first quarter performance of the current fiscal, Mr Gupta said net profit of PNB amounted to Rs 367.52 crore as compared with Rs 358.16 crore in the corresponding period of last year, recording a year-on-year(y-o-y) growth of 2.61 per cent. ''But for the loss of Rs 387 crore on account of transfer of securities from AFS (available for sale) to HTM (held to maturity) category done to derisk the investment portfolio, the net profit of the Bank would have been higher.'' He pointed out that the cost of deposits has remained at same level of 4.38 per cent in June 2006 as compared to June 2005, while yield on Advances has improved to 8.81 per cent from 8.32 per cent during this period.

Gross NPAs (non performing assets) as percentage to gross advances of the bank declined from 6.02 per cent at the end of June 2005 to 3.98 per cent at the end of June 2006, while Net NPAs as percent to net advances increased from 0.09 per cent in June 2005 to 0.35 per cent in June 2006.

UNI SN MJ SKB1813