PNB looking to further dilute its stake in UTI Mutual Fund

State-owned Punjab National Bank (PNB) on Friday said it is looking to further monetise its stake in UTI Mutual Fund as part of its non-core asset sale plan to shore up its capital base.

The bank has categorised non-core assets into two heads -- real estate and investment assets.

"We have sold 3 per cent stake in UTI AMC, where we have earned an amount of about Rs 180 crore in October 2020...we had the investment of 18 per cent in UTI AMC which we have brought down to 15 per cent. There is still scope to monetise that," S S Mallikarjuna Rao said at a virtual media briefing.

PNB is one of the sponsors of the country's oldest mutual fund company. Besides PNB, State Bank of India, Life Insurance Corporation of India, Bank of Baroda and US-based T Rowe Price are other sponsors.

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The bank also intends to divest its stake in Canara HSBC OBC Life Insurance Co Ltd, an associate of the bank, within the regulatory guidelines to monetise it, he said.

The city-headquartered bank had acquired a stake in the life insurer post amalgamation of the erstwhile Oriental Bank of Commerce (OBC) into itself last fiscal year. The erstwhile OBC held a 23 per cent stake in the life insurer, which by virtue of amalgamation has come to PNB.

Besides, he said, the bank is also looking to divest a stake in asset reconstruction companies during 2022-23.

With regard to real estate assets, Rao said, the bank has one of the floors in Bhikaji Cama place at Delhi and other floors are in line.

Asked about the outlook for the current quarter, he said, the bank expects recovery of about Rs 5,000 crore from both NCLT and non-NCLT cases in the January-March period.

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"At a conservative level, we are confident of getting gross non-performing assets (NPAs) below 12 per cent by March 2022. We shall definitely get net NPAs below 4.5 per cent by March 2022 because we are expecting the recovery to the extent of Rs 5,000 crore during the quarter," he said.

On the bottom line, he said, the current financial year would close with a net profit of over Rs 4,000 crore.

For the 9 months, the profit is about Rs 3,250 crore, he said, "so we are properly in line with the guidance given that the profit at the end of March 2022 would be more than Rs 4,000 crore."

Net interest margin would also see improvement at 2.75 per cent at the end of March 2022, he said.

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As far as credit growth is concerned, he said, it should rise to around 6 per cent and further improve to 8 per cent in the coming financial year 2022-23.

The bank has enough capital to meet the rise in credit growth, he said, adding, the bank has already raised Rs 6,000 crore through bonds which should take care of business growth for the next financial year.

However, he said, the capital position would be assessed after the first half.

When asked about the interest rate, Rao said, it is expected to harden after February as the RBI has started liquidity tightening.

It may see a rise of up to 25 basis points in the near future, he added.

With regard to recovery from Air India, he said, the bank has recovered its entire dues of Rs 4,900 crore.

The bank got Rs 4,000 crore in December while Rs 900 crore during the month.

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