PNB eyes ambitious mission top 100

Punjab National Bank expects to break into the ranks of the world’s top 100 lenders within two years, as India’s third-biggest state bank by assets bets on faster credit growth and an expansion into new businesses to bolster its balance sheet.“Given our trajectory on growth, profitability, and asset quality, the bank is poised for good growth and better valuation,” Chief Executive Officer Ashok Chandra said in an interview.

“If you see the profitability or the efficiency ratios of the bank, I think we are in the right position.”Also Read: Punjab National Bank to foray in acquisition finance in third quarter: MD ChandraIndian authorities have been exploring options to build stronger, larger banks capable of financing the massive infrastructure and industrial projects needed in the world’s fastest-growing major economy.Currently, only State Bank of India, the country’s biggest lender, and private-sector leader HDFC Bank Ltd. rank in the top 100 global sector list by total assets.

Punjab National Bank is among the world’s 125 biggest banks, data compiled by Bloomberg shows.Also Read: India's big bank moment has arrived.

Why it mattersPNB, once among the banks hardest hit by India’s corporate bad-loan crisis last decade, has cleaned up its books and is pivoting toward higher-return businesses.

The New Delhi-based lender’s net profit surged more than three-fold to 52.5 billion rupees ($545 million) in April-June from a year earlier when its performance suffered due to higher provisions.The bank’s balance sheet grew nearly 9% year-on-year to 19.90 trillion rupees as of June-end and Chandra expects it to more than double to 48 trillion rupees by 2030 as it expands its loan book and asset base.PNB is counting on a revival in corporate borrowing, particularly project finance, to drive loan expansion after years in which retail lending dominated the sector.

Chandra said the lender’s estimated 13% credit growth this financial year will come from demand for corporate financing and as project loans gather pace.The comments add to signs that India’s long-awaited private-sector capital expenditure cycle is beginning to gain traction, encouraging banks to increase exposure to large-ticket corporate lending.

Most private-sector lenders reported double-digit growth in corporate loans last quarter.PNB is looking to build new sources of income, with plans to launch wealth management services by October and enter corporate mergers and acquisitions financing in the third quarter of this financial year, Chandra said.

This follows a decision by India’s central bank earlier this year to allow lenders to finance up to 75% of the acquisition value in corporate takeovers.Meanwhile, PNB is also intensifying efforts to attract foreign-currency deposits under a temporary swap facility offered by the central bank.

The program allows lenders to offer leverage, with many pitching double-digit returns on these dollar deposits.PNB has attracted about $425 million under the program, and plans to garner more of these deposits, Chandra said.

By partnering with some global banks, PNB expects to attract more than $2.5 billion by the end of September. ...