PNB shelves plan to sell housing finance unit


Kolkata: Punjab National BankNSE 0.89 % (PNB) has decided not to sell shares in its subsidiary PNB Housing FinanceNSE -10.55 % and maintain a minimum 26% shareholding as a promoter, putting all speculations to rest.

PNB’s holding in PNB Housing is set to fall to around 27.5% from the current 32.43% when the later issues fresh shares to raise about Rs 1500 crore. PNB will not subscribe to the issue.

“PNB has confirmed that its stated objective is to continue to hold a minimum 26% shareholding in the company and continue to be the promoter,” PNB Housing said in a statement.

The mortgage lender has in fact shrunk its equity raising plan by one-fourth from the proposed Rs 2000 crore so that PNB’s holding does not fall below the 26% level, PNB Housing Finance managing director Sanjay Gupta told ET.

The Carlyle Group and General Atlantic Singapore, among existing shareholders, will make fresh investments.

A minimum 26% holding is needed for nominating a chairman in the board. PNB’s chief executive SS Mallikarjuna Rao is now PNB Housing’s chairman.

“PNB does not plan to sell any of its current holding. PNB Housing Finance Ltd shall continue to use the PNB brand,” the mortgage lender said after a board meeting which also reviewed its financials.

It has reported a 22% drop in net profit at Rs 237 crore for December quarter amid lower credit growth despite easing interest rate cycle and comfortable liquidity for it.

Gupta has attributed the fall in net profit to the expected credit loss provision of Rs 240 crore made against Rs 600 crore exposure to three stretched corporate accounts, slowed loan disbursement and the negative carry for the excess Rs 9585 crore liquidity.

The lender’s net interest margin, a key profitability ratio, shrunk to 2.98% for the December quarter, the lowest in the last five quarters. Outstanding loan book degrew to Rs 69194 crore from Rs 74023 crore in March 2019.

Its net interest income at Rs 566 crore vs Rs 558 crore registered a growth of 1.4%. Gross non-performing assets ratio stood at 1.75% of the Loan Assets at the end of December 2019 against 0.47% a year back.