Punjab National Bank has embarked on a five-pronged strategy for improving its financial position to become the 'best bank' in the country.
PNB Chairman S C Gupta said that the bank has identified five areas:
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Reduction in cost of deposit,
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Expansion of credit,
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Reduction in gross NPAs,
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Improvement in asset-liability management, and
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Creation of more promotional opportunities for the staff in coming years.
Gupta, after his successful stint at Indian Overseas Bank, took charge of PNB this month and charted out the future roadmap that aims at a growth in business by at least 20 per cent to over Rs 200,000 crore (Rs 2,000 billion) this fiscal.
The first priority of the bank will be to reduce its cost of funds to 4-4.25 per cent from the present 4.6 per cent.
"Though the mix of deposit is good, we want to increase the share of demand deposit from 46 to 48 per cent and reduce the proportion of time deposit from 54 to 52 per cent," he said, adding that PNB will focus on semi-urban and rural areas for growth in time deposits and improve its net interest margins.
PNB is also aiming to expand credit especially to retail, agriculture, trade and corporate sectors. The bank intends to allocate more funds for retail lending rather than give short term commercial loans at sub-PLR rates, Gupta said.
Although PNB has almost wiped out net NPAs, Gupta said the bank would not be complacent and will aim at cutting gross NPAs, which are now at 5.86 per cent.
With these measures, PNB will improve its asset-liability management and aim to attain 50 per cent of budgeted goals in the first half of the fiscal year so that the pressure in meeting the targets is less in the latter half.
"I have set the target of achieving 50 per cent of the budgeted goals for 2005-06 in the first six months to reduce pressure in the second half," Gupta said.
To improve staff productivity, Gupta said: "We want to create promotional opportunities for staff, so that their aspirations are fulfilled. This will instil confidence among staff to perform better and accelerate PNB's growth."
PNB, which posted a robust 27 per cent rise in net profit at Rs 1,410 crore (Rs 14.10 billion) for 2004-05, is aiming to take it up to Rs 1,700 crore (Rs 17 billion) by the end of this fiscal.
The Delhi-based bank, which clocked a business (advances and deposits) of Rs 1,63,579 crore (Rs 1,635.79 billion) last fiscal, is aiming to cross the Rs 200,000 crore mark by March end 2006.
PNB expects deposits to cross Rs 1,15,000 crore (Rs 1,150 billion) in2005-06 from Rs 1,03,167 crore (Rs 1,031.67billion) in 2004-05, and loan advances to grow from Rs 60,413 crore (Rs 604.13 billion) to Rs 72,000 crore (Rs 720 billion).
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