New Delhi: Punjab National Bank, the country’s second largest state-run lender, has no plans to cut deposit and lending rates in the near future as it wants to maintain a healthy profit margin, the chairman said on Wednesday.
“The bank is also confident of meeting the annual net profit target for 2007/08,” K.C Chakrabarty told reporters.
In January, the chairman had forecast 18-20% growth in net profit during 2007/08 on treasury gains, lower borrowing costs and higher recovery of bad loans.
PNB will report its earnings for the financial year 2007/08 on 15 May and analysts polled by Reuters Estimates peg the bank’s annual profit at Rs18.7 billion, up 21.4% from Rs15.4 billion a year earlier.
The bank also plans to sell between 20 - 30% stake in subsidiaries PNB Gilts Ltd and unlisted PNB Housing, and sell upto 10% of the 25% stake it holds in UTI Asset Management Co. “These could happen this fiscal,” the chairman said.
Chakrabarty expects interest rates to remain stable in India in the near future, and stated that the bank had no plans to revise its deposit and lending rates.
“There is no question of cutting deposit rates. We will be able to protect our net interest margin at 3.5-3.6%,” he told reporters after inaugurating a micro-finance branch on the outskirts of the capital city.
India’s central bank has not revised its key policy rates during 2007/08 but raised cash reserve ratio by 200 basis points since April 2007 to tame inflation.
Tight monetary policy slowed banks’ loan growth to 23.4% until the first week of May from 27.1% a year earlier, and crimped demand in Asia’s third largest economy.
Analysts expect the central bank may not tighten rates any further as industrial output growth moderated to 3% in March, its weakest rate in six years. Industrial output grew by 8.6% in February.