State-run Punjab National Bank (PNB) is looking to reduce its gross non-performing loans at under 12% this year with better recoveries.
In the quarter to June, the bank's gross NPAs came down to 16.49% at ₹77,000 crore from 18.26 percent or ₹82,889 crore.
"In this fiscal, we expect two NCLT accounts--Essar Steel and Bhushan Power & Steel--worth ₹7,000 crore to get resolved. If our normal recovery is ₹15,000 crore this fiscal then our total recovery will be ₹22,000 crore with these two accounts. This will help in the reduction of NPAs," managing director Sunil Mehta told reporters here.
In FY19, the bank's recoveries stood at ₹20,000 crore, which included ₹2,100 crore through an one-time settlement scheme.
"We have extended the scheme and expect to recover same amount in this year," he added.
He said the target is to contain gross NPAs below 12 percent and net NPAs at 6% in FY20 from 7.17%.
The bank is also targeting a loan growth of 10%, he said.
The bank also managed to arrest fresh slippages at ₹4,711 crore in the June quarter from ₹5,250 crore.
During the reporting quarter, the bank turned black with a net profit of ₹1,019 crore as against a net loss of ₹940 crore and attributed lower provisioning for this.
"We reduced the provisioning requirement substantially in the June quarter. In the last two years, we had an impact of a fraud (Nirav Modi and Mehul Choksi) for which we had to make a provision of ₹15,000 crore spread over two years. In this fiscal, we don't have any legacy provisioning requirement," Mehta said.
The lender will continue to focus on retail loans, which accounts for 54% of its total loan book.
In the first quarter, retail loans grew 22% led by a 30% spurt in housing loans and Mehta expects the ongoing "NBFC crisis to open larger window for banks for growing in the retail sector."
The bank has a board approval to raise ₹5,000 crore through a rights issue or qualified institutional placement. That apart it is also looking to raise ₹3,500 crore through tier 1 bonds in this fiscal.
The bank is planning to sell non-core assets, which include its erstwhile headquarters at the Bhikaji Cama Place in south Delhi and some of its investments, and mop up ₹1,000 crore.