PNB’s board to consider fundraising via AT1 bonds issue next week

State-owned Punjab National Bank (PNB) on Thursday informed that its board of directors will meet next week on Wednesday, March 29, 2023 to consider the proposal of fund raising of capital for FY 2023-24 through the issuance of Basel-Ill compliant Additional Tier-1 (AT1) Bonds and Tier-II Bonds, in one or more tranches.

“..the Exchange is hereby informed that a meeting of the Board of Directors of the Bank is scheduled on Wednesday, 29 March, 2023 for inter alia considering the proposal for raising of capital for FY 2023-24 through issuance of Basel-Ill compliant Additional Tier-1 Bonds and Tier-II Bonds, in one or more tranches,” PNB said in an exchange filing. AT1 bonds are a type of unsecured, perpetual bonds that banks issue to improve their core capital base.

The lender reported a 44% decline in standalone net profit at ₹629 crore in the third quarter ended December 2022 (Q3 FY23) due to higher provisions for bad loans. The state-owned bank had earned a net profit of ₹1,127 crore in the year-ago period. The provisions for bad loans increased to ₹3,908 crore during the quarter as against ₹3,654 crore a year ago.

During the quarter, the net interest income (NII) grew by 17.6% to ₹9,179 crore while operating profit increased by 12.6% to ₹5,716 crore on YoY basis. On the asset quality front, the bank recorded an improvement with gross NPAs (Non-Performing Assets) declining to 9.76% as compared to 12.88% at the end of the third quarter of previous fiscal.

PNB shares have surged more than 31% in a year's period, however, the bank stock has declined over 18% in 2023 so far (year-to-date or YTD) as compared to 5% fall in the benchmark BSE Sensex during the said period.