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From the Chairman & Managing Director's Desk:
I am pleased to present the Annual Report of your Bank for the Financial Year 2012–13 (FY'13).
The FY'13 turned out to be one of the most challenging years for the banking industry on account of uncertain global economic scenario and slow growth of Indian economy. The GDP growth of Indian economy continued to be weak throughout the year, with inflation remaining above comfort level with the current account deficit widening. In this backdrop, Government of India initiated proactive measures which started showing positive impact by the end of FY'13.
Punjab National Bank, with a rich legacy of more than 119 years has withstood the challenges with strength and resolve. With more than 5800 branches spread across the country and more than 63,000 employees serving over 80 million satisfied customers, PNB is a trusted brand in Indian Banking system. During FY'13, the Bank delivered a qualitative performance in business and profit, demonstrating a significant shift from unsustainable and high–risk growth. The overseas operations of the Bank also registered a healthy growth. I am happy to inform you that your Bank has crossed a landmark of Rs. 7 lakh crore in Total Business as on 31.03.2013. Besides this, the Bank has also achieved other new milestones such as Rs. 3 lakh crore Net Advances, Rs. 3 lakh crore Total Domestic Core Deposits, Rs. 1.50 lakh crore CASA Deposits and Rs. 30,000 crore Networth during FY'13.
Your Bank was bestowed with a number of prestigious awards during the year. Bank has been recognized as 'Best Public Sector Bank' by CNBC TV 18. The Bank has also been recognized as "Most Socially Responsive Bank" consecutively for second year by Business World and PwC. Further, The Sunday FINWIZ 2012 finds your Bank the "Best Banker in Agriculture Credit (Large)".The Bank has also been recently conferred with National Award for excellent performance in lending under PMEGP Scheme of KVIC in North Zone by Ministry for MSME, GOI. Apart from this, your Bank has also been bestowed with the IBA Banking Technology Awards 2012 under the categories of "Best Use of Business Intelligence" and "Best Risk Management and Security Initiatives".
Globally, 'The Banker' Magazine, London has ranked PNB at 175th position amongst World's Top 1000 Banks in 2012, up from 186th position in 2011. Forbes Magazine has placed PNB at 668th place amongst 2000 global giants. The Bank has also been ranked at 26th amongst FE 500 India's Finest Companies.
Now, let me share with you PNB's operational and financial performance during FY'13.
I am happy to inform you that PNB has shown a consistent performance during the FY'13:
i. As on 31st March'13, the Bank's Global Business rose to Rs. 7 lakh crore, out of which Global Deposits reached Rs. 3.91 lakh crore and Global Gross Advances touched Rs. 3.15 lakh crore.
ii. Overseas Business increased by 57.2% and crossed Rs. 48,000 crore mark. The percentage of Overseas Business in Total Business improved from 4.6% in March'12 to 6.9% in March'13.
iii. CASA deposits of your Bank at Rs. 1.53 lakh crore registered YoY growth of 14.3% constituting 40.86% of the domestic deposits which has remained one of the highest among the peer banks.
iv. Savings Deposits of the Bank reached Rs. 1.23 lakh crore registering a satisfactory growth of 16.9%.
v. Core Term Deposit grew by 20.4% whereas Inter–bank and Bulk Deposits were consciously shed to improve profitability.
vi. Overall Core Deposits have grown by 17.6% in FY'13, which is a reasonably good performance in the given circumstances.
vii. Along with increased business, Bank's productivity indicators have shown improvement. While Business Per Employee grew to Rs. 11.65 crore in March'13 from Rs. 11.32 crore at the end of March'12, Business Per Branch increased to Rs. 116.84 crore from Rs. 116.03 crore at the end ofMarch'12.
viii. Operating Profit stood at Rs. 10,907 crore for the FY'13, which was Rs. 10,614 crore last year. Net Profit stood at Rs. 4748 crore due to provisions of Rs. 6160 crore during the FY'13.
ix. Keeping in view the stressed economic environment, the Bank has leveraged its risk management system to safeguard quality of assets. Gross NPA ratio stood at 4.27% at the end of March'13. Similarly, Net NPA ratio stood at 2.35%.
x. Despite the difficult market conditions, Net Interest Margin (NIM) has been above 3.50% for the FY'13 to reach 3.52% in FY'13. Return on Assets (RoA) and Return on Equity (RoE) stood at 1.00% and 15.19%, respectively.
xi. Sustaining a high earnings performance will continue to be a priority area for the Bank with judicious cost rationalization and revenue maximization.
xii. Complying with Basel II requirements, your Bank's Capital to Risk Weighted Assets Ratio (CRAR) stood at 12.72% (Tier–I Capital: 9.76%; Tier–II Capital: 2.96%) at the end of March'13. Besides surpassing the minimum requirements, the Bank is working diligently towards meeting the challenges of migrating to Advanced Approach in Operational risk and implementation of Basel III guidelines.
In Bank's quest for excellence in delivering banking services to its customers, last year your Bank initiated an organizational transformation exercise called PNB Pragati. Under this, the Bank has converted around 350 branches into "Pragati Branches". The layout of these branches have been modified and the flows have been streamlined, so as to offer customers a better banking experience. A queue management system has been put in place and a self–service area equipped with a Passbook Printing Terminal, Cash Deposit Machine, Cheque Deposit Machine and ATM has been created. The new layout with self–service area, reception area and HNI area has enabled speedy and convenient delivery of service to customers in an excellent ambience.
In the intense competitive environment, which is set to intensify further with the entry of new players, the Bank is diversifying its revenue streams. During the FY'13, your Bank acquired 30% stake in MetLife India Insurance Company Ltd., creating a new entity named PNB MetLife India Insurance Company Ltd.
During the FY'13, the Bank strengthened its presence in the 'Financial Capital of India' by setting up a fully equipped corporate office building named 'PNB Pragati Tower" at Bandra Kurla Complex, Mumbai. PNB's Treasury operations are being conducted from this building. Further, the presence of Treasury Office in the financial capital will enhance its operational efficiency and will add to productivity and profitability of the Bank.
The Bank recognizes that customer service is the prime differentiator and business growth is inextricably linked with the satisfaction of customers. This year Bank celebrated Foundation Day as 'Customers' Day' across India. Bank observed a week starting from 15th to 20th April 2013 as 'Customer Contact Week' across all branches. Further, Bank will introduce Centralized Grievance Redressal Mechanism to take care of all service requests, complaints and suggestions of valuable customers. The Bank has appointed a Chief Customer Service Officer to work as Internal Ombudsman to ensure speedy resolution of customer grievances. The Bank hopes to strengthen its bond with its customers through these initiatives.
It is a matter of pleasure in informing you that your Bank has set up fully equipped 'E–bayfor NRI clients' at Nauroji Nagar, New Delhi. NRI customers will be facilitated by virtual opening of new accounts. E–bay will then transfer the newly opened accounts to the desired locations in India.
With its presence at 10 favoured global business destinations, PNB is heading towards becoming a 'GLOCAL BANK'. Further, to expand its overseas presence and increase the share of overseas business, your Bank is exploring possibilities of entering Singapore. The Bank has obtained permission of RBI for opening up of a Representative Office in Yangon, Myanmarand has applied to the Myanmar Regulator for their permission.
To align itself with the financial inclusion initiative, PNB has linked its CBS to the National Automated Clearing House (NACH) –Aadhaar Payment Bridge System. This will enable the direct benefit transfer system to become a reality.
To fulfill its responsibility towards its customers and as one of the largest nationalized banks, your Bank is recalibrating process flows to bring in greater efficiency to create 'moments of truth'. This will help Bank to deliver services faster while managing inherent risks better. We will continue to deliver sustainable value to our stakeholders.
It is your trust which is essential for creating value in long term and we are confident that the Bank will continue to have your patronage.
With warm regards,
(K. R. Kamath)
Chairman & Managing Director