The Bank of Punjab (BOP) has decided to do a right shares issue of around Rs13b, which will enable it to give out more loans, improve its capital structure and help in expanding its network. As per President of BOP, Naeemuddin Khan who said “The new issue of right shares is purely a business decision taken by the management to further strengthen the bank’s balance sheet. The stronger equity base of the bank will improve its credit ratings, provide additional comfort to stakeholders, and enable the management to expand its branch network and explore new business avenues for enhancing our earnings. “This will be the thirds rights issue for BOP in the last three years.
From the year 2009 till Sep 2015, BOP’s bank deposits recorded a massive growth of 117pc over the year 2008 and touched the level of Rs 356.6b. Nevertheless, the bank was able to trim the cost of deposits which decreased 5.32% from 10.89pc. In the corresponding period, the Bank’s investments also registered a whopping increase of 731pc with a major chunk of it being in Government securities to improve the overall assets profile. Prudent lending to top notch business groups of the country and SME sector, helped in steadily building advances portfolio to Rs. 231.7b as on September 30, 2015 showing a rise of 54pc over the year 2008 with a very nominal 1.2pc infection ratio in fresh relations. As a result, the bank had been able to achieve a 29pc reduction in non-performing loans portfolio in the same period.
As per their president, 70pc of shares at Rs 12 per share are being issued to meet the future business requirements of BOP and which also fall in line with their growth strategy. He also commented that “The value of the bank’s net assets per share was Rs13.41 as of December 31, 2016, and as per market practice the price of the right share is not determined on the basis of the highest price on a certain day,” He provided reassurances in regard to concerns being raised over the current right issue that it may contribute to a change in the shareholder pattern and stated “It will not dilute minority shareholding at all. The Punjab government’s holding in the bank will remain the same despite its investment of Rs7bn in the right issue.”
