PNB to meet FY08 profit target, not cut rates

NEW DELHI (Reuters) - 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 was confident of meeting the annual net profit target for 2007/08, K.C Chakrabarty told reporters.

In January, the chairman had forecast 18-20 percent 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 Thursday and analysts polled by Reuters Estimates peg the bank's annual profit at 18.7 billion rupees, up 21.4 percent from 15.4 billion rupees a year earlier.

The bank also plans to sell between 20 percent and 30 percent stake in subsidiaries PNB Gilts Ltd and unlisted PNB Housing, and sell upto 10 percent of the 25 percent stake it holds in UTI Asset Management Co. "These could happen this fiscal," the chairman said.

STABLE RATES

Chakrabarty said he expected interest rates to remain stable in India in the near future, and the bank has 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 percent," K.C. Chakrabarty told reporters after inaugurating a micro-finance branch on the outskirts of the capital city.