Punjab National Bank (PNB) recorded a 62% fall in net profit to R307 crore in the March quarter on higher provisioning towards bad loans. In absolute terms, the profit was the lowest in the last five years.
The lender reported a net profit of R806 crore in the March quarter last year and R775 crore in the Q3 of FY15.
Provisioning towards bad loans rose 87% to R3,281 crore in the March quarter (up from R1,755 crore in the same period last year).
Gross non-performing assets (NPAs) rose 6.55% of the total advances (or R25,695 crore) in the March quarter, up from 5.25% (or R18,880 crore) in the same period last year. Net NPAs jumped 4.06% (or R15,396 crore), up from 2.85% (or Rs 9,917 crore) in Q4 FY14.
Though the bank managed to recover R2,925 crore in the March quarter (up from R2,611 crore in the March quarter last year), there were fresh slippages of R15,692 crore (from R9,865 crore in in the same period last year). The loan write off rose to R5,920 crore in March 2015 from R1,355 crore in March 2014. The restructured assets were to the tune of R15,241 crore in Q4, including bad loans of R404 crore.
The bank’s executive director Gauri Shankar said infrastructure sector (power, ports and roads), steel, sugar and textiles contributed maximum to the bad loans. He said the bank has taken a note of the weakening asset quality and strengthened the recovery efforts.
Despite fresh slippages from, Shankar said he was hopeful of reversing the trend and improving the asset quality, adding the bank’s lending will focus on retail, agriculture and SME segments. The bank has become choosy, especially about infra loans, he said, adding the “legacy problem with regard to restructured assets and NPAs would continue for next two quarters.”
Total income in Q4 FY15 rose 7.7% to R13,456 crore from R12,498 crore in the same period in FY14. Interest income in Q4 FY15 increased 4.9% to R11,651 crore against R11,101 crore in Q4 FY14. The net interest income fell 5.3% to R3,792 crore against R4,002 crore in Q4 FY14.
In FY14, the bank’s net profit fell 8.4% at R3,062 crore (against R3,343 crore in FY14). Total provisions in FY15 rose 10.6% to R8,893 crore from R8,042 crore in FY14. Gross NPAs in absolute terms at the end of FY15 were to the tune of R22,211 crore, while net NPAs were at R13,788 crore. Capital adequacy ratio was 12.2% at the end of the March quarter as per Basel-III norms.
Total income in FY15 increased to R52,206.09 crore from R47,799.96 crore in the previous fiscal. Net interest income for FY15 rose 2.5% to R16,556 crore against R16,146 crore a year ago.
No stopping free fall, scrip tanks 9% intraday
The PNB scrip tanked nearly 9% intraday on Friday after the public sector bank reported below-estimate quarterly numbers for the three months to March 2015. After opening in green, the stock took a plunge as soon as the quarterly numbers were reported. After falling as low as Rs 142.5, it closed at Rs 145.65, down Rs 10.50, or 6.7%.
Notwithstanding Friday’s performance, PNB has led the decline in the banking space, losing 12.6% of its value in the last four trading sessions. The Bank Nifty has declined 3.8% during the period.