1. Punjab National Bank net drops 93 per cent on rising provisions

Punjab National Bank net drops 93 per cent on rising provisions

Punjab National Bank (PNB) said on Tuesday its profit for the three months to December plunged 93% year-on-year (y-o-y) to R51 crore owing to higher provisions.

By: | Updated: February 10, 2016 2:27 AM
punjab national bank

PNB MD and CEO Usha Ananthasubramanian told a business news channel that over Rs 5,000 crore of fresh slippages have been reported following the Reserve Bank of India’s (RBI) latest asset quality review process. (Reuters)

Punjab National Bank (PNB) said on Tuesday its profit for the three months to December plunged 93% year-on-year (y-o-y) to Rs 51 crore owing to higher provisions. The lender reported a pre-tax loss of Rs 858 crore in Q3FY16 but a tax writeback of Rs 909 crore helped it remain profitable. Meanwhile, total provisions more than doubled y-o-y to Rs 3,775 crore as asset quality deteriorated sharply.

Interestingly, PNB’s slippages of Rs 17,655 crore at the end of December 2015 were larger than its current market capitalisation of Rs 17,250 crore. The public sector lender has lost approximately Rs 12,404 crore in value over the last six months.

Following the announcement, the PNB stock fell as much as 7.4% on the BSE in intra-day trade, ending the session at Rs 87.85, up 3.9%. Since January, PNB shares have fallen 24% against an 8% drop in Sensex.

Gross non-performing assets (NPAs) at the New Delhi-headquartered bank rose to Rs 34,338 crore in Q3FY16, a rise of 54.6% over the same period last year. The gross NPA ratio — bad loans as a percentage of total loans — stood at 8.47%, up 250 basis points (bps) y-o-y. The bank was, however, able to recover R3,357 core though the capital adequacy ratio stood at 11.25%, down 29 bps from the previous year.

pnb

PNB MD and CEO Usha Ananthasubramanian told a business news channel that over Rs 5,000 crore of fresh slippages have been reported following the Reserve Bank of India’s (RBI) latest asset quality review process.

“We need to look into some of these accounts. Some of them may successfully go through the SDR (strategic debt restructuring) route,” the CEO added.

The bank, she said, also initiated SDR schemes for 13 accounts worth Rs 6,800 crore. Moreover, loan repayments were rescheduled for another 13 accounts amounting to Rs 7,000 crore under the RBI’s 5/25 rule. The CEO observed it was difficult to attract investors to buy into the companies since they wanted to stay away from sectors such as steel. “Given more of the accounts relate to steel and power and gas-based plants, you don’t have takers,” she added.

The CEO said some of the accounts had failed and that the bank was preparing to tackle them together with the promoters to see what best can be done. “Even the medium-sized ones have to be tackled because the number is more there,” she added.

Ananthasubramanian said she expects loans to grow 10-11% in Q4 after they grew 8.4% in the December quarter The net interest margin (NIM), the CEO said, could be in the range of 2.6-2.85%. In Q3 FY16, PNB’s NIM stood at 2.75%, down 46 bps y-o-y. The bank’s net interest income — the difference between interest earned and interest expended — fell 2.7% y-o-y to Rs 4,120 crore.

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