Punjab National Bank (PNB) on Tuesday reported a net profit of Rs 507 crore in the quarter ended September 2019 against a net loss of Rs 4,532 crore in the year-ago quarter, on the back of a 58% year-on-year (y-o-y) slide in provisions to Rs 3,253 crore.
At the same time, asset quality at the bank deteriorated as a result of high slippages, with the share of gross non-performing assets (NPA) in the loan book rising 27 basis points (bps) sequentially to 16.76%. In absolute terms, gross NPAs for Q2FY20 stood at Rs 79,458 crore. The share of net NPAs rose 48 bps from the previous quarter to 7.65%. Slippages, or fresh bad loans, stood at Rs 7,460 crore, up 58% sequentially.
The bank’s net interest income (NII) came in at Rs 4,264 crore, up 7.29% y-o-y. The net interest margin (NIM), a key measure of profitability, stood at 2.39%, up 3 bps sequentially. The non-interest income of the bank also saw an increase of 32.5% y-o-y to Rs 2,265 crore.
The operating profit of the bank in the quarter went up 25% y-o-y to Rs 3,562 crore. Provisions made by the bank included an amount of Rs 645.19 crore set aside for a fraud, with Rs 1,935 crore of provisions being deferred to subsequent quarters. Total provisions on account of amortisation and fraud to be carried over to the subsequent quarters stands at Rs 2,284 crore.
Total advances of the bank stood at Rs 4.28 lakh crore at the end of September 2019, down 0.17% y-o-y. Deposits of the bank grew 3.47% y-o-y to Rs 6.96 lakh crore. After earnings announcement, MD and CEO SS Mallikarjuna Rao said that PNB’s loan book is expected to grow 8-10% y-o-y by March 2020, and the operating profit is expected to grow 10-12%. On Tuesday, shares of PNB ended at Rs 64.9 on BSE, down 5.06% from their previous close.