Punjab National Bank (PNB) on Thursday reported a steeper-than-expected 70% decline in its standalone net profit to Rs 308 crore for the April-June period, its second straight quarter of substantial fall in profitability.
Elevated provision to cover bad loan losses, a marginal drop in interest income from a year before, a 28% drop in revenue from treasury operations and a rise in operating expenses (other than the employee costs) weighed on the profitability.
However, some analysts expect PNB’s net interest margin to pick up in the coming quarters, reflecting a rising interest rate scenario. The bank has lost a fifth of its share value in the last six months.
Shares of the lender PNB on Thursday closed up 1.9% on the BSE (the results came in after the market hours).
In the March quarter, the bank had reported around 66% drop in its net profit to Rs 202 crore.
Gross non-performing asset (GNPA) ratio eased a tad sequentially but still stood at 11.3% for the June quarter, compared with 11.8% as of March. Net bad loan ratio, meanwhile, dropped to 4.3% from 4.8%, the bank said in a regulatory filing.
However, given that PNB’s capital adequacy ratio still remained high at 14.8% as of June 30, against 14.5% in the previous quarter, it can absorb a fair bit of potential shock without knocking the government’s door for additional infusion.
The bank’s interest income dropped 0.9% from a year before to Rs 18,757 crore, while interest expense declined 4.1% to Rs 11,214 crore. Other income fell 35% on year to Rs 2,547 crore.
