Punjab National Bank’s net profit slumped 48.5% year-on-year to Rs 1,675 crore in the quarter ended June on the back of higher tax expenses and muted net interest income growth.
The state-owned bank had posted a net profit of Rs 3,252 crore in the year-ago period.
Tax and Net Interest
Tax expenses surged over 150% y-o-y to Rs 5,083 crore in April-June. The bank said it has evaluated the option of lower tax regime and has decided to exercise the said option with effect from FY25-26. “The resultant impact is a one-time charge of Rs 3,324.24 crore in the profit and loss account for the quarter ended June 30,” PNB said.
Net interest income saw a muted 1% y-o-y growth to Rs 10,578 crore, while other income grew around 46%. The domestic net interest margins (NIM) moderated to 2.84% in April-June from 2.96% a quarter ago. The bank said once the one-year deposits, 18-month deposits and special deposits get repriced, the real impact on NIMs will be seen Q3 and Q4 onwards.
Global advances were up 9.8% y-o-y to Rs 11.3 lakh crore as on June 30, while global deposits rose 12.9% to Rs 15.9 lakh crore.
PNB’s Executive
In a post-earnings call, managing director and CEO Ashok Chandra said the main focus of the bank in the current financial year would be to improve the share of current account and savings account deposits (CASA) and the share of RAM (retail, agriculture and MSME) book. The domestic CASA ratio stood at 36.99% as on June 30.
On corporate lending, Chandra said the growth in the corporate loan book was not as per expectations. However, he said the bank expects the corporate lending book to clock double-digit growth. He also said the bank will have multiple tie-ups and aim to grow the co-lending book from the current size of Rs 850 crore.
Provisions for the quarter declined by 75% on-year to Rs 323.10 crore. Slippages fell from Rs 3,001 crore to Rs 1,886 crore in the June quarter. Of the total slippages, Rs 463 crore were from retail loans and Rs 342 crore from agriculture and Rs 966 crore from MSME loans.
Asset quality improved, with gross non-performing asset (NPA) ratio falling to 3.78% from 3.95% a quarter ago and the net NPA ratio at 0.38% as on June 30 against 0.4% a quarter ago.
Though the bank has board approval to raise Rs 8,000 crore in FY26, Chandra said the bank is comfortable with the current capital levels.
Shares of Punjab National Bank ended 1.08% lower at Rs 108.11 on the NSE on Wednesday.