Provisions more than halves: PNB back in black, logs Q1 profit of Rs 1,019 crore

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Published: July 27, 2019 3:20:58 AM

Speaking to a television channel, Sunil Mehta, MD and CEO, said, “Our gross NPA numbers have been coming down sequentially. This particular quarter has seen the impact of a base effect as the denominator in June is smaller than that in March.”

Punjab National Bank, Punjab National Bank Q1 profit, Bhushan Power and Steel, Asset quality of PNB, latest news on PNBPNB’s provision coverage ratio stood at 74.63%, up from 61.8% a year ago.

Punjab National Bank (PNB), the country’s third-largest public-sector lender on Friday reported a net profit of Rs 1,019 crore in the June quarter of FY20, against a net loss of Rs 940 crore a year ago as provisions fell 65% year-on-year (y-o-y) to Rs 2,023 crore.  Fresh slippages dropped over 10% y-o-y to Rs 4,711 crore. Asset quality at PNB deteriorated on a sequential basis, with its gross non-performing assets (NPAs) as a percentage of total advances rising 99 bps to 16.49%. Its net NPAs stood at 7.17%, up 61 bps sequentially. PNB’s cash recoveries and upgradation in the June quarter stood at Rs 2,305 crore and Rs 1,554 crore, respectively.

Speaking to a television channel, Sunil Mehta, MD and CEO, said, “Our gross NPA numbers have been coming down sequentially. This particular quarter has seen the impact of a base effect as the denominator in June is smaller than that in March.” In absolute terms, gross NPAs fell 1.5% q-o-q to Rs 77,267 crore. Mehta added that slippages for the whole of FY20 could work out to about Rs 14,000-15,000 crore.

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PNB’s provision coverage ratio stood at 74.63%, up from 61.8% a year ago. The bank said for the accounts covered under the provisions of Insolvency and Bankruptcy code (IBC), it is holding a total provision of Rs 12,053 crore as on June 30, which works out to 84% of the total outstanding in these accounts.

During Q1, PNB availed of a regulatory dispensation for deferment of provision in respect of frauds amounting to Rs 425.52 crore. “Accordingly, an amount of Rs 106.38 crore has been charged to profit and loss (P&L) account and Rs 319.14 crore has been deferred to subsequent quarters,” the bank said in its notes to accounts. Further, out of the unamortised amount of Rs 686 crore of FY19, Rs 270.41 crore has been charged to the P&L account and the remaining amount of Rs 415.19 crore has been carried forward to subsequent quarters.

Against its exposure to one account, understood to be that of Bhushan Power and Steel, PNB is maintaining provisions of Rs 1,880.44 crore as on June 30. The company, in which PNB reported a fraud earlier this month, owes the lender Rs 3,761 crore.

Operationally, Q1 was a weak quarter for PNB. Its net interest income (NII) stood at Rs 4,141 crore, down 12% y-o-y, and its domestic net interest margin stood at 2.36%, down 9 bps from 2.9% in Q1. The bank benefited from a 6% y-o-y rise in non-interest income to Rs 2,075 crore. Mehta said the June quarter is typically a weak one for the banking system and the bank’s results for Q1FY20 reflect that.

PNB’s net advances stood at Rs 4.22 lakh crore, up 1.6% y-o-y and its total global deposits stood at Rs 6.72 lakh crore, up 6.7% y-o-y. The value of current account and savings account (CASA) deposits stood at Rs 2.78 lakh crore or 42.84% of all deposits. The CASA ratio slipped from 43.51% at the end of March. Mehta guided for a credit growth of 10% for the rest of the year. PNB’s capital adequacy stood at 9.77%, as opposed to the regulatory minimum of 11.075%, down from 9.73% a quarter ago, but better than 9.62% a year ago.

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