Punjab National Bank’s profit falls 57.5% to Rs 306 cr

By: | Published: July 29, 2016 6:09 AM

Punjab National Bank (PNB) on Thursday reported a 57.5% year-on-year decline in its net profit to R306.4 crore for the quarter ended June.

Punjab National Bank Q1 net profit down 57 per cent at Rs 306 cr, Net NPAs at 9.16% vs 8.16% QoQThe bank’s bottom line during the latest quarter also received a boost from a 68.5% (Y-o-Y) jump in non-interest income.

Punjab National Bank (PNB) on Thursday reported a 57.5% year-on-year decline in its net profit to R306.4 crore for the quarter ended June.

The fall in the profit can partly be attributed to a 9.8% Y-o-Y drop in the net interest income – the difference between interest earned and interest expended. Sequentially, however, the performance was an improved one, as the New Delhi-headquartered bank had reported a net loss of R5,367.1 crore during the quarter ended March 2016. The country’s second largest state-owned lender was able to achieve the turnaround in Q1FY17 owing to a 73.9% (Q-o-Q) decline in provisions.

The fall in provisions came despite a rise in gross non performing assets (GNPAs), both sequentially and year-on-year. At the end of the June quarter, PNB’s GNPAs, as share of advances, stood at 13.75%, compared with 12.9% in the previous quarter and 6.47% in the year-ago period.

The bank’s bottom line during the latest quarter also received a boost from a 68.5% (Y-o-Y) jump in non-interest income.

The top management of the bank said the creation of a ‘war room’ at the head office had enabled it to monitor NPAs and recoveries on a real-time basis, which has led to cash recoveries and upgrade of R6,006 crore during the quarter, compared with R3,818 crore in the quarter ended March 2016, and R2,328 crore in Q1FY16.

“We have set up a real-time digital network that allows us to be in touch and extend support to the field at the time of deduction. There is a committee of general managers who go through each account of R100 crore and above. There’s a special team formed for looking into it,” said MD & CEO Usha Ananthasubramanian. “I am sure we will be able to see this kind of recovery happening in the quarters to come as well,” she said.

The bank said while its cost of deposits reduced 43 bps

(Y-o-Y) to 5.46% in the June quarter, the yield it earned on advances dropped 102 bps

(Y-o-Y) to 8.54%, leading to contraction in the net interest margin.

In terms of business growth, the bank reported a 2.8% (Y-o-Y) rise in advances to R3,91,574 crore, while deposits grew at 7% to R5,53,952 crore. Terming the muted advances growth as a ‘normal phenomenon for public sector banks in the first quarter’, Ananthasubramanian said it was largely accounted for by growth in the retail, agriculture, MSME and large corporates segments.

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