Quarterly results: PNB Q2 net declines 18% on higher provisions

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November 3, 2020 4:45 AM

Provisions increased 11% YoY to Rs 5,054 crore, but they remained flat sequentially. The lender’s net interest income (NII) increased 29.2% YoY and 24% sequentially to Rs 8,393 crore.

The bank's asset quality showed an improvement in the second quarter.

The country’s second-largest public sector lender, Punjab National Bank (PNB), on Monday reported a 17.9% year-on-year (y-o-y) drop in the net profit during the September quarter to Rs 621 crore on higher provisions. The bank’s operating profit, however, increased 7.1% year on year (YoY) to Rs 5,675 crore, but remained flat sequentially.

Provisions increased 11% YoY to Rs 5,054 crore, but they remained flat sequentially. The lender’s net interest income (NII) increased 29.2% YoY and 24% sequentially to Rs 8,393 crore.

The bank’s asset quality showed an improvement in the second quarter. Gross non-performing assets (NPAs) ratio improved 68 basis points (bps) to 13.43%, compared to 14.11% in the previous quarter. Similarly, net NPAs ratio came down 64 bps to 4.75% from 5.39% in the June quarter. The bank has not declared any new non-performing assets (NPAs) since August 31, due to the Supreme Court’s interim order.

The apex court had earlier directed banks not to recognise fresh NPAs, till further orders in the interest on interest case. A public interest litigation (PIL) was earlier filed in the SC to waive off interest on interest for borrowers during the moratorium period between March and August.“The bank has made a contingent provision of Rs 180 crore in respect of such accounts that were not classified as NPAs, which includes provision for interest income aggregating to Rs 85 crore reckoned in operating profit,” the lender declared in an exchange filing. The provisioning coverage ratio (PCR) as on September 30 was at 83%.

Advances remained flat in the September quarter at Rs 7.16 lakh crore, compared to Rs 7.12 lakh crore as in September 2019. The retail loan portfolio grew 3.85% YoY to Rs 1.3 lakh crore, compared to Rs 1.25 lakh crore in the September quarter last financial year.

Deposits grew 4% YoY to Rs 10.55 lakh crore in the September quarter, compared to Rs 10.14 lakh crore in the corresponding quarter last financial year. Domestic current account savings account (CASA) ratio increased 253 bps YoY to 44.10%, compared to 41.57% as on September 30, 2019.

The net interest margin (NIM) of the lender increased 63 bps to 3.21%, compared to 2.58% in the corresponding quarter of the last financial year. NIM improved 71 bps quarter-on-quarter (q-o-q) basis, compared to 2.5% in the June quarter. The cost of funds improved 69 bps to 3.8%, compared to 4.49% in the September quarter last year.

Other income declined 32% YoY to Rs 2,493 crore in Q2, compared to Rs 3,663 crore last year.

The capital adequacy ratio of the lender stood at 12.84% at the end of September quarter, compared to 12.63% in the June quarter.

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