Punjab National Bank's net profit rose 11.1% in the third quarter of the current financial year as a higher provisioning for bad loans impacted its profit that stood at Rs 2.3 billion. PNB had earned a net profit of 2.1 billion in the same quarter last year and Rs 5.6 billion in the previous quarter ended September 2017 when the growth rate stood at 2 per cent. Provisions during the third quarter grew 56 per cent to Rs 40.1 billion compared to the same period last year dragging the overall profitability of the public-sector bank that witnessed a huge jump of 52.7 per cent in its operating profit to Rs 42.4 billion. The increase in operating profit was mainly on account of asset sales, PNB managing director and chief executive officer Sunil Mehta said in a press conference, adding that incremental provisioning of around Rs 11 billion had an impact on the treasury. Banks are required to keep aside a portion of expected bad loans out of their profits, termed as provisioning, at present. PNB's net interest income stood at Rs 39.9 billion, up 6.9 per cent from Rs 37.3 billion in same period a year ago, but lower by 0.6 per cent as against Rs 40.1 billion in the previous quarter this year. The bank's bad loans, in terms of the non-performing assets, declined marginally. The gross NPAs came down to 12.1 per cent from 13.3 per cent and 12.5 per cent in the previous two quarters respectively. The net bad debt assets inched down from 8.4 per cent at the end of September to 7.5 per cent at the end of December 2017. The bank's fresh slippages, the amount of loans that turned from good to bad, in the third quarter slightly increased to Rs 39.5 billion from around Rs 35 billion in the previous quarter. It witnessed a robust loan growth of 17 per cent from 4.5 per cent in the previous quarter. "Our credit growth is robust.
We witnessed a 20 per cent growth in domestic credit which is better than the private sector (banks)," Mehta said. The uptick in credit growth came mainly from the retail sector loans that rose 22.2 per cent at the end of December 2017.Mehta said that the amount that the government will infuse into PNB as part of its recapitalisation programme will be utilised to support the growth in business rather than going for higher haircuts. "Capital will, of course, provide us an opportunity to take more haircuts but we may not like to take that. We want to use the capital for growth and not for taking haircuts and that's what we are planning for," he said. Under the recapitalisation plan, PNB will get Rs 54.7 billion as capital infusion from the Union government - the second highest share amongst healthier banks. Last year, the Union government had announced a two-year Rs 2.11 trillion roadmap to strengthen public sector banks reeling from bad debts.