PNB net down 11.5% in Q2 due to NPA provisioning

State-owned Punjab National Bank (PNB) continued to show a fall in net profit though the rate of decline came down to 11.5 per cent in the second quarter of the current financial year from 57 per cent in the first quarter, prompting the lender to express confidence that it was slowly moving towards a turnaround.

Pulled down by higher provisioning for bad debts, PNB’s net profit declined to Rs 549.36 crore in the second quarter of 2016-17 from Rs 621.03 crore in the corresponding period of the previous financial year. The bank’s net profit was Rs 306.36 crore in the first quarter of 2016-17.

During the quarter, provisions for bad loans increased 34.6 per cent to Rs 2,533.76 crore from Rs 1,882.08 crore in the year-ago period.

Gross NPAs as a proportion of total advances moved up 13.63 per cent during the second quarter against 6.36 per cent in the corresponding period of 2015-16. Net NPAs also rose 9.10 per cent during the quarter under review against 3.99 per cent in the same quarter a year ago.

To a query on when the bank could expect a turnaround in net profit, PNB’s Managing Director and CEO Usha Ananthasubramanian said at a press conference,” The direction is set in terms of increasing net profit quarter after quarter. Going forward, we should be able to make this number (net profit) bolder.”

Before taking into account provisioning for bad loans, taxes and other contingencies, PNB’s operating profit rose 12.7 per cent to Rs 3,312.04 crore in July-September 2016-17.

Total income increased to Rs 14,218.27 crore for the quarter ended September 30, 2016, from Rs 13,701.93 crore during the same quarter a year earlier, the bank said in a regulatory filing.

Total interest earned by the bank during the three-month period fell by 4.16 per cent to Rs 11,830.36 crore from Rs 12,345.03 crore in the same period a year earlier.

PNB, which had received over Rs 2,000 crore of capital infusion from the government, would take a decision on tapping the markets at the appropriate time, Ananthasubramanian said.

The bank has permission to raise Rs 6,000 crore through perpetual Tier I and Tier II bonds. Ananthasubramanian did not specify how the bank would raise the money though, saying it would be decided later.

She ruled out issuing masala bonds at this point of time and a further diluting of the bank’s stake in PNB Housing.

The PNB share closed down 1.16 per cent at Rs 131.60 on the Bombay Stock Exchange on Friday.

PNB’s saving deposits rose 14.2 per cent to Rs 1.8 lakh crore during the second quarter from Rs 1.57 lakh crore in the year-ago period. Net advances rose 3.4 per cent to Rs 3.93 lakh crore against Rs 3.80 lakh crore.

Besides big lenders, the bank was focussing on agriculture, small and medium enterprises, mudra loans for advances, and bottom-of-pyramid savings, Ananthasubramanian said.