PNB net profit slumps 93% in December quarter

Gross non-performing assets (NPAs) rose to 8.47% at the end of Q3 as against 6.36% at the end of Q2; provisioning doubles to Rs 3,775 crore

India's second largest state-run lender Punjab National Bank posted a sharp 93% decline in net profit in the third quarter of the fiscal on account of fresh slippages arising from the steel sector besides higher provisioning requirement as part of RBI norms. The net profit in the October to December quarter stood at Rs 51 crore versus Rs 775 crore in the corresponding period of the previous fiscal. 
 
The gross non-performing assets (NPAs) rose to 8.47% at the end of Q3 as against 6.36% at the end of Q2. Net NPA stood at 5.86% at the end of December as against 3.99% seen during September end.
 
The third quarter saw fresh slippages worth Rs 13,482 crore arising out of large accounts turning into NPAs, led mainly by steel, infra and power sectors. This is much higher than the Rs 5,193 crore fresh slippage seen during the third quarter of the corresponding quarter of last year.
 
"Industry is going through a tough time and PNB is a large player. PNB being a large lender, the impact is seen on the bank's NPA level," said Usha Ananthasubramanian, CMD, PNB.
 
The lower than expected Q3 results announced on Tuesday led to an over 4% decline in PNB share decline.
 
Net interest income, a key measure of a bank’s performance, was down 2.7% during the quarter at Rs.4,119.6 Cr  versus Rs 4,233 Cr in the corresponding period last year.
 
Bank's provisioning was up 100% at Rs 3,775 Cr versus Rs 1,882 cr in the previous quarter, reflecting higher stress. 
 
The increase in NPA was on account of bank's exercise as part of RBI's Asset Quality Review over the last two quarters of the current financial year. "Bank is undertaking the same over the timeframe stipulated by RBI", said Ananthasubramanian.
 
The bank is looking at new streams of income beyond the loan portfolio, such as insurance, credit card, and asset management company, among others.