PNB profit plunges 62% on higher provisioning

In the March quarter, provision for NPAs rose 87% to Rs 3,281 cr

Punjab National Bank (PNB) on Friday reported a 62 per cent year-on-year decline in net profit at Rs 306.5 crore for the quarter ended March this year, on account of higher provisioning. For 2014-15, net profit declined 8.4 per cent to Rs 3,062 from Rs 3,343 crore in 2013-14.

Following the announcement of the bank’s earnings, the PNB stock closed at Rs 145.65 on the BSE, down 6.7 per cent.

In absolute terms, the profit in the March quarter is one of the lowest quarterly profits in the past five years. The decline in profit is despite the fact that the bank had a write-back of Rs 938 crore during the quarter.

“The decline in profit is due to higher provisioning towards bad loans,” PNB Executive Director Gauri Shankar said. In the March quarter, provision for non-performing assets (NPAs) rose 87 per cent to Rs 3,281 crore, compared with Rs 1,755 crore a year earlier.

“The legacy problem in terms of restructured assets and NPAs will continue for the next two quarters,” Shankar said.

For 2014-15, the bank has declared dividend of Rs 3.3 for every Rs 2 share.

During the March quarter, the bank’s total income increased 7.7 per cent to Rs 13,455.65 crore, while interest income rose 4.9 per cent to Rs 11,651 crore.

However, net interest income declined 5.3 per cent to Rs 3,792 crore.

At the end of March, gross NPAs stood at 6.55 per cent of overall assets, against 5.25 per cent a year earlier, while net NPAs rose from 2.85 per cent to 4.06 per cent.

The bank restructured assets worth Rs 15,241 crore during the quarter, including bad loans worth Rs 404 crore.

For 2014-15, PNB’s total income rose to Rs 52,206 crore from Rs 47,800 crore in 2013-14. Net interest income rose 2.5 per cent to Rs 16,556 crore.

Total provisions for 2014-15 rose 10.6 per cent to Rs 8,893 crore.

During the year, the bank's net interest margin declined to 3.15 per cent from 3.44 per cent at the end of March, 2014.

Shankar said for 2014-15, PNB’s total business stood at Rs 8.83 lakh crore, adding this was 10.1 per cent higher compared to the previous financial year.

At the end of March, the bank’s capital adequacy ratio, according to Basel-III norms, was 12.2 per cent.