PNB net profit rises 16%

The performance was led by a 49% rise in net interest income.

Punjab National Bank (PNB), the country’s second largest public sector lender, on Thursday reported a net profit of Rs 1,075 crore for the quarter ended September, a 15.9 per cent rise compared to Rs 927 crore during the year-ago period.

The rise was mainly on account of a 49 per cent increase in the net interest income which went up to Rs 2,977 crore. It more than offset the impact of a decline in treasury income and higher non-tax provisions.

What helped the bank was a sharp rise in interest income, partly due to the introduction of base rate. In contrast, the growth in interest outgo was lower. This also translated into a net interest margin (NIM) of 4.06 per cent though chairman and managing director KR Kamath indicated margins would be lower for the year.

“We had projected a NIM of 3.5 per cent at the beginning of the year. I would stand by my original target. It could be better than the that (for 2010-11).”

During the second quarter, treasury income fell by nearly 75 per cent to Rs 38 crore, as against Rs 150 crore an year ago as the value of bonds fell. Rise in non-performing assets meant the bank had to more than double its non-tax provisions to Rs 516 crore, as against Rs 216 crore in the year-ago period.

Gross non-performing assets rose by 54 per cent to Rs 4,024 crore, as against Rs 2,619 crore an year ago. Advances grew 27.6 per cent to Rs 2,08,764 crore. Kamath said he expected credit growth to be higher than the public sector bank average of around 25 per cent.