PNB slides after under reporting bad loans

Punjab National Bank (PNB) said the Reserve Bank of India has found that it has under-reported bad loans by Rs 2,617 crore in the year ended 31 March 2019.

The disclosure was made on Saturday, 14 December 2019.

The adjusted (notional) net loss for the year ended 31 March 2019, after taking into account the divergence in provisioning, was at Rs 11,335.90 crore. Earlier, PNB had reported a net loss of Rs 9975.49 crore in the year ended March 2019.

The divergence is the difference in bad loans reported by the bank and the assessment done by RBI.

According to recent guidelines by the Securities and Exchange Board of India (Sebi), banks are now required to disclose divergence in the asset classification and provisioning immediately upon receipt of RBI's final Risk Assessment Report (RAR).

For the year ended March 2019, the gross non-performing assets (NPAs) assessed by RBI was at Rs 81,089.70 crore compared with Rs 78,472.70 crore in gross NPA reported by the bank.

The bank had reported Rs 30,037.66 crore net NPAs during the year while the RBI assessed it at Rs 32,654.66, leaving a gap of Rs 2,617 crore. The divergence in provisioning also increased by Rs 2091 crore for the fiscal ended March 2019.

PNB reported a net profit of Rs 507.05 crore in Q2 September 2019 compared with a net loss of Rs 4,532.35 crore in Q2 September 2018. Total income rose 10.83% to Rs 15,556.61 crore in Q2 September 2019 over Q2 September 2018.

Shares of PNB were down 1.94% at Rs 63.2. The stock slumped 17.44% in six months compared with a 4.85% rise in Nifty Bank index.

The stock continues to trade below its 200 days simple moving average placed at 73.45 which will act as a resistance in near term.

PNB is a public sector bank. The Government of India holds 75.41% stake in the bank as on 30 September 2019.

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