Bad assets hit PNB hard; Oct-Dec net plunges 93% to Rs 51 cr

A higher provisioning for bad assets and contingencies dragged down state-owned Punjab National Bank's net profit by 93 per cent to Rs 51 crore for the three months to December.
The bank had reported a net profit of Rs 774.56 crore in the corresponding quarter last fiscal.
"I like to mention that the industry is going through very tough times and PNB has been one of the major lenders. And obviously the impact is felt on the bank which is very much visible on its books," Chief Executive Officer Usha Ananthasubramanian told reporters at a post earnings press conference here.

PNB increased its provisioning and contingencies allocation to Rs 3,775.53 crore for the October-December quarter of 2015-16, a steep increase from Rs 1,467.77 crore parked aside in the same quarter a year ago.
Bank's asset quality deteriorated further as gross non-performing assets (NPAs) or bad loans hit 8.47 per cent of the gross advances during third quarter of current fiscal, as against 5.97 per cent a year ago.
Likewise, net NPAs rose to 5.86 per cent of the net advances as of December quarter of 2015-16, from 3.82 per cent in the previous year's third quarter.

In absolute terms, the gross NPAs increased to Rs 34,338.22 crore as of December 2015, from Rs 22,211.43 crore.

Net NPAs were at Rs 22,983.40 crore during the quarter, up from Rs 13,787.76 crore.
"The increase in NPA is on account of Bank's exercises as part of RBI's Asset Quality Review over the last two quarters of the current financial year. The bank is undertaking the same over the time-frame stipulated by the RBI," PNB said in a statement.
However, income of the bank rose by 7.6 per cent to Rs 13,891.20 crore during the third quarter of current fiscal as against Rs 12,904.85 crore a year earlier.
The net interest income (NII) during the third quarter stood at Rs 4,120 crore, while the non-interest income stood at Rs 1,671 crore.

Ananthasubramanian said the bank has a strategy in place to increase the portfolio under small ticket loans.
"In line with bank's objective to achieve profitable growth from the grassroots, share of small ticket advances to non-food credit increased to 60.3 per cent in December 2015 from 57 per cent in December 2014, she added.
Total deposits of the bank grew by 13.3 per cent to Rs
5.49 lakh crore as on December 2015. While CASA (current account & savings account) deposits increased to Rs 1.98 lakh crore as of December 2015, up 14.32 per cent from a year ago.
The savings deposits increased by 12.5 per cent on the year to Rs 1.61 lakh crore.

Ananthasubramanin said the bank is also looking forward to get capital infusion from the government.
"We expect some capital infusion from the government. We may not look worse in terms of capital but as a big player, someone has to participate as a big player when the economy starts moving, we are an active player on the lending side of the banking. I am hopeful capital infusion will certainly happen considering the DNA of the bank," she said.
She also said the bank will look more seriously into new streams of income such as fee-based income beyond the loan portfolio.

"... We have an insurance partner in MetLife, asset management company relationship and we have lot of investments, we want to leverage on them, even the credit card front."
She said PNB is focussing on digitalisation and also increasing its business operations overseas.
The bank has opened a representative office in Dhaka, Bangladesh during the third quarter.
"The bank will be moving in a big way in digitalisation to protect our customers and to make it a very digital savvy bank. There is a big push on improving the asset quality, and we are going to see good credit pick up as well as improved CASA.

"Profit maximisation method has been unleashed, cost control and increase income through new streams of income have been in place," Ananthasubramanin added.
She further said that PNB remains committed towards nation building by actively participating in schemes launched by the government.
Under the Pradhan Mantri Jan Dhan Yojana, the bank opened 123 lakh accounts and issued 99.6 lakh RuPay cards as on December 2015 and Rs 1,324 crore have been mobilised in these accounts.