PNB Q4 loss narrows to Rs 697 cr, CEO expects Rs 8k-cr recovery this fiscal

State-owned Punjab National Bank (PNB) has said its standalone net loss narrowed to Rs 697.20 crore in the quarter ended March 31 due to lower provisioning against bad loans.

The second-largest public-sector lender had posted a loss of Rs 4,750 crore in the January-March period of 2018-19.

The bank's total income during the March quarter rose to Rs 16,388.32 crore from Rs 14,725.13 crore in the year-ago period.

Addressing the media PNB managing director S S Mallikarjuna Rao on Saturday said the bank has done the cash recovery of Rs 10,000 crore during the fiscal, while containing the fresh slippages to Rs 20,000 crore.

Going forward, he said, the bank is expecting the recovery of Rs 6,000-8,000 crore during the current fiscal and recovery will gather momentum from the third quarter onwards.

There are some leftovers from the previous year, including big accounts like Bhushan Power and Steel, which are expected to get resolved in the ongoing financial year.

During the quarter, the bank earned an operating profit of Rs 3,932.28 crore as against Rs 2,861.18 crore in the same period previous fiscal.

On the assets quality front, PNB witnessed improvement as the gross non-performing assets (NPAs) which were brought down to 14.21 per cent of gross advances at the end of March 2020, as against 15.50 per cent in March 2019.

Net NPAs or bad loans also came down to 5.78 per cent as against 6.56 per cent in the year-ago period.

In absolute value, gross NPAs stood at Rs 73,478.76 crore at the end of 2019-20, lower than Rs 78,472.70 crore reported in the previous fiscal. Similarly, Net NPAs were valued at Rs 27,218.89 crore as against Rs 30,037.66 crore.

As a result of improvement in asset quality, the provisioning for bad loans during the March quarter almost halved to Rs 4,618.27 crore compared to Rs 9,153.55 crore.

Provision other than tax and contingencies too declined to Rs 4,901.31 crore from Rs 10,007.11 crore in the same period a year ago.

For the full fiscal 2019-20, the bank''s earned profit of Rs 363.34 crore, as against a loss of Rs 10,026.41 crore during 2018-19.

Total income during the fiscal rose to Rs 64,306.13 crore as against Rs 59,514.53 crore in the previous financial year.

As per the RBI's April 17 guidelines, the bank has decided not to make any dividend pay-outs to shareholders despite posting profit after a gap of two years.

As per the direction, the bank has done restructuring of 37,409 MSME accounts aggregating to Rs 1,761.74 crore as on March 31, 2020.

Rao said COVID impact was seen since March and more clarity would emerge in the third and fourth quarter since the Reserve Bank of India has extended moratorium till August 31.

Only 30 per cent of the borrowers have utilised moratorium while 70 per cent continued to service loan, he said.

"The situation continues to be uncertain and the bank is evaluating the situation on an ongoing basis. The major challenges of the bank would arise from eroding of cash flows and extended working capital cycles. The bank is gearing itself on all the fronts to meet these challenges," he said.

However, he said, the bank's capital position is comfortable and the capital to risk weighted assets ratio (CRAR) stands at 14.14 per cent.

The bank is sufficiently capitalised not in terms of regulatory requirement but in terms of growth needs, he added.

During 2019-20, the government infused Rs 16,091 crore capital in the bank. As a result, the government holding in the bank rose to 83.19 per cent at the end of March 2020 as against 75.41 per cent at the end of the preceding fiscal.

On the outlook for the next financial year, Rao said: "We are confident that we will be able to book moderate profit during the current financial year. It will create a robust base for 2021-22".

He also said the bank would continue to enjoy treasury advantage in the current financial year as interest rates are expected to remain low.