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Punjab National Bank Q4 net falls 21% on higher provisions

State-owned Punjab National Bank's fourth quarter (January - March) net profit declined nearly 21 percent to Rs 1,131 crore on higher provisions that spiked 44 percent y-o-y to Rs 1,478 crore. Shares rose 5%!

May 09, 2013 / 22:39 IST
     
     
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    Moneycontrol Bureau


    State-owned Punjab National Bank's fourth quarter (January - March) net profit declined nearly 21 percent to Rs 1,131 crore on higher provisions that spiked 44 percent y-o-y to Rs 1,478 crore. Total provisions were inclusive of all components like loans, investment and gratuity of Rs 166 crore.


    However, the net interest income (NII) or the difference between interest earned and paid out, rose 14 percent Y-o-Y to about Rs 3,780 crore during the quarter.


    It is learnt that the bank reduced its share of bulk deposits substantially while the year-end short term loans (aimed at expanding credit growth) too contracted. This helped the bank to post a better interest margin.  Deposit growth was muted just a little more than 3 percent Y-o-Y to Rs 3.91 lakh crore for year ended March 31, 2012-13.


    The bank expanded its loan book at a muted pace just at 5 percent Y-o-Y to Rs 2.94 lakh crore. According to a bank official, it was a conscious decision not to grow credit fast.  PNB was more focussed in managing credit quality rather than volume.


    During the quarter, gross non-performing asset ratio increased to 4.27 percent compared with 2.93 percent a year back suggesting the stress in credit quality. Net NPA ratio too rose to Rs 2.35 percent versus 1.51 percent a year back.


    On the quarter-on-quarter basis,  the bank's Capital Adequacy Ratio (CAR) has grown up to 12.72 percent from 11.66 perecent and advances were at Rs 3 lakh crore as on March 31, 2013.


    However, PNB shares surged 5 percent to Rs 787 at 13.10 hours on NSE. Despite a significant fall in net profit, investors are cheering the improvement in asset quality quarter-on-quarter.  Gross NPA ratio improved to 4.27 percent from 4.61 percent in October - December quarter. Net NPA ratio too fell to 2.35 percent as against 2.56 percent.


    "It was more of a knee-jerk reaction," Manish Innani, director of Mumbai-based brokerage Prayas Securities told moneycontrol.com


    "Some amount of bottom fishing led to the rise of PNB shares. Investors may have been swayed away by the sequential improvement in asset quality. In long run, it is not worth of investment. Share price will again come down after a brief spell or rising. The bank lacks growth," he said.


    The banks recommended dividend of  Rs 27 per share compared with Rs 22 per share a year back. Since last one year, PNB shares rose little to remain almost flat. However, Bank Nifty - the broader index for banking stocks, soared 32 percent during the same period.

    saikat.das@network18online.com

    first published: May 9, 2013 12:49 pm

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