State-owned Punjab & Sind Bank on August 1 reported an 18 per cent growth in net profit at Rs 205 crore in the April-June quarter of FY23, helped by a decline in bad loans.
The bank had posted a net profit of Rs 174 crore in the year-ago quarter. Sequentially, it had registered a net profit of Rs 346 crore in the January-March 2022 quarter.
The total income of the bank during the reporting quarter declined to Rs 1,91,547 crore from Rs 2,03,961 crore recorded in the same quarter of FY21, Punjab & Sind Bank said in a regulatory filing. However, net interest income grew by 22.45 per cent to Rs 709 crore in the first quarter of FY23.
The bank’s asset quality showed an improvement and the gross Non-Performing Assets (NPAs or bad loans) came down to 11.34 per cent of the gross advances as of June 30, 2022, against 13.33 per cent a year ago. The net NPA ratio also fell to 2.56 per cent from 3.61 per cent in the first quarter of the last financial year.
The bank intends to bring down gross NPA and net NPA to less than 10 per cent and 2 per cent, respectively by the end of the current financial year, the bank’s managing director Swarup Kumar Saha said. Net Interest Margin (NIM) improved to 2.92 per cent in the quarter from 2.50 per cent in the same period a year ago.
Saha expects the NIM to stay at the same level by March. Asked about profit outlook, he said, on conservative side, it should be around the last year. Last year, the bank got proceeds of the Air India sale as exceptional item. Asked about profit outlook, he said, on conservative side, it should be around the last year.
Capital Adequacy Ratio (CAR) stood at 16.79 per cent with Common Equity Tier 1 (CET-1) ratio of 13.08 per cent in the first quarter of FY23. The bank is looking to double its credit growth to 15 per cent in FY23 from existing 7 per cent at present. Saha said the bank plans to transfer 5 accounts worth Rs 528 crore to NARCL during this year. In September last year, the government had announced a guarantee worth Rs 30,600 crore to security receipts issued by NARCL. The guarantee will be valid for five years.
NARCL will try to identify and acquire assets on 15:85 cash and Security Receipts (SRs) basis. While public sector banks have taken a majority stake in NARCL, private lenders will own the majority stake in NARCL’s subsidiary India Debt Resolution Company Ltd (IDRCL). In her Budget 2022 speech, finance minister Nirmala Sitharaman had announced that the government intends to set up a bad bank.
"An asset reconstruction company limited and asset management company would be set up to consolidate and take over the existing stressed debt," she had said in the Budget speech. It will then manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realisation, she had said.
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