PNB thrills mkt, posts 14% profit growth on low provisions

Moneycontrol Bureau

India's second largest public sector lender Punjab National Bank (PNB) reported a forecast beating nearly 14% year-on-year rise in its third quarter net profit at Rs 1,306 crore, aided by lower provisions against bad loans. Net interest income or the difference between interest earned and paid out, rose by about 6% y-o-y to Rs 3,733 crore during the same period. Analysts on an average were expecting net profit at Rs 1,102 crore and net interest income at Rs 3,749 crore for the quarter. "During the quarter, we drove whole-hearted efforts in recovering our bad loans. That simply yielded results. After a poor show in the last two consecutive quarters, we finally emerged successful in managing our asset quality. While recoveries took place, there is hardly any big slippage," a senior bank official told moneycontrol.com a few hours before the official disclosure of Q3 numbers. Provisions against bad loans dropped to Rs 802 crore in the October-December quarter as against Rs 1,074 crore in July-September quarter. Provision coverage ratio of the bank stood at 55.97% compared with 43.8% in the previous quarter. Gross non-performing asset (NPA) declined 5 basis points quarter-on-quarter to 4.61 percent and net NPA fell by 13 basis points to 2.56% during the same. Capital adequacy ratio stood at 11.66 percent as against 11.73 percent QoQ. The state-controlled lender would cut base rate by 25 basis points to 10.25% effective from February 9. At 12:14 hours IST, shares jumped 6.32 percent to Rs 887 amid hefty volumes on Bombay Stock Exchange on Thursday. Also Read - ICICI Bank Q3: Analysts expect profit to grow 20% to Rs 2077 cr