PNB Q2 net falls 52.6% to Rs 505.5cr on higher provision

Moneycontrol Bureau

India's third largest public sector lender Punjab National Bank (PNB) disappointed Dalal Street with its second quarter (July-September) falling 52.6 percent year-on-year to Rs 505.5 crore - the lowest in last six years, dented by higher provisions on depreciation in investment.

Net interest income - the difference between interest earned and interest expended - grew 10 percent Y-o-Y to Rs 4,015.5 crore in three-month period ended September 2013, supported by higher revenues from treasury and retail banking operations.

Net interest income registered above Rs 4,000 crore-mark for the first time in bank's history, K R Kamath, CMD said in a press conference.

According to a CNBC-TV18 poll, analysts had expected the bank to report net profit of Rs 951 crore and NII of Rs 3,935 crore for the quarter.

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During the same period, revenues from treasury operations increased 10.4 percent Y-o-Y to Rs 2,807.43 crore and retail banking grew 12 percent to Rs 3,196.76 crore while corporate/wholesale banking fell 4 percent to Rs 5,525.52 crore.

Provisions and contingencies jumped 78 percent on a sequential basis (up 77 percent on yearly basis) to Rs 1,899 crore in the quarter gone by. Provision coverage ratio increased Q-o-Q to 55.27 percent as on September 30 from 54.67 percent in June 30.

Net interest margin of the bank declined to 3.47 percent during September quarter from 3.52 percent in June quarter.

KR Kamath said operating expenses of the bank soared 17.7 percent Y-o-Y to Rs 2,380 crore due to rise in accounting costs.

Asset quality weak

Gross non-performing advances (NPAs) expanded 30 basis points Q-o-Q (up 48 bps Y-o-Y to 5.14 percent while net NPAs grew 9 bps Q-o-Q (up 38 bps Y-o-Y) to 3.07 percent in the quarter gone by.

In absolute terms, gross NPAs jumped 9.5 percent Q-o-Q (up 18 percent Y-o-Y) to Rs 16,526.3 crore while net NPAs rose 6 percent Q-o-Q (up 22 percent Y-o-Y) to Rs 9,609 crore during September quarter.

"Fresh slippages were Rs 2,009 crore during the quarter whereas the bank restructured assets worth Rs 2,768 crore during the quarter and Rs 5,427 crore during April-September period," Kamath said.

Total restructured book stands at Rs 34,816 crore as of September-end and recoveries during the quarter were Rs 1,064 crore, he added.

Capital adequacy ratio (as per Basel III norms) stood at 11.62 percent in the quarter ended September 2013 from 11.79 percent in June quarter.

According to him, the bank will get Rs 500 crore capital infusion from the government.

At 13:25 hours IST, the stock was trading at Rs 522, down 4.22 percent on the BSE.