Moneycontrol Bureau
Punjab National Bank's (PNB) second quarter profit missed analysts' expectations but net interest income came in ahead of estimates. Profit increased by 8 percent year-on-year to Rs 621 crore, impacted by lower other income, slow growth in operating profit & net interest income and increase in provisions. However, fall in tax cost supported profit growth.
Net interest income grew by 4.1 percent to Rs 4,322 crore compared to Rs 4,151.2 crore in same period on tepid growth in loan book. Net interest income is the difference between interest earned and interest expended.
Profit missed analysts' estimates but net interest income was ahead of forecast. According to analysts polled by CNBC-TV18, profit was estimated at Rs 929 crore and NII at Rs 4,202 crore for the quarter.
The public sector lender says advances (loan book) in quarter ended September 2015 rose by 6.7 percent to Rs 3.8 lakh crore and deposits increased by 14 percent to Rs 5.4 lakh crore compared to corresponding quarter of previous fiscal.
Other income (non-interest income) declined 13 percent year-on-year to Rs 1,356.90 crore in quarter gone by. During the same period, operating profit was up only 2.2 percent to Rs 2,938.5 crore despite a 7.7 percent fall in employee cost on yearly basis.
Asset quality improved sequentially but weakened on yearly basis. The bank says gross non-performing assets (as a percentage of gross advances) declined 11 basis points quarter-on-quarter (up 71 bps year-on-year) to 6.36 percent and net NPA was down 6 bps Q-o-Q (up 73 basis points Y-o-Y) to 3.99 percent in July-September quarter.
In absolute terms, gross NPA stood at Rs 24,945 crore, down 1.8 percent on sequential basis but up 20.2 percent on yearly basis. Net NPA slipped 1.34 percent quarter-on-quarter (up 30.7 percent year-on-year) to Rs 15,187 crore in quarter gone by.
Capital adequacy ratio (as per BASEL III norms) improved to 12.2 percent during the quarter compared to 12.08 percent in preceding quarter and 11.79 percent in same quarter last fiscal.
Provisions for bad loans have shown marginal increase in September quarter. "Provisions increased 3.9 percent sequentially and 6.4 percent year-on-year to Rs 1,882 crore in July-September quarter," PNB says, adding provision coverage ratio was at 61.35 percent as on September 2015. Provision coverage ratio improved compared 59.32 percent in June quarter.
Tax expenses for the quarter declined 18.3 percent to Rs 435.4 crore compared to Rs 532.8 crore in year-ago period.Speaking to CNBC-TV18, Kaitav Shah, Banking Analyst, SBI Capital market says the bank is improving in terms of asset quality and that the numbers are encouraging.
At 12:19 hours IST, the scrip of Punjab National Bank was quoting at Rs 134.15, up Rs 4.55, or 3.51 percent on the BSE.
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