PNB Q3 result: Net profit tanks 44% to Rs 628.8 crore

Punjab National Bank | CMP: Rs 51 | The share price managed to end in the green on January 30. The PSU bank reported a massive 44 percent year-on-year fall in net profit at Rs 628.8 crore for the December quarter. The bottomline was dragged down by a sharp rise in provisions from a year ago. The public sector lender's provisions rose by 40 percent to Rs 4,713 crore in the reported quarter from Rs 3353 crore in the year-ago period. Within the total provisions, those towards bad loans totaled Rs 3908.1 crore, an increase of 6.90 percent from the year ago period and 9.9 percent sequentially.

Punjab National Bank (PNB) Ltd on January 30 reported a massive 44 percent year-on-year fall in net profit at Rs 628.8 crore for the December quarter.

The bottomline was dragged down by a sharp rise in provisions from a year ago.

The public sector lender's provisions rose by 40 percent to Rs 4,713 crore in the reported quarter from Rs 3,353 crore in the year-ago period. Within the total provisions, those towards bad loans amounted to Rs 3,908.1  crore, an increase of 6.9 percent from the year-ago period and 9.9 percent sequentially.

PNB has beefed up provisions despite its bad loan stockpile reducing by 14 percent year-on-year. Gross non-performing assets (GNPAs) were at 9.76 percent of the total loan book, down from 12.88 percent in the year-ago period.

Net NPA ratio fell to 3.30 percent from 4.90 percent. Outstanding NPA stockpile was Rs 83,583. 9 crore as of December, down from Rs 97,258.7 crore a year ago.

Fresh slippages rose marginally to Rs 3,865 crore from Rs 3,831 crore a year ago.

Business growth strong

The bank's net interest income grew 17.6 percent year on year to Rs 9,179 crore. Non-interest income grew by 23.6 percent to Rs 3338 crore. While fee income grew 8.8 percent, the non-interest income growth was slightly dented by a 82 percent year-on-year fall in profit from the sale of investments.

NII growth was driven by a healthy 11.8 percent domestic loan growth and a sequential surge in net interest margin to 3.30 percent.

Loan growth was driven by the retail segment, which grew 13.5 percent year-on-year. Home loans, the safest asset class, rose 9.16 percent and riskier unsecured personal loans surged 40 percent year-on-year. The corporate loan book also registered a healthy growth of 12.5 percent from a  year ago period.

However, loans to small businesses shrank by 1.76 percent, in contrast to a sharp growth in this category for PNB's private sector peers.

Deposits showed a growth of 7.37 percent, while the share of low-cost current and savings account deposits rose to 43.7 percent of total deposits.

Margins hold up

PNB was able to pass on policy rate hikes through increases in loan rates, thereby offsetting some of the increase in its cost of deposits. This along with a smaller share of loans priced at marginal cost based lending rate (MCLR) ensured that margins improved sequentially.

The bank's cost of deposits rose to 4.15 percent from 4 percent a year ago, while the yield on advances rose to 7.35 percent from 7.29 percent. The domestic net interest margin rose to 3.30 percent for the December quarter from 3.01 percent.