Impacted by the higher provisioning for bad debts, state-owned Punjab National Bank, on Saturday, registered a 11.5 per cent decline in its net profit for the quarter ended September 2016. The net profit for the bank fell from 621 crore in September 2015 to 549.4 crore in September 2016. While the year-on-year decline in net profit is lower from 57 per cent in Q1 FY16 to 11.5 per cent in Q2 FY17, the bank’s management expressed confidence on the recovery trend and said that “green shoots” are visible on the recovery front.
During the quarter, the provisions for bad loans increased by 35 per cent from Rs 1,882 crore in September 2015 to Rs 2,533.8 crore in September this year. The total earnings during the quarter rose by a marginal 3.8 per cent to Rs 14,218.3 crore as against Rs 13,701.9 crore in the corresponding period last year. The bank also witnessed a marginal decline in its gross and net NPA during the quarter. While the gross NPA came down by 12 basis points from 13.75 per cent in June 2016 to 13.63 per cent in September 2016, the net NPA came down by 6 basis points from 9.16 to 9.1 per cent in the same period.
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“The green shoots are visible as stressed assets ratio has reduced to 13 per cent. From here onwards, we would like to see gradual reduction. Several indicators such as income, cost of deposits, net interest margin, GNPA, NNPA are moving in a positive trajectory,” said Usha Ananthasubramanian, MD & CEO of PNB. While the bank had set a target of recovery of loans of Rs 20,000 crore for FY17, the MD said that the bank has already recovered loans amounting to Rs 10,778 crore in the first two quarters of the fiscal.
She said that the bank’s CASA (current account, saving account) has continued to strengthen and it has improved from 40.23 per cent in September 2015 to 42.1 per cent in September 2016. Even the bank’s operating profit improved to Rs 3,312 crore during the quarter from Rs 2,939 a year ago. Ananthasubramanian also informed that one account worth Rs 3,000 crore of ABG Cement has been on the way of upgradation with the change in management of the company, and it has encouraged the bank to revisit other such accounts.
“We worked along with the promoter where we bring about a management change that has helped us in upgrading the account. It’s a labour of almost an year. Successfully the management change happened and company name is changed and brand name is changed,” she added. This kind of success has given PNB lot of encouragement to look at these opportunities where the bank can engage itself with the promoter and ensure certain turnaround, she added.