State-owned Punjab National Bank (PNB) on Wednesday reported a net loss of Rs 5,367 crore in the quarter to March , owing to higher provisioning for bad loans in what marks the biggest ever loss posted by an Indian bank in a quarter. PNB had posted a net profit of Rs 306.56 crore in the corresponding period of the previous fiscal.
The bank’s provision for non-performing assets (NPAs) rose more than three-fold to Rs 11,380 crore in the fourth quarter compared to Rs 3,281 crore in the same period a year ago.
PNB’s operating profit rose 0.78 per cent year-on-year to Rs 3,228 crore in Q4 and it reported a loss before tax of Rs 7,257 crore. The Delhi-based bank would have reported a greater loss but for a tax write back of Rs 1,890 crore in the quarter. PNB’s net interest margin fell to 2.60 per cent by March 2016 from 2.90 per cent by June 2015.
Usha Ananthasubramanian, MD & CEO, Punjab National Bank said at a press conference that the lender has fully completed the asset quality review (AQR) as mandated by the Reserve Bank of India. She did not rule out more stress on the balance sheet going forward. The bank has classified certain large accounts as bad loans in the quarter after those firms failed to repay their loans on time. Loans to such companies were not part of AQR and were voluntarily downgraded by PNB, she said. The bank has also provided Rs 166.36 crore or 7.5 per cent of the existing loans of Rs 2,218 crore under food credit availed by the Punjab government in the fourth quarter. As per RBI’s directive, the provision is required to be made in two quarters — 7.5 per cent each in March and in June 2016.
Asset quality at PNB deteriorated in the March quarter with its gross non-performing assets more than doubling year-on-year to Rs 55,818 crore and gross NPA as a percentage of total loans stood at 12.9 per cent, up 635 basis points (bps) year-on-year. It added that seven stressed sector currently account for 55 per cent NPAs and due to strong recoveries, gross non-performing assets (GNPA) should start declining from the June quarter of FY17.
The bank has created a war room at its head office, which is headed by a GM (General Manager) to focus on recovery, she said. PNB sold Rs 1,832 crore worth of bad loans to asset reconstruction companies in 2015-16. The bank plans to sell its non-core assets including a listing of its arm PNB Housing Finance on the stock exchanges.
To a query of what action is being taken on wilful defaulters, she said 250 passports of such defaulters have been impounded at the bank’s request and the lender has requested the debt recovery tribunals to impound 500 more passports.
On loan settlement offer of Vijay Mallya, she said “Although we are not leader of the consortium, we want he should pay full.” PNB had an exposure of Rs 800 crore to the now defunct Kingfisher Airlines promoted by Mallya.
Shares of PNB on the BSE closed at Rs 76.2 a piece on Wednesday, up 3.25 per cent from its previous close.
Watch: Rajan on bad loans