Punjab National Bank on Tuesday posted a net loss of Rs 13,416.91 crore for the January-March quarter, the biggest ever by any domestic lender. Provisions for the bad loans tripled and the bank recorded an across the board deterioration in its performance. The state-owned bank reported standalone profit of Rs 261.90 crore in the fourth quarter of the preceding fiscal, 2016-17.
The total income for Q4 also declined to Rs 12,945.68 crore from Rs 14,989.33 crore in the year-ago period, while its non performing assets (NPAs) rose sharply. Gross NPAs ratio jumped to 18.38 per cent of gross advances at the end of March 2018, up from 12.53 per cent a year ago. Net NPAs also soared to 11.24 per cent. PNB stock closed down 6.10 per cent at Rs 83.85 at the NSE on Tuesday.
PNB’s total provisions more than tripled to Rs 20,353 crore from Rs 5,753.51 crore in the fiscal-ago quarter. With regards to provision made for the loss incurred on account of Letter of Undertaking fraud perpetrated by diamantaire Nirav Modi in connivance with certain bank officials, the bank said it provided for Rs 7,178 crore in the fourth quarter. This provision is 50 per cent of the total amount of Rs 14,356 crore and the remaining amount will be covered in the three quarters of the current fiscal year.
PNB said it has paid Rs 6,586.11 crore to other banks to discharge its liabilities towards Letter of Undertakings and Foreign Letter of Credits issued fraudulently and in unauthorised manner to certain overseas branches of Indian banks via SWIFT system.
On Monday, the Central Bureau of Investigation probing the alleged fraud involving diamantaires Modi and his uncle Mehul Choksi has named 25 accused including Usha Ananthasubramanian, MD & CEO of Allahabad Bank, who was a former CEO of PNB; two Executive Directors of PNB Brahmaji Rao and Sanjeev Sharan, and a General Manager, Nehal Ahad, besides Nirav Modi’s three firms Stellar Diamonds, Solar Exports and Diamond R US in its chargesheet filed in the CBI Special Court. PNB’s board on Monday evening divested two executive directors named in the CBI chargesheet— K V Brahmaji Rao and Sanjiv Sharan — of all financial and executive powers.
Even on operating profit basis, the bank had posted loss of Rs 447.38 crore in the quarter as against Rs 6,231.79 crore profit in the year-ago period. In absolute term, the gross NPA of the bank surged to Rs 86,620 crore in the fourth quarter as compared to Rs 55,370 crore in same quarter a year ago. Similarly, the net NPA also rose to Rs 48,684.29 crore from Rs 32,702 crore at the end of March 2017. The bank’s capital adequacy ratio fell sharply to 9.20 per cent of the risk weighted assets at March-end 2018, from 11.66 per cent at March-end 2017.
As per the quarterly number, the RBI detected gross NPA divergence of Rs 2,207 crore in FY17. Accordingly, the net profit of the bank was adjusted to Rs 532.6 crore against declared profit of Rs 1324.8 crore for entire 2016-17.