Punjab National Bank (PNB) on Tuesday reported a net loss of Rs 940 crore in the April-June period, its second straight quarterly loss, as it struggles to rebound from a Rs 14,357-crore fraud it had announced in February, involving jewellers Nirav Modi and Mehul Choksi.
The bank recovered from the record loss of Rs 13,417 crore in the March quarter when its provisioning quadrupled to cover half of the fraud losses, apart from having to set aside funds for losses in its bond portfolio. It had posted a net profit of Rs 343.40 crore in the June quarter last fiscal. PNB shares plunged 8.1 per cent on the BSE on Tuesday.
Its asset quality remained worrisome, with gross non-performing asset having hit 18.26 per cent in the June quarter, slightly better than 18.38 per cent in the March quarter but much worse than 13.66 per cent a year ago.
At the operating level, PNB reported a profit of Rs 4,195 crore, compared with a loss of Rs 447 crore in the previous quarter and a profit of Rs 3,217 crore a year earlier. Its net interest income stood at Rs 4,692 crore, up 21.7 per cent from a year before and against a decline of 17 per cent in the previous quarter. Its domestic net interest margin, a gauge for profitability, stood at 2.9 per cent, against 2.51 per cent in the March quarter and 2.56 per cent a year earlier.
PNB Managing Director Sunil Mehta said Rs 5,000-7,000 crore worth of bad loans could be resolved through the insolvency proceedings in the current quarter. He said the bank expects to mop up around Rs 8,600 crore through the sale of non-core assets in this fiscal and that the bank could achieve profit in the current fiscal, tiding over initial losses.
Its capital adequacy in the June quarter improved a tad to 9.62 per cent, against 9.2 per cent in the previous three months, but it was still much worse than 11.64 per cent a year earlier and lower than the regulatory minimum of 10.25 per cent. Return on asset continued to remain in negative territory (-0.48 per cent), although it was better than -6.72 per cent in the last quarter. —FE