Rising bad loans pull PNB Q4 net down 29%; stocks dip 4%

Provisioning for NPAs rise 45% to R2,139 cr during the quarter.

By: ENS Economic Bureau | New Delhi | Published: May 14, 2014 12:37:37 am

Taking a hit from rising bad loans, state-run Punjab National Bank on Tuesday reported a 28.7 per cent drop in its net profit to Rs 806.35 crore for the quarter ended March 2014.

The bank, which is the second largest public sector lender, had reported a net profit of Rs 1,131 crore in Q4FY13. “We had fresh slippage of Rs 4,189 crore and increase in existing NPAs (non-performing assets) to Rs 263 crore, totaling Rs 4,452 crore,” said KR Kamath, chairman and managing director, PNB.

The bank also reported a near 30 per cent drop in its net profit for FY14 at Rs 3,342.57 crore, as against Rs 4,747.67 crore in the previous year. PNB’s provisioning for bad loans rose by 45 per cent to Rs 2,139 crore during the quarter, as against Rs 1,478 crore in the corresponding period a year ago. Gross NPAs also jumped up to 5.25 per cent for the fourth quarter of FY14 while net NPAs were 2.85 per cent. In contrast, gross NPAs stood at 4.27 per cent in the fourth quarter a year ago, while net NPAs were 2.35 per cent.

Significantly, PNB’s annual results were announced on the same day that public sector banks collectively reported an improvement in their NPAs at 4.44 per cent for the three-month period ended March 2014 as against 5.07 per cent at the end of December 2013 at a review meeting with finance minister P Chidambaram. Kamath said the bank has drawn a fresh strategy for recovery of loans. “We have taken note of this pressure on the asset quality and drawn a strategy and launched a recovery campaign. We will reverse the trend and bring about improvement in the asset quality,” he said.

However, the statement did little to assure investors and the bank’s scrip lost 4.16 per cent to close at Rs 800.05 a piece at the Bombay Stock Exchange on Tuesday.

“Asset quality was a major concern for the current quarter. Key issues to watch out include management strategy on balance sheet growth, liability mix and asset quality management. Pipeline of restructured loans and sale of loans to ARCs should also be monitored,” said Rahul Shah, vice president, equity advisory group, Motilal Oswal Securities.

Meanwhile, net interest margin, which is an indicator of the bank’s profitability, was at 3.20 per cent in the last quarter of FY14, and 3.44 per cent for the entire fiscal.

For FY15, the bank expects to grow at about 15 per cent with the NIM estimated at 3.25 per cent. For the quarter ended March 31, 2014, PNB reported an interest income of Rs 11,101 crore as against Rs 10,378 crore a year ago.

Total income of the bank also rose by over eight per cent to Rs 12,498 crore for the quarter under review as against Rs11,553 crore a year ago.

BoB net up 12.5% on better NII

New Delhi: State-run Bank of Baroda on Tuesday posted a 12.5 per cent rise in its net profit at Rs 1,157.27 crore for the quarter ended March 2014 on the back of improved asset quality and higher non-interest income. It had reported a net profit of Rs 1,028,85 crore in the fourth quarter of FY13.

Total income grew by 13.1 per cent to Rs 1,161.48 crore for the period under review. Of this, net interest income (NII) grew 11 per cent to Rs 3,124.3 crore while the core non-interest income rose 15 per cent to Rs 602 crore. The bank’s chairman and managing director SS Mundra said a push in cost of funds limited the NII growth in the reporting quarter.

The bank’s scrip gained 4.59 per cent on the Bombay Stock Exchange to close at Rs 877.90 a piece on Tuesday. ENS

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