PNB net rises 11% in Q3

February 6, 2018

Aided by its partial stake-sale in PNB Housing Finance that helped mop up ?1,315 crore, Punjab National Bank (PNB) on Tuesday reported a net profit of ?230.11crore in the third quarter ended December 31, 2017.

This bottomline performance represents a 11.10 per cent increase over the net profit of ?207.18 crore recorded in the same quarter of the previous fiscal.

For the nine months ended December 31, PNB reported a net profit of ?1,134.09 crore (?1,062.90 crore). In the September quarter, the bank had recorded a net profit of ?560.58 crore.

Total income for the public sector bank during the quarter under review increased to ?15,257.50 crore (?14,123.98 crore).

Unexpected provisioning

Commenting on the Q3 financial performance, Sunil Mehta, Managing Director and CEO, PNB, said that the bottomline growth was achieved despite an unexpected huge provision (about ?1,500 crore) on diminution in value of investments due to adverse movement in yields of government securities in the December quarter.

Mehta also said that PNB has been “belt tightening” and this has helped improve efficiency.

While it was the partial stake-sale in PNB Housing Finance that bolstered the bottomline in the third quarter, Mehta said the bank was lining up more non-core assets for sale in the current quarter.

He indicated that PNB will, in the coming days, look to monetise some of the real estate owned by it, including buildings in the heart of the Capital.

Operating profit of the bank in the third quarter came in at ? 4,245 crore, a 52.7 per cent increase over the ?2,781 crore recorded in the same quarter of the previous fiscal.

As on December 2017, the gross non-performing asset (NPA) ratio fell to 12.11 per cent from 13.31 per cent at the end of September 2017. Net NPA ratio declined to 7.55 per cent in December 2017 from 8.44 per cent in September 2017.

GNPA and NNPA ratios are below the March 2017 levels of 12.53 per cent and 7.81 per cent, respectively.

Credit growth

On overall credit growth, Mehta said that the bank was well on course to meet the earlier given guidance of 10 per cent.

Till end-December 2017, overall credit grew a robust 17 per cent on year-on-year basis, with retail credit expanding at about 23 per cent. The corporate loan book also recorded a robust 10 per cent growth.

“We are confident of achieving our earlier specified guidance of overall credit growth of 10 per cent for the entire fiscal,” Mehta added.

Corporate loan book

Ram S Sangapure, Executive Director, told BusinessLine that most of the corporate loan book growth has come from lending to high-quality public sector companies.

For instance, PNB has provided ?9,000 crore loan to ONGC (a top-rated public sector company) in the December quarter to help it acquire Hindustan Petroleum Corporation (HPCL).

“Very little of the corporate loan has gone to the private sector. It is mainly top notch public sector companies to whom advances have been provided,” Sangapure said.

Sanjiv Sharan, Executive Director, said the bank had total exposure of about ?6,500 crore in the 20 cases identified by the RBI’s second list.

PNB has so far provided only ?75 crore as many of the cases are yet to be admitted by the National Company Law Tribunal, he said.

The remaining necessary provisioning could happen in the March quarter, he added.

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