A higher provisioning for bad assets and contingencies dragged down state-owned Punjab National Bank's net profit by 93 per cent to Rs51 crore for the three months to December. The bank had reported a net profit of Rs774.56 crore in the corresponding quarter last fiscal.
“I like to mention that the industry is going through very tough times and PNB has been one of the major lenders. And obviously the impact is felt on the bank which is very much visible on its books,” Chief Executive Officer Usha Ananthasubramanian told reporters at a post earnings press conference here.
PNB increased its provisioning and contingencies allocation to Rs3,775.53 crore for the October-December quarter of 2015-16, a steep increase from Rs1,467.77 crore parked aside in the same quarter a year ago. Bank's asset quality deteriorated further as gross non-performing assets (NPAs) or bad loans hit 8.47 per cent of the gross advances during third quarter of current fiscal, as against 5.97 per cent a year ago.
likewise, net NPAs rose to 5.86 per cent of the net advances as of December quarter of 2015-16, from 3.82 per cent in the previous year's third quarter. In absolute terms, the gross NPAs increased to Rs34,338.22 crore as of December 2015, from Rs22,211.43 crore. Net NPAs were at Rs22,983.40 crore during the quarter, up from Rs13,787.76 crore.
“The increase in NPA is on account of Bank's exercises as part of RBI’s Asset Quality Review over the last two quarters of the current financial year. The bank is undertaking the same over the time-framestipulated by the RBI,” PNB said in a statement.
However, income of the bank rose by 7.6 per cent to Rs13,891.20 crore during the third quarter of current fiscal as against Rs12,904.85 crore a year earlier. The net interest income (NII) during the third quarter stood at Rs4,120 crore, while the non-interest income stood at Rs1,671 crore.
Ananthasubramanian said the bank has a strategy in place to increase the portfolio under small ticket loans. “In line with bank's objective to achieve profitable growth from the grassroots, share of small ticket advances to non-food credit increased to 60.3 per cent in December 2015 from 57 per cent in December 2014, she added. Shares of PNB today plunged by 6.89 per cent to close at Rs87.85 apiece on the BSE.