New Delhi: State-run Punjab National Bank on Thursday said quarterly profit rose 31%, as trading gains doubled and its loan book grew by a quarter but the proportion of restructured loans rose.
“Most of the rescheduling I have done is on a pre-emptive basis,” executive director Mohan Tanksale said. “There is no cause for concern. That is amply demonstrated by the fact that my gross NPAs (bad loans) have come down”.
“(This) is to take care of cash flow mismatches by elongating the repayment period with or without a reduction in interest.”
The economic slowdown has cut sales and profits at businesses on muted domestic demand and falling exports. But analysts are optimistic about an improvement in the rest of the fiscal year.
By the end of the September quarter, PNB had restructured 5.8% of its total loan portfolio compared with 5.2% at the end of the June quarter.
PNB’s stock had under performed the sector index and the broader market during the September quarter, largely as analysts fretted over the quality of its assets. The stock has since then beaten both indices, as these concerns abated.
Shares in PNB, which the market values at Rs2,600 crore, rose 17.4% during the period, compared with the banking index’s 20% ascent and the Mumbai market’s 18% climb.
By 3:03 pm on Thursday, PNB shares were down 1.42% at Rs840.35, in line with the broader market.
For the September quarter PNB, reported a net profit of Rs927 crore compared with Rs707 crore a year ago. Total income rose 14.4% to Rs6,076 crore.
Treasury income stood at Rs150 crore, up from 720 million a year ago, helped by a fall in government paper yields and a rising stock market. Net interest margins stood at 3.64%, down from 3.78% a year ago.
K R Kamath, who took over as chairman on Wednesday, said the bank’s would grow loans in excess of the central bank’s forecast of 18 percent for the sector during 2009/10 and saw stable interest rates for the next three months.
He did not see an impact on profit from the central bank’s recent directive to hike the provision ratio for bad debts, as PNB’s provisioning exceed the new norm.
PNB also said it would sell a 26% stake in subsidiary PNB Housing Finance Ltd and also merge PNB Gilts with itself by end-December. It would also pick up a 63.64% stake in Kazakhstan’s Dana Bank.