Delhi MCD Election Results 2017

Source: media reports

PNB Q4 net falls 18% on high pension, interest costs

PNB Q4 net falls 18% on high pension, interest costs
Comment E-mail Print Share
First Published: Thu, May 24 2007. 01 04 AM IST
Updated: Thu, May 24 2007. 01 04 AM IST
An increase in interest expenses and higher provisions for employee pensions saw the net profit of Punjab National Bank (PNB) fall 17.7% for the January-March quarter of 2006-07, compared with a year ago.
The country’s third-largest public sector bank by total business announced a net profit of Rs237.7 crore for the quarter on total income of Rs3712.7 crore, a 28.45% increase over the corresponding figure for 2005-06.
PNB also became the latest bank to announce plans to raise a substantial amount of capital this year to fund expansion and meet tighter capital norms that are due to be introduced by the Reserve Bank of India (RBI) the next financial year. “We would be needing not less than Rs2,000 crore in capital in the current financial year (2007-08),” said S.C. Gupta, chairman and MD, PNB, at a press conference.
The bank could meet its requirement for capital through an equity issue. It had earlier received the governing board’s nod to dilute the government’s shareholding to 51% from the current level of 57.8%. For the moment, PNB plans to raise Rs500 crore through a bond issue before the end of June, said Gupta.
PNB’s credit growth in 2007-08 is expected to slow down to 20%-22% after growing at 29.4% in 2006-07, said Gupta. PNB’s total advances in 2006-07 were Rs96,597 crore.
The bank’s performance in the fourth quarter of 2006-07 was affected by interest expenses, which increased by 37.45% year-on-year on account of hardening interest rates following RBI’s efforts to reduce money supply.
The bank’s fourth quarter profit was affected by Rs78.1 crore of payment and provisions related to employees, 121.6% higher than the corresponding number for 2005-06.
Banks are required to start making provisions for employees’ pensions in the current financial year once accounting guidelines for these are issued by RBI. PNB has decided to start provisioning for pensions in advance, said K. Raghuraman, executive director, PNB.
Hardening interest rates also affected the bank’s cost of deposits in the fourth quarter, which stood at 4.89%. The bank’s net profit for 2006-07 was Rs1,540.08 crore. The total income for the year was Rs12,579.7 crore, up 16.31% from last year. The bank’s board recommended a final dividend of Rs6 a share, in addition to an interim dividend of Rs4.
Comment E-mail Print Share
First Published: Thu, May 24 2007. 01 04 AM IST