New Delhi: The net profit of Punjab National Bank rose as much as 31.1% to Rs927 crore in the three months ended 30 September from the year-ago period, helped by significant growth in high yield loans to small businesses and treasury gains.
“A major portion of our profit has come from our core banking operations,” chairman and managing director K.R. Kamath said on Thursday.
Kamath declined to forecast profit for the second half of the financial year to March. However, the state-owned bank’s credit growth in the second half of the fiscal should outpace the 18% projection of non-food credit growth made by the Reserve Bank of India’s quarterly policy statement on Tuesday, he said.
“The highlight is the improvement in margins sequentially,” said Ganeshram Jayaraman, senior analyst at financial services firm Spark Capital Advisors (India) Pvt. Ltd. “The key reason for it is 65% of high-cost deposits have been repriced.”
Analysing gains: Punjab National Bank chief executive K.R. Kamath says a major portion of its profit came from core banking operations. Rajkumar/Mint
The bank’s net interest margin (NIM) for the September quarter was 3.64%, compared with a margin of 3.78% in a year earlier. Sequentially, NIM improved by 25 basis points. One basis point is one hundredth of a percentage point. Interest income for the quarter was Rs5,407 crore, higher by 16.3%. Treasury income rose 108% to Rs150 crore. Outstanding credit increased 25.4% to Rs1.63 trillion from the September quarter last year.
According to executive director Nagesh Pydah, the growth in profit was driven by a rise in loans to small and medium enterprises (SMEs). Outstanding credit to SMEs as on 30 September was Rs31,030 crore, 64% higher than a year ago. Loans to SMEs were priced at an average of around 12% as against the bank’s prime lending rate (PLR) of 11%, Pydah said. PLR is the rate at which a bank lends to its most creditworthy borrowers.
The lender’s gross non-performing assets declined 16% to Rs2,619, compared with the July-September quarter last year.
The percentage of gross bad loans to gross credit stood at 1.58%, down from 2.18% a year earlier. The bank’s board on Thursday gave it permission to invest up to 63.64% in the equity of Dana Bank of Kazakhstan, Kamath said. It has sought approvals from regulators in India and Kazakhstan to go through with the investment. Once these come through, the lender would disclose the price of the transaction, its chief executive said.
The bank’s net profit for the first half of 2009-10 rose 44.2% to Rs1,759 crore from the year-ago period.
The bank’s stock, which has risen 64% this year, closed at Rs838.3 down 1.58% at the Bombay Stock Exchange, on a day the benchmark equity index, the Sensex, declined 1.42% to 16,052.72 points.