New Delhi: State-owned Punjab National Bank (PNB) on Tuesday reported a fourfold jump in net profit in the December quarter from a year ago as provisions fell.
Net profit during the quarter was Rs207 crore, against Rs51 crore a year ago. The profit, however, fell short of Rs613.30 crore estimated in a Bloomberg poll of 21 brokers.
Like other banks, PNB, too, received a surge of low-cost deposits after the government withdrew high-value notes on 8 November. However, despite a cut in lending rates, loan demand remained muted during the quarter.
Gross NPAs rose to 13.7% in the quarter from 8.47% in the year-ago period though the rise in bad debt seems to be tapering, compared with the preceding quarter when it was 13.63%. Net NPAs came in at 9.09% in the December quarter against 5.86% in the year-ago quarter and 9.1% in the immediate preceding quarter.
Provision for NPAs came in lower at Rs3,363 crore against Rs3,767 crore a year ago as the pace of slippages slowed.
“We have taken directional changes to derisk the portfolio. The focus going ahead will on the rural sector, SMEs, agriculture and retail,” said Usha Ananthasubramanian, managing director and chief executive officer of the bank.
“The uptake in loans has been very negligible,” she said, adding credit demand for large projects is still elusive. The bank’s net advances growth contracted to Rs3.85 trillion as of end December 2016 from Rs3.92 trillion in the year-ago period.
She added the bank is keeping a close watch on small accounts to protect against intermittent slippages on account of demonetization.
Cost of deposits came down to 5.3% from 5.8% a year ago, mainly on account of the Rs53,000 crore of low-cost savings account deposits received during the quarter. However, this did not help in improving the net interest margin—a measure of profitability—which came in lower at 2.62%, compared with 3.13% a year earlier.
Net interest income, a bank’s core income earned from lending money, fell 9% to Rs3,731 crore from Rs4,120 crore in the year ago period.
PNB said it has identified Rs7,500-8,000 crore of strategic investments where it can dilute its stake. However, it did not share a timeline for this.
PNB shares price rose 1.44% to Rs151.80 on BSE on Tuesday.
Reliance Securities, in a note, said the bank has improved its performance on key asset quality parameters.
“In absolute terms, the bank’s gross NPA is likely to decline due to relatively higher upgrades and recovery vis-à-vis fresh slippages,” it said.