NEW DELHI : State-owned Punjab National Bank (PNB) on Tuesday posted a net profit of `507.05 crore in the quarter to September against a `4,532.35 crore loss a year ago on the back of a decline in provisioning for bad loans.

However, the lender posted a higher profit of 1,018.63 crore in the preceding three months. “In June-end we had over 1,000 crore profit. If you look at the segments where fraud has been declared, there was a requirement of provisioning to be done. That’s why there has been a change in profitability. But still, considering the amount of provisioning that we have done, it has been a good performance," said S.S. Mallikarjuna Rao, managing director and chief executive of PNB.

Provisions during the quarter ended September declined by 58.5% year-on-year to 3,055 crore.

Gross non-performing assets (GNPA) declined from 16.76% in July-September from 17.16% a year ago while net NPA was down to 7.65% from 8.90% a year ago. PNB’s provisioning coverage ratio (PCR)—the amount set aside to cover NPAs—increased to 73.58% as of September-end, from 66.9% a year ago.

However, fresh slippages grew by two-third to 7,462 crore in July-September. The major contribution to the fresh slippages was from 10 corporate accounts, including those of Jet Airways and Suzlon.

“Agriculture ( 632 crore), retail ( 498 crore), MSME ( 1,506 crore)—these are the three RAM (retail, agriculture, MSME) accounts and others are 4,786 crore. This is the composition of 7,462 crore of total slippages."

He further said the lender’s exposure to beleaguered Dewan Housing Finance Corp. Ltd (DHFL) is over 1,000 crore.

The bank’s operating income grew 14.9% to 6,529 crore from 5,684 crore a year ago.

PNB expects the credit growth to be 8-10% by March 2020. The bank’s retail credit grew 18% to 96,457 crore in July-September from 81,198 crore a year ago.

Net interest margin (NIM), a key measure of profitability, was 2.39% in the quarter ended September compared with 2.46% a year ago.

Rao expects NIM to hover around 2.4% by year-end. Net interest income—the difference between interest earned and interest expended—increased 7.3% to 4,264 crore.

On Tuesday, shares of PNB ended at 64.60 on the National Stock Exchange, down 5.28% from the previous close.

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