Punjab National Bank narrows net loss to Rs 4,750 cr in March quarter, gross non-performing assets fall to 15.5%
State-owned Punjab National Bank on Tuesday said it has narrowed its loss to Rs 4,750 crore in the last quarter of the fiscal ended March 2019
The scam-hit lender had posted a staggering loss of Rs 13,417 crore during the corresponding January-March period of 2017-18
On assets front, the bank witnessed improvement with the gross non-performing assets (NPAs) reducing to 15.50 percent of gross advances at end of March 2019, as against 18.38 percent by March 2018
The shares of PNB traded at Rs 88.10 on BSE, down 1.34 percent from its previous close
New Delhi: State-owned Punjab National Bank (PNB) on Tuesday reported narrowing of its loss by nearly 65 percent to Rs 4,750 crore during the fourth quarter of fiscal ended March 2019 even after making adequate provisions towards the Nirav Modi fraud and non-performing assets (NPAs).
The scam-hit lender had posted highest ever loss of Rs 13,417 crore in the corresponding January-March period of 2017-18, due to fraud committed by jeweller duo Mehul Choksi and Nirav Modi.
The bank's total income during the March quarter of 2018-19 rose to Rs 14,725.13 crore from Rs 12,945.68 crore in the year-ago period.
It has earned a healthy operating profit of Rs 2,861 crore during the quarter and Rs 12,995 crore for the year as a whole indicating strong fundamentals, PNB Managing Director Sunil Mehta said while announcing financials here.
"We suffered a setback (Nirav Modi fraud) last year of which, 50 percent provisioning was done last year and 50 percent have been made this year. We have taken a conscious step to clean up the book and take provision coverage ratio to a reasonably high level which gives a high degree of safety to our stakeholders.
"So, almost all my net NPAs (non-performing assets), 75 percent provision has already been made against that. Few assumptions which we thought will happen during this quarter that didn't materialise. In 2-3 major accounts which have already been resolved by the NCLT, they were on the table, but that money could not be unlocked as against that we had to make 100 percent provisioning because of the ageing," he said.
On the assets front, PNB witnessed improvement as the gross non-performing assets (NPAs) which were brought down to 15.50 percent of gross advances at the end of March 2019, as against 18.38 percent at the end of March 2018.
Net NPAs or bad loans also came down to 6.56 percent as against 11.24 percent in the year-ago period.
In absolute value, gross NPAs stood at Rs 78,472.70 crore at the end of the financial year 2018-19, lower than Rs 86,620.05 crore reported in 2017-18. Net NPAs have valued at Rs 30,037.66 crore as against Rs 48,684.29 crore.
Improvement in asset quality allowed the lender to park a lesser amount towards provisioning for bad loans during the March quarter of 2018-19, which stood at Rs 9,153.55 crore. While in the year-ago period, it stood at Rs 16,202.82 crore.
"We have factored in the entire IL&FS slippages, we have made provisions for Jet Airways although the account is standard (as on March 2019)," he said without elaborating on the exposure of the bank on an individual account.
At the same time, fresh slippages came down significantly to Rs 5,130 crore during the quarter, compared with Rs 30,377 crore in the corresponding period a year ago.
With respect to accounts covered under the provisions of the Insolvency and Bankruptcy Code (IBC), the bank is holding total provision of Rs 11,940.15 crore as on March 31, 2019, (84.63 percent of total outstanding) including additional provision of Rs 433.93 crore in said accounts made during the year ended March 31, 2019, it said.
PNB also said it received a capital infusion of Rs 5,908 crore from the government during March quarter of 2018-19 in lieu of over 80 crore equity shares on a preferential basis.
On divergence in asset classification and provisioning for NPAs, in compliance with the Reserve Bank of India's (RBI) risk assessment report for 2017-18, PNB has reported a gap of Rs 895.70 crore in respect of divergence in gross NPAs.
The divergence in net NPAs stood at (-) Rs 2,871.10 crore.
The provisioning coverage ratio (PCR) as on March 31, 2019, works out to 74.50 percent from 58 percent at the end of 2017-18.
Despite the increase in PCR, the net interest margin of the bank improved to 2.59 percent from 2.42 percent at the end of previous fiscal.
Talking about the way forward, Mehta said the focus area would be the recovery of NPAs, conservation of capital, rationalising operation and sale of non-core assets, among others.
The bank still has a handful of non-core assets and things are in the process even if PNB Housing Finance does not go again.
"We expect roughly Rs 1,000 crore from a non-core asset sale," he said.
The stake sale in PNB Housing Finance could not take place because of some regulatory permission, he said, adding that, so, expected inflows from that could not come to the balance sheet.
"We are yet to take a call on PNB Housing Finance stake sale it will all depend on market conditions," he added.
With regard to recovery, he said, "If all these NCLT cases which are on the table materialise then definitely this year, recovery will be much more than 2018-19.
Recovery more than doubled to Rs 20,000 crore in 2018-19 as against Rs 9,666 crore in the previous fiscal.
There are two major cases which are already on the table, he said adding that NPA recovery would be to the tune of Rs 5,000-6,000 crore, and there would be write-back of roughly Rs 4,000 crore.
On proposed merger talks, Mehta said, "Right now, we have not thought of it, neither any proposal has come to us. As the situation comes, we will take a call."
For the full fiscal 2018-19, the bank's net loss was at Rs 9,975 crore, as against a loss of Rs 12,283 crore during 2017-18.
Income during the fiscal rose to Rs 59,514.53 crore as against Rs 57,608.19 crore in the previous financial year.
Shares of the bank closed at Rs 86.20, down by 3.47 percent on the BSE.