PNB Posts A Profit In Q4, But Misses Estimates
Shares of PNB gained the most in six months after the bank posted a profit and asset quality improved.
Public sector lender Punjab National Bank Ltd. reported a significant improvement in its fourth quarter results, with asset quality numbers stabilising and profitability improving.
Shareholders rewarded the bank for its improved gross non-performing asset (NPA) number as its stock rose as much as 6.7 percent on Tuesday.
The bank reported a net profit of Rs 261.9 crore in the January-March quarter, missing Rs 447 crore consensus estimate of analysts tracked by Bloomberg. The public sector lender had reported a loss of Rs 5,367.14 crore in the same quarter last year, after factoring in the impact of the Reserve Bank of India’s (RBI) asset quality review.
Net interest income for the bank grew 33 percent to Rs 3,683.52 crore over the year-ago period. Other income grew 68.2 percent year-on-year to Rs 3,102.8 crore.
Punjab National Bank’s capital adequacy ratio rose to 11.66 percent at the end of the fourth quarter, as compared with 11.22 percent a year ago. During the year, the bank raised Rs 2,250 crore through additional tier-1 (AT-1) bonds.
The government has also hiked its stake in the bank from just over 62 percent to 65.01 percent, by the end of financial year 2016-17.
Asset Quality Improves
The bank’s asset quality improved on a sequential basis. Gross non-performing assets (NPAs) remained relatively flat on a quarter-on-quarter basis. During the quarter, the bank reported Gross NPAs worth Rs 55,370 crore, down 0.46 percent as compared with Rs 55,627.51 crore in the October-December quarter. Net NPAs during the quarter dropped 6.5 percent on a quarter-on-quarter basis to Rs 32,702 crore.
As a ratio of total advances, though, asset quality saw some sequential improvement.
Slippages during the year dropped to Rs 22,000 crore as compared with around Rs 42,000 crore last year. The bank saw cash recoveries worth Rs 10,700 crore in financial year 2016-17 and upgradations worth Rs 3,000 crore. Technical write-offs during the year were over Rs 9,000 crore.
Executive Director, K Brahmaji Rao confirmed that the bank had exposure worth over Rs 30,000 crore to the top 50 corporate accounts.
Provisions for non-performing assets grew 46 percent sequentially to Rs 4,910.39 crore from Rs 3,363.2 crore. In year-on-year terms, provisions declined 54.4 percent. The bank’s provision coverage ratio as on March 31 was at 58.57 percent.
Shares of the bank gained as much as 6.35 percent, the most since November 10, 2016 to Rs 177.40 on the National Stock Exchange.
The bank’s total deposits rose 12.4 percent on a year-on-year basis to Rs 6.21 lakh crore. Total advances rose 1.7 percent from last year to Rs 4.42 lakh crore. Retail loans grew 14.2 percent from a year ago to Rs 65,982 crore while housing loans reported a 17 percent year-on-year growth to Rs 31,429 crore.