Q3 Results: PNB Reports First Profit In Four Quarters; Says Fully Provided For Nirav Modi Fraud

Punjab National Bank Ltd. reported a profit after posting losses for previous three quarters.

Net profit rose 8 percent year-on-year to Rs 247 crore for quarter-ended December, according to the state-run lender's exchange filing. Net interest income—the lender’s core income—rose 7 percent to Rs 4,290 crore.

“Proud moment for PNB to be back in the black,” Managing Director and Chief Executive Officer Sunil Mehta said. “Despite the biggest turbulence ever faced in the industry, bank had the capability to handle the situation.”

PNB's asset quality improved as its gross non-performing assets ratio contracted to 16.33 percent from 17.16 percent sequentially. Net NPA ratio also fell to 8.22 percent from 8.90 percent in the September-ended quarter.

Nirav Modi Fraud Completely Provided For

Provisions fell 38.4 percent quarter-on-quarter to Rs 2,753 crore. Of this, Rs 2,014 crore went towards provisioning against the accounts affected by the Rs 14,357-crore Nirav Modi fraud. “Nothing left to provide for the fraud now,” Mehta said.

The bank made recoveries worth Rs 16,000 crore during the first nine months of this financial year—thrice the amount it recovered last year.

PNB has written back provision of Rs 162.84 crore during the quarter due to 22 borrowal accounts under the provisions of Insolvency and Bankruptcy code and directions of the Reserve Bank of India. Total provision made in these accounts is Rs 10,573.30 crores, the filing said.

The lender’s provision coverage ratio stood at 68.85 percent as of Dec. 31, 2018.

Shares of the lender rose 3.6 percent to Rs 75.80 after the earnings were announced compared with the NSE Nifty PSU Bank Index’s 0.9 percent advance.

The stock has taken a beating over the last 12 months, losing more than half of its market value. Punjab National Bank has fallen 54.7 percent compared with a 4.22 percent rise in the NSE Nifty Bank Index, making it the worst performer on the list.