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Informist, Saturday, Jul 27, 2024

 

By Nishat Anjum

 

MUMBAI - Topping market expectations, Punjab National Bank today reported 32.52 bln rupees net profit for Apr-Jun, which was 159% higher than a year ago. Analysts had expected the bank's bottomline to rise 140%. The state-owned bank's stellar performance was due to a slump in its provisions, which was as per expectations.

 

Provisions and contingencies for the bank slumped 66.9% on year to 13.12 bln rupees, while they were down 17.4% sequentially. Out of this, provisions for non-performing assets were down by 82% on year to 7.92 bln rupees, marking a 60?ll on quarter. As on Jun 30, the provision coverage ratio, including techincal write-offs, was 95.90%, improving 607 basis points on year.

 

The bank also saw an improvement in its asset quality, both on a yearly and quarterly basis. The gross non-performing asset ratio as on Jun 30 was 4.98%, lower than 7.73% a year ago and 5.73% a quarter ago. Meanwhile, the net NPA ratio was 0.60%, improving from 1.98% a year ago, and 0.73% a quarter ago. In a post-earnings conference call, the management of the bank said it sees the gross NPA ratio to be around 4% in 2024-25 (Apr-Mar).

 

In the current financial year, the state-owned bank pegged the recovery aim at 180 bln rupees, while it expects around 30 bln rupees from insolvency cases under the National Company Law Tribunal.

 

Net interest income of the bank rose 10% year-on-year to 104.76 bln rupees, while the domestic net interest margin for the reporting quarter was 3.21%. The bank expects the net interest margin to be between 2.9% and 3.0% in the financial year ending March.

 

Global deposits for the bank rose 8.5% on year to 14.08 trln rupees, and the current account savings account ratio of the bank stood at 40.08% as on Jun 30. Global advances increased by 12.20% on a yearly basis to 10.29 bln rupees. The bank aims for credit growth of 11% to 12% in the current financial year, the management said in the conference call.

 

In the quarter under review, credit cost for Punjab National Bank was 0.32%, much lower than 1.99% in the corresponding quarter a year ago. For the financial year ending March, the bank aims to achieve a credit cost of 0.5%.

 

The bank reported a rise in its credit-to-deposit ratio, which was 73.05% as on Jun 30, against 70.64% a year ago. The bank said that the credit-to-deposit ratio was comfortable. Also, the bank holds excess government securities worth 700-800 bln rupees.

 

When asked about the bank's plan to raise funds, the management said it plans to raise 50 bln rupees through qualified institutional placement in 2024-25. As on Jun 30, Basel-III capital adequacy ratio for the bank was 15.79%.

 

Regarding the latest draft norms on the liquidity coverage ratio, the bank said the liquidity coverage ratio would fall to 115% if these norms are taken in account, as against 125% LCR currently.

The central bank released draft guidelines on the Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio on Thursday. It proposes that banks should assign an additional 5% run-off factor on retail deposits opened by customers, who have internet and mobile banking facilities enabled, and tighten other norms on valuation of high-quality liquid assets as well as bring other sources of banks' liabilities under the liquidity coverage ratio framework.  End

 

Edited by Vandana Hingorani 

 

 

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