On Monday, State-owned Punjab National Bank (PNB) reported a 17.9 per cent year-on-year (YoY) drop in its net profit of Rs 621 crore, due to higher provisions.
The bank provided comparable numbers after consolidating those of United Bank of India and Oriental Bank of Commerce, with PNB’s own financials when they were separate entities. On April 1, the three banks merged to one entity and the September quarter numbers reflected that as well.
PNB’s total provisions during the quarter rose 11.3 per cent YoY to Rs 5,054 crore, of this provision for bad loans was at Rs 3,811 crore. The provisions on depreciation on investment were at Rs 570 crore.
During the quarter, Net Interest Income (NII) was 29.3 per cent up at Rs 8,393 crore, while domestic net interest margin was 3.34 per cent up at 75 basis points on a sequential basis. The bank’s asset quality was also improved in September quarter, with gross bad loans as a percentage of total advances declines 223bps YoY and, 68bps on a sequential basis to 13.43 per cent.
On September 3, the Supreme Court ordered an interim stay on classifying bad loans if not declared by August 31 and the banks were expected to use this relaxation during the quarter or till the final order is passed. PNB said that it has made a contingent provision of Rs 180 crore, in respect to accounts are not classified as non-performing, which includes provisions for net income of Rs 85 crore reckoned in the operating profit.