PNB Q1 net up 12% at Rs 343 cr; NPAs rise on farm loan waiver

Gross NPAs stood at 13.66% in April-June period

Punjab National Bank has registered 12 per cent rise in net profit at Rs 343 crore during the first quarter of 2017-18, but farm debt waiver in some states has hit its bad debts.

The bank has got board approval to raise Rs 3,000 crore from equity and bonds each this financial year. Of this, the bank has already raised Rs 1,500 crore from bonds. As such, the bank has not asked the government for any capital this financial year, Sunil Mehta, MD & CEO, PNB told reporters here. 

The bank has not taken a decision to cut savings rate in line with the leader SBI, but its asset and liabilities committee (ALCO) will deliberate on the issue and take a call next week, Mehta said before the release of the RBI monetary review.

The bank plans to raise Rs 1,000 crore from the sale of its non-core assets, but has not taken a call to sell stake in PNB Housing, where its lock-in period ends in November.

PNB's credit grew 6.8 per cent during the quarter, Mehta said. However, credit to corporates grew just one per cent, while retail advances rose 16 per cent, showing subdued industrial performance.

In the previous quarter ended March 2017, PNB had earned a net profit of Rs 262 crore, recovering from a loss of Rs 5,367 a year ago.

Gross non-performing assets of the bank stood at 13.66 per cent in April-June, 2017 against 12.53 per cent in the previous quarter. However, these were slightly lower from 13.75 per cent a year ago.

Mehta said farm debt waiver in five states, change in the definition of NPA for medium, small and micro enterprises, post-December resulted in higher bad debts sequentially.

When asked that the state governments would reimburse the bank for debt waiver, he said that would come later.

He said the hope that there could be more farm debt waiver by states also come in the way of farmers paying the debt.

In absolute terms, gross NPAs rose to Rs 57,721 as on June 30, 2017, against Rs 55,370 crore as on March 31, 2017.

After providing for NPAs, net bad debts stood at 8.67 per cent at the end first quarter 2017-18 against 7.81 per cent at end fourth quarter, 2016-17.

In fact, lower provisioning also helped net profit to go up.

PNB had NPAs in nine of the 12 cases referred for insolvency. PNB provided for 35 per cent for these bad debts and has to provide another 15 per cent or Rs 1,000 crore to meet the RBI guidelines.

PNB shares ended 0.89 per cent higher at Rs 158.90 on BSE. During the day, it gained 2.85 per cent to Rs 162.