PNB Q2 profit beats estimates, rises 2% to Rs 561 cr; fresh slippages decline

Moneycontrol News

Public sector lender Punjab National Bank has reported better-than-expected growth of 2 percent for the quarter ended September 2017 and even its asset quality improved over previous quarter.

Profit for the quarter increased to Rs 560.6 crore, against Rs 549 crore in same quarter last fiscal.

Net interest income during the quarter grew by 3.5 percent year-on-year to Rs 4,015.2 crore, with total advances growth of 4.2 percent at Rs 4.1 lakh crore.

Gross non-performing assets (NPA) as a percentage of gross advances were lower at 13.31 percent compared with 13.66 percent in previous quarter and net NPA also declined to 8.4 percent, from 8.67 percent on sequential basis.

In absolute terms, also gross NPA were lower at Rs 57,630 crore compared with Rs 57,721 crore and net NPA declined to Rs 34,570 crore from Rs 34,573 crore on quarter-on-quarter basis.

Sunil Mehta, MD & CEO, PNB told CNBC-TV18 that fresh slippages for the quarter stood at Rs 3,500 crore (which was far better than analyst estimates), against Rs 6,649 crore in previous quarter.

The slippages for first half of FY18 were at Rs 8,449 crore, he added.

He said the divergence from RBI audit was less than Rs 300 crore.

Numbers were ahead of estimates. Profit was estimated at Rs 366 crore and net interest income at Rs 3,913.2 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Provisions and contingencies for the quarter fell 6.4 percent sequentially to Rs 2,441 crore, but increased 25 percent on year-on-year basis.

Provision coverage ratio improved to 59.23 percent in quarter ended September 2017, from 58.23 percent in June quarter.

While addressing press conference, he said the bank was adequately capitalised for FY18, but it might sell some non-core assets without diluting promoter’s required stake. "We can bring down stake as a promoter in PNB Housing to 30 percent."

Domestic net interest margin for the quarter also improved to 2.62 percent, compared with 2.56 percent in previous quarter.

"We are looking to consolidate our own bank before consolidating other banks with self," Mehta said.

Meanwhile, the board of directors on Thursday has authorised the management of the bank to partially sell its stake in PNB Housing Finance.

PNB Housing Finance will continue to be core associate of Punjab National Bank.

"Consequent upon the exercise of call option by the Principal Group, board has approved to offload its entire stake in Principal PNB Asset Management Company and Principal Trustee Company to the Principal Group," the bank said.

As of September 2017, PNB holds 38.86 stake in PNB Housing Finance.