Reversing a three-quarter losing streak, state-owned Punjab National Bank (PNB) Tuesday reported a net profit of Rs 247 crore for the three months to December 2018 on speedier recoveries and a slide in bad loans. The lender had posted a net profit of Rs 230.11 crore during the similar October-December quarter of the previous fiscal.
In February 2018, a fraud of over Rs 14,000 crore by jeweller duo Nirav Modi and Mehul Choksi in connivance with a few bank officials had come to light. "Profitability from operations is going well, the asset quality is improving. The way forward, our provisioning requirement from the one-off incident (fraud) is no more.
"I recall the last incident when we talked to you in February 2018. We were passing through the most turbulent time in the banking history. I am happy to announce...that we are back in black," PNB MD and CEO Sunil Mehta told reporters at a press conference here. PNB had logged a net loss of Rs 13,416.91 crore for the fourth quarter of 2017-18 - the biggest ever by any domestic lender - after the scam was revealed. It had posted a net loss of Rs 4,532.35 crore and Rs 940 crore during the second and first quarters of the current fiscal year (2018-19), respectively.
Mehta said the bank has consistently brought down its gross non-performing asset (NPA) levels from as high as over 18 percent at the end of March 2018 to 16.33 percent at December 2018. He said the bank hopes to bring down its gross NPA by 200 basis points (2 percentage points) to around 14 percent by the end of this fiscal (March 2019).
Compared yearly, gross NPA of 16.33 percent was higher than the 12.11 percent at December 2017. Net NPAs fell to 8.22 percent from 11.24 percent at March 2018 but higher from the year ago's 7.55 percent (December 2017).
Value-wise, gross NPAs of the bank stood at Rs 77,733.33 crore as on December 31, 2018 while net NPAs totalled Rs 35,675.12 crore. Thus, provisioning for bad loans for the December quarter came down to Rs 2,565.77 crore as against Rs 2,996.42 crore in the same period a year earlier. The bank made recoveries of Rs 8,445 crore in the first quarter, Rs 3,739 crore in the second and Rs 4,424 crore in the third quarter of this fiscal. However, there were fresh slippages worth Rs 3,324 crore in the December quarter.
"The bank is resilient enough and there were better recoveries to bounce back. The recovery in the first quarter was historical for the industry at Rs 8,445 crore. Our recoveries for the three quarters (of 2018-19) is almost three times the recovery of the full year last fiscal of Rs 5,617 crore," Mehta said. "Total risk weighted assets (RWAs) reduced by more than Rs 89,000 crore year on year," he added.
Income of the bank, however, came down by 2.64 percent to Rs 14,854.24 crore in the third quarter as against Rs 15,257.50 crore a year ago. Talking about the bad accounts undergoing insolvency proceedings at the National Company Law Tribunal (NLCT), Mehta said "My provision coverage ratio for NCLT is 75 percent. All the major accounts are on fast track (for recovery). Rs 8,000 crore is expected to be recovered in the current quarter (ending in March 2019) and we have given a recovery guidance of Rs 22,000 crore for the entire fiscal."
The bank hopes to recover around Rs 5,000-6,000 crore from Essar Steel and Bhushan Power and Steel which are under the insolvency process. On selling of its non-core assets, he said, "We may not sell anything if we don't think we are not getting a good offer."
Declining to offer any comment on reports of selling its 32.8 percent stake in subsidiary PNB Housing Finance to US-based Carlyle Group, he said the process is still on. The private equity firm currently owns 32.4 percent in the housing financier. State-owned lenders are selling-off their non-core assets as part of the banking reforms envisioned by the government.
Among other business dynamics, the bank has reported a fall in its global business and has closed down operations in three locations while the Hong Kong branch has been rationalised. The overseas business of the bank fell by 64.7 percent to Rs 37,144 crore as against Rs 1,05,168 crore at December 2017. In USD terms, it was down by 67.7 percent at USD 5,323 million from USD 16,465 million.
The gross domestic business rose by 7 percent to Rs 10,89,286 crore from Rs 10,17,782 crore. "Our domestic deposits have grown and overseas advances have shrunk. So it is more domestic which we are focussing right now," Mehta told reporters. The provision coverage ratio stood at 68.85 percent as on December 31, 2018. Stock of Punjab National Bank closed 0.55 percent higher at Rs 73.55 apiece on BSE.
(With inputs from agencies.)