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Punjab National Bank (PNB) on Wednesday posted the worst-ever quarterly loss by an Indian bank after an RBI diktat on asset quality review (AQR) led to a surge in provisions for bad debt.
PNB’s fourth-quarter net loss stood at ₹5,367 crore. This is the first time in recent history that the public sector lender is reporting a loss.
It had last reported technical losses in the mid-1990s after the takeover of New Bank of India.
PNB reported a net profit of ₹306 crore in the same quarter last fiscal.
For fiscal year 2015-16, PNB reported a net loss of ₹3,690 crore despite its operating profit coming in at ₹13,100 crore. For five consecutive years now, PNB has recorded operating profits in excess of ₹10,000 crore.
On Wednesday , PNB said it had provided ₹11,380 crore towards non-performing assets (NPAs) for the fourth quarter of fiscal year 2016.
This is significantly higher than the ₹3,281 crore provided for in the same quarter of fiscal year 2015. “We have now (in 2015-16) done the asset quality review in entirety… I have got a statement from auditors that there is no under-provisioning and that it (provisioning) has been made to their fullest satisfaction,” Usha Ananthasubramanian, MD and CEO, PNB, said. The March quarter saw more than 40 per cent of the entire quality review-identified bad assets provided for, denting the bottomline. PNB had recorded a net profit of ₹51.01 crore in the December quarter last fiscal year.
Asked if the worst was behind, Ananthasubramanian said there could be more pain in the June quarter.
“Nobody can claim they have cleansed the entire NPA book. It does not work like that at all. Provisioning pain will continue.
The good thing is our asset quality review is over. AQR has been good as it made banks look closely at stressed assets and work on them,” she said. There has also been some unanticipated provisioning to the tune of about ₹560 crore arising from the Punjab grain loss controversy and also the adoption of the UDAY discom scheme by Rajasthan.
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