Punjab National Bank on Friday reported a 52.5 per cent drop in net profit to Rs 505 crore for the three-month period ending September 30 from Rs 1,065.58 crore earned in the corresponding period last year. “Profit was down due to higher provisioning for depreciation on investments and standard assets,” K. R. Kamath, Chairman and Managing Director of the bank said.

The bank made a provision of Rs 443.10 crore for depreciation on investments, which is around 3,300 per cent higher than in the second quarter of 2012-13, while provision for standard assets rose over 400 per cent to Rs 180.93 crore.

After the results, the bank’s share tumbled over 5 per cent in intra-day trading on the BSE. After touching a low of Rs 515.55, it closed at Rs 522.05, over 4 per cent lower than Thursday’s closing of Rs 545.

Pinning hopes on the green shoots of recovery in the economy, PNB expects its financials to improve in the second half of this fiscal. “The consolidation phase in the bank is over and now the focus will be on more growth. Similarly, there will be a base effect, too,” Kamath said.

Credit growth

Although overall net credit growth was a mere 6.5 per cent, of significance was the 14.58 per cent increase in retail loans, especially housing and vehicle. Housing loans grew over 15 per cent and car/vehicle loans by around 10 per cent. The bank has set up 80 branches to exclusively disburse retails loans. The bank expects the good growth in retail to continue. Though the Government is yet to state the total quantum of additional capital that can be used for loans to consumer goods at lower rates, Kamath expects that to be 10 per cent of the total amount.

This, he said, will help in overall credit growing at 15 per cent, in line with the banking industry.

Non-performing assets

Reflecting the bleak economic conditions, the gross NPA (non-performing asset) ratio as a percentage of advances rose to 5.14 per cent during the first six months (April-September) of the current fiscal, against 4.66 per cent in the same period last year.

At the same time, the net NPA ratio as on September 30 grew to 3.07 per cent against 2.69 per cent.

Commenting on the result, Vaibhav Agarwal, Vice-President (Research-Banking) with Angel Broking, said, “We remain cautious on the asset quality performance of state-owned banks, given the prevailing macro environment.”

Deposit rates

Keeping in line with the market, PNB hiked the rates on select deposits by 25-50 basis points. However, the public sector bank said it had no plan to raise lending rates.

The new rates will be effective from November 11. The rate of interest on fixed deposit of less than Rs 1 crore has been increased by 25 bps to 7 per cent in the maturity bucket of 91 days to 179 days.

Deposit of 271 days to less than one year will now earn 50 bps more, at 8 per cent. For deposits of one year and above up to 10 years, a uniform 9 per cent will be applicable.

However, for domestic term deposits between Rs 1crore and Rs 10 crore, the interest rate has been lowered to 8 per cent from 8.25 per cent for maturity period of 180 days to 270 days.

For NRE term deposits of one-to-three years, the rate has been hiked to 9 per cent from 8.75 per cent.

> shishir.s@thehindu.co.in

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