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A sharp jump in the provision for employee benefits (gratuity and second option for pension) has impacted Punjab National Bank's fourth quarter financial performance in 2010-11.
PNB's net profit for the quarter grew 5.8 per cent to Rs 1200.89 crore (Rs 1,135.06 crore) even as total income saw a whopping 31 per cent increase to Rs 8,586 crore.
For the fourth quarter (January-March 2011), PNB has provided Rs 752 crore towards employee benefits as against Rs 81 crore in the same previous year period.
“Higher employee benefits provisioning had an impact on our Q4 operating profit also”, Mr K. R. Kamath, Chairman and Managing Director, PNB, told reporters here after a board meeting to consider the financial results. PNB's operating profits for the fourth quarter grew 7.5 per cent to Rs 2,607.52 crore (Rs 2,332.50 crore).
PNB's fourth quarter bottom-line growth was also weighed down by the absence of extraordinary income of Rs 81.45 crore that the bank registered in the fourth quarter of 2009-10.
PNB had in 2009-10 booked an exceptional income of Rs 153 crore (including Rs 81.45 crore in Q4) from stake sale in UTI Asset Management Company and also in PNB Housing Finance.
The other provision for the quarter under review stood at Rs 1,307.44 crore (Rs 1,197.46 crore) including a provision for NPAs of Rs 544 crore (Rs 467 crore). Meanwhile, the board of directors of PNB declared a dividend of 220 per cent, which is Rs 22 on equity share of Rs 10 each. The bank had paid a dividend of 220 per cent in 2009-10 as well.
Full year performance
For the entire fiscal 2010-11, PNB reported a 13.52 per cent increase in net profit at Rs 4,433.49 crore (Rs 3,905.37 crore). Total provision towards employee benefits (gratuity and second option for pension) stood at Rs 1,826 crore. Treasury income in 2010-11 was considerably lower at Rs 299 crore (Rs 803 crore in 2009-10)
Mr Kamath maintained that there would be pressure on net interest margins (NIM). He gave a NIM guidance of 3.5 per cent for 2011-12. PNB had closed 2010-11 with a NIM of 3.96 per cent, higher than the 3.57 per cent seen in end March 2010.
“We did much better than the NIM guidance of 3.5 per cent that was given for 2010-11. Our endeavour for 2011-12 would be to hold on to 3.5 per cent “, he said. PNB on Wednesday hiked its base rate for lending by 50 basis points to 10 per cent and its benchmark PLR to 13.5 per cent.
PNB's gross NPA levels saw a big jump in 2010-11 to close at Rs 4,379.39 crore, reflecting a 36.24 per cent increase over Rs 3,214.41 crore in end March 2010.
This gross NPA as a percentage of advances was 1.79 per cent, which is within the comfort zone of the top management. Provision towards NPAs for 2010-11 stood at Rs 2,003.74 crore (Rs 999.43 crore).
On the RBI move to increase savings bank rate by 50 basis points, Mr Kamath said that this would lead to addition in the cost of funds of 15 basis points.
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