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Delhi-based public sector Punjab National Bank’s (PNB) net profit inched up 2.5 per cent during the three-month period ended December 31. However, its asset quality has deteriorated during the period under review.
The stock market showed its disappointment at PNB’s result, with its share plummeting around 8 per cent on BSE to close at ₹176.75.
Announcing its financial results on Tuesday, the bank said its net profit during October-December quarter grew to ₹774.56 crore from ₹755.41 crore in the same period in 2013-14. The bank’s Executive Director Gauri Shankar said that due to higher provisioning on account of bad debts (known as non performing assets or NPAs) and tax, profit was low.
PNB has made a total provision of ₹1,976.17 crore against ₹1,946.97 a year ago for bad debts and tax. In fact, the bank’s NPAs have risen both in terms of gross and net. Gross NPAs (as a percentage of advances) rose to 5.97 per cent from 4.96 per cent, while net NPAs grew to 3.82 per cent from 2.80 per cent.
Shankar said there were fresh slippages in almost all sectors but more specifically in infrastructure, oil and cement. However, “there is strong effort for recovery and it is giving good results”, he said. It may be noted that banks that have so far declared results, have shown fresh slippages and higher NPAs that reflect slower growth of the economy.
Additional liquidity On the Reserve Bank’s move to cut Statutory Liquidity Ratio (SLR) to 21.5 per cent from 22 per cent, Shankar said this will help in providing additional liquidity to banks. PNB expects additional liquidity of ₹2,500 crore. He also indicated that the Government is likely to infuse additional capital in the bank by March.
When asked about capital raising plans, Shankar said it could take place next fiscal. However, he refused to divulge the size and instrument for raising capital.
It may also be noted that the Centre has decided to lower its stake in public sector banks to 52 per cent against the existing 58 per cent. It currently holds 58.87 per cent in PNB.
On the way ahead, another Executive Director Ram S Sangapure said deposit and credit growth during January-March quarter of fiscal 2014-15 is likely to be 15 and 11 per cent, respectively. The focus will be on the retail and micro, small and medium sector.
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