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Punjab & Sind Bank (PSB), a public sector bank, on Monday reported a 17.82 per cent increase in net profit for Q1 ended June 30, 2022 at ₹205 crore.
However, the latest bottomline performance was 41 per cent lower than the net profit of ₹346 crore recorded in Q4FY22.
Asked as to why the bank faced sequential decline in profits in Q1FY23, Swarup Kumar Saha, Managing Director & CEO, PSB said the performance for the quarter under review was weighed down by a marked-to-market loss of ₹109 crore. He highlighted PSB had in Q!FY22 recorded treasury gain of ₹130 crore.
This is the first quarter (June 2022) that the bank faced overall treasury loss largely due to spike in G-sec yield rates in the system. From April this year onwards, there has been an increase in interest rates, largely resulting from tightening of monetary policy by the RBI.
Despite the bank taking a MTM loss of ₹109 crore in Q1, Saha expressed confidence that it would be able to this fiscal achieve bottomline of about ₹1039 crore — the same level as recorded in 2021-22.
Saha said he was giving a somewhat muted profit guidance primarily on account of uncertainty in how interest rates will move in coming days and the MTM impact that it could have on the balance sheet.
“Every bank has had to face impact of MTM loss in the June quarter. This has been across the industry. We too had to face this. We have booked the entire amount (MTM loss) as RBI has not permitted banks to stagger it. As of now, we feel we are adequately cushioned. We feel the impact would not be substantial incrementally from June onwards”, Saha said post the announcement of Q1 results of the bank.
It maybe recalled that PSB had last fiscal staged a turnaround and reported a net profit of ₹1,039 crore.
Capital raising
On capital raising, Saha said the bank was adequately capitalised for now, but may go in for some capital mop up in Q4FY23.
He said PSB is looking to transfer five non-performing assets (NPA) accounts amounting to ₹528 crore to the newly set up, National Asset Reconstruction Company Ltd (NARCL).
Total income of PSB for Q1FY23 stood at ₹1915 crore.
Saha said the bank was aiming to bring down the gross NPA, which stood at 11.34 per cent now, to below 10 per cent by end March 2023. Net NPA, which was at 2.56 per cent as of June 2022, would be brought below 2 per cent as of end March 2023, he added.
PSB was eyeing retail credit growth of 15 per cent this fiscal.
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