PNB Q2 profit rises 22% to Rs 621 crore; asset quality improves

Punjab National Bank reported a standalone net profit of Rs 620.81 crore for the quarter ended September 30, 2020, marking a 22.43 per cent increase from Rs 507.05 crore in the year-ago period. For the first half of the current fiscal, the public sector lender saw its net profit declining to Rs 929.26 crore from Rs 1,525.68 crore, a drop of 39 per cent on annual basis.

Net interest income (NII), the difference between interest earned and interest expended, at the end of second quarter of financial year 2020-21 stood at Rs 8,393.20, as opposed to Rs 4,263.84 in the year ago period. Interest earned during the quarter under review stood at Rs 20,945.84 crore, where interest expended was Rs 12,552.64 crore.

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Operating profit for the period under review was Rs 5,674.91 crore, as opposed to Rs 3,561.95 crore in the corresponding quarter last fiscal. Provision and contingencies rose to Rs 4,696.15 crore, compared to Rs 2,928.90 crore. Of this, Rs 3,811.17 was provisions for non-performing assets (NPAs), up from Rs 3,253.32 crore in the corresponding quarter last year.

Capital adequacy ratio for the September quarter of this fiscal was 12.84 per cent, with CET 1 ratio at 9.53 per cent and Additional Tier 1 ratio at 0.8 per cent.

PNB reported an improvement in asset quality, with amount of net NPAs at Rs 30,919.84 crore. Net NPAs as a per cent of net advances during Q2 FY21 stood at 4.75 per cent, as against 7.65 per cent in Q2 FY20 and 5.39 per cent in Q1 FY21. Gross NPAs as a per cent of gross advances was 13.43 per cent, compared to 16.76 per cent in the year-ago period and 14.11 per cent in the previous quarter.

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"In the interim order dated September 03, 2020, Hon'ble Supreme Court of India... has directed that accounts which were not declared as NPA till August 31, 2020, shall not be declared as NPA till further orders. Based on the same, the bank has not classified any account as NPA which was not NPA as on August 31, 2020. As a matter of prudence, the bank has made a contingent provision of Rs 180 crore in respect of such accounts that were not classified as NPA which includes provision for interest income aggregating to Rs 85 crore reckoned in operating profit," PNB told the stock exchanges.

PNB said that it is evaluating the conditions arising out of the COVID-19 crisis on ongoing basis as the situation continues to be uncertain. The major identified challenges for the bank would arise from eroding cash flows and extended working capital cycles, the lender stated, adding that it is gearing itself on all the fronts to meet these challenges.

The public sector bank further added that it has extended resolution timeline for eight stressed accounts, involving Rs 1,790.06 crore, in accordance to a circular issued by the Reserve Bank of India.

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