PNB Q2 results: Profit falls 18% to Rs 621 crore

KOLKATA: Punjab National Bank on Tuesday reported a 18 per cent fall in net profit for the September quarter due to rise in provision to cover bad loans and Covid related risk even as its net interest margin improved.

The country's second largest state-owned lender posted a net profit of Rs 621 crore for the quarter under review compared with Rs 757 crore in the year ago period. The bank's operating profit grew 7 per cent at Rs 5675 crore on nearly flat business growth.

Provision against bad loans was Rs 3811 crore against Rs 3253 crore for the same period.

Managing director SS Mallikarjuna Rao said the bank is expecting 4-6 per cent rise in advances in the second half of the fiscal with the economic activities getting back into track setting aside the pandemic-related disruptions. It's credit growth was merely 0.6 per cent year-on-year to Rs 716924 crore at the end of September.

Rao said that the bank has not renewed cost deposits and certificates of deposits worth Rs 27000 crore which helped its NIM to improve to 3.21 per cent in second quarter from 2.58 per cent in the year ago period.

"We are not carrying any high cost deposits now," he said.

The CASA (current and savings account) ratio, which is key to profitability, improved 253 basis points over the year to 44.1 per cent.

Rao said that the Covid-led risk is likely to be lower than what was expected earlier. Gross non-performing assets ratio was at 13.43 per cent at the end of September as against 16.76 per cent a year back while net NPA stood at 4.75 per cent as compared with 7.65 per cent over the same period.

PNB's share price fell 0.36 per cent to Rs 27.80 on BSE even as the Sensex gained 1.27 per cent to 40,261 points.

Its capital adequacy ratio dipped to 12.84 per cent at the end of the quarter under review from 14.07 per cent in the year ago period.

The bank is preparing to raise Rs 7000 crore through share sales to institutional investors next months as part of its Rs 14000 crore capital raising plan this fiscal.