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Punjab National Bank (PNB) sprang a surprise on the equity market and the banking fraternity with its stellar financial turnaround in 2016-17, which was made public on Tuesday by the new Chief Executive Sunil Mehta.
A concerted effort to reduce NPAs (non-performing assets) and fresh slippages helped PNB report a bottomline turnaround in the fourth quarter as well as the entire fiscal 2016-17 (FY17). For the quarter ended March 31, 2017, the public sector bank reported a net profit of ₹262 crore as against a net loss of ₹5,367 crore in the same quarter last fiscal.
In 2016-17, PNB recorded a net profit of ₹1,325 crore as against net loss of ₹3,974 crore in the previous fiscal.
Although the bank had a relatively good FY17 due to proactive NPA management, it is still not entirely out of the woods on the bad loans front.
Gross NPAs as a percentage of advances stood at 12.53 per cent and net NPAs at 7.81 per cent as of end-March 2017. This has prevented the bank from declaring any dividend for 2016-17.
The turnaround in bottomline in FY17 could be attributed to significant NPA reduction of ₹22,863 crore, which was nearly double the NPA reduction of ₹12,129 crore seen in 2015-16, Sunil Mehta, who had recently taken charge as Managing Director and CEO of PNB, told newspersons here.
Mehta, nearly a week into his new role, also announced that fresh slippages had nearly halved to ₹22,415 crore in FY17 from ₹42,252 crore in the previous fiscal.
NPA reduction is an outcome of several factors, including cash recovery and write-offs. Cash recovery in 2016-17 more than doubled to ₹10,677 crore (₹4,262 crore), Mehta said.
The overall provisioning for NPAs in the fourth quarter stood at ₹4,910 crore, a 54.4 per cent decline over ₹10,773 crore provided for the same quarter last year.
For the entire 2016-17, NPA provisioning declined 27.8 per cent to ₹12,704 crore, from ₹17,591 crore in the previous fiscal.
On Tuesday, PNB’s shares closed at ₹173.20, up 3.94 per cent over the previous close of ₹166.80 at the National Stock Echange.
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