A sharp increase in provision towards bad loans cast a shadow on Punjab National Bank’s first quarter financial performance this fiscal.
Despite the bad loan situation, the bank reported a 12.72 per cent increase in bottomline for the June quarter at Rs 1,246 crore (Rs 1,105 crore).
This is also higher than the 3.44 per cent increase in net profit recorded in the same quarter last year.
The bottomline performance for the June quarter this year was buoyed by treasury trading profits of Rs 88 crore (Rs 48 crore) and write-back of depreciation in investments to the tune of Rs 105 crore (Rs 133 crore provision for depreciation).
The increase in non-performing assets (NPA) for the quarter under review was not disproportionate to the state of the economy and the stress in various sectors, said Mr K.R Kamath, Chairman and Managing Director.
He, however, said that increase in bad loans was a matter of concern for the bank. All efforts are being made to minimise the adverse impact of bad loans on the profit and loss account, Mr Kamath said.
“I don’t think there is any concentration in delinquencies, either sectorally or geographically,” he said, adding that cash recoveries have been robust despite slippage in bad loan situation. For the June quarter, PNB made cash recoveries of Rs 570 crore (Rs 470 crore in June quarter of 2011), For the entire financial year 2011-12, the cash recoveries stood at Rs 1,675 crore.
“While there has been an increase in NPA, there has been good amount of recoveries and upgradation happening. The bank is now focused on recoveries,” said Ms Usha Ananthasubramanian, Executive Director.On PNB recording a lower net interest margin (NIM) of 3.6 per cent against 3.84 per cent in same quarter last year, Mr Kamath said that sequentially the NIM has improved from 3.5 per cent in January-March quarter this year.
“NIM has fallen when compared to the quarter last year primarily because our cost of funds has gone up. We have not been able to pass it on to our borrowers”.
PNB has also made a higher provision of Rs 640 crore towards retirement benefits of employees as against Rs 508 crore in the June quarter.
On capital raising, Mr Kamath said there is no immediate plan to raise fresh capital, especially from the public markets.