Punjab National Bank (PNB) came up with disappointing results for the March quarter. The gross non-performing asset (GNPA) of the bank rose by 35 per cent during the quarter ; only Central Bank of India and Punjab & Sind Bank had higher slippages in gross NPAs.
Even after providing a 62 per cent higher provision for NPAs than in the December quarter, the net NPA ratio rose by 41 basis points sequentially to 1.52 per cent .
The restructured loans have also jumped by another Rs 8,100 crore in the quarter, taking the outstanding restructured portfolio to Rs 25,000 crore.
This portfolio accounted for 8.5 per cent of the global advances.
Around 8.8 per cent of the restructured assets have become non-performing . Much of the restructuring happened in the 2011-12 fiscal. Power (State electricity boards) and aviation were the major segments where PNB witnessed higher restructuring .
Apart from loan quality, decline in margins is also a reason for concern . In spite of a 21 per cent growth in the loan book, the net interest income grew in single digits .
While the cost of deposits rose due to a sharp jump in certificate of deposit rates during this quarter, the yield on advances declined for the bank. The relief of CRR cut was also not seen on the margins.
The yield on advances declined by close to 50 basis points to 11.4 per cent during the quarter when there weren't any cuts in rates .
The bank, however, managed to keep tab on operating expenses and the cost-to-income ratio declined to 36 per cent, partly due to a high base last year when PNB had to provide for pension and gratuity expenses . Lower operating expenses, treasury profits and marked-to-market gains on the investment book aided the net profit growth of 18 per cent.