PNB SWINGS TO PROFIT IN Q4 AIDED BY LOWER PROVISIONS

Punjab National Bank (PNB) on Tuesday reported a fiscal fourth-quarter profit of ₹261.90 crore, compared to a loss of ₹5,367.14 crore a year ago, as it set aside a lower amount to cover bad assets and wrote back provisions for employee pensions and gratuity.

The bank said it revalued the provisions related to pension and gratuity funds and found that it carried an excess of ₹2,026.6 crore, which it decided to write back. Without this one-off gain, the bank would have reported a net loss of ₹1,764.7 crore. A poll of 22 analysts tracked by Bloomberg had the bank’s profit pegged at ₹447.1 crore in the March quarter.

To be sure, while the bank’s write back is within the ambit of accounting standards, its external auditors have drawn attention to this note ‘without qualifying opinion”.

The other key ingredient to the rise in profit was lower provisions against loans. The bank set aside ₹5,753.3 crore in the March quarter, down 41.7% from a year ago.

About one-third of the total addition of fresh bad loans in the March quarter came from the agriculture loan book as news about UP’s farm loan waiver came out. Gross non-performing assets (NPAs) stood at ₹55,370.45 crore at the end of March, marginally lower compared to three months ago and a year ago.

The bad loan ratio stood at 12.5% in March, compared with 13.7% three months earlier. While its provision coverage ratio, too, improved to 58.7%, the net bad loans ratio stood at 7.81% at the end of March.