PNB Q3 loss at Rs 492 cr as NPA provisioning spikes

New Delhi, Feb 4 () Punjab National Bank (PNB) on Tuesday reported a standalone net loss of Rs 492.28 crore for December quarter 2019-20 as provisioning for bad loans was raised substantially.

The state-owned lender had posted a net profit of Rs 246.51 crore for the same period a year ago. In September quarter 2019-20, the bank logged a profit of Rs 507.05 crore.

Total income during the quarter under review was at Rs 15,967.49 crore as against Rs 14,854.24 crore in the year-ago same period, PNB said in a regulatory filing.

The bank hiked the provisioning for bad loans to Rs 4,445.36 crore for the quarter under review against Rs 2,565.77 crore parked aside for the year-ago period.

On consolidated basis, the lender reported a net loss of Rs 501.93 crore for the quarter under review. However, there was a net profit of Rs 249.75 crore in the same period of 2018-19, the bank said.

Income was at Rs 16,211.24 crore, up from Rs 15,104.94 crore earlier. Provisioning for bad loans was up at Rs 4,471 crore for December quarter from Rs 2,636.09 crore in year-ago same period.

Consolidated results of PNB include earnings from its five subsidiaries, seven associate companies and one joint venture.

About one of the subsidiaries -- PNB Insurance Broking -- the lender said steps are being taken for winding up the company as the licence has already been surrendered in February 2011.

On the asset quality front, the bank continued to face challenges with gross non-performing assets (NPAs) at 16.30 per cent of gross advances as at December-end 2019, slightly down from 16.33 per cent by the year-ago same period.

Net NPAs or bad loans were at 7.18 per cent, down from 8.22 per cent by December 2018.

In absolute terms, gross NPAs of the bank stood at Rs 76,809.20 crore by the end of December quarter of this fiscal, lower than Rs 77,733.33 crore by the same period of 2018-19.

Net NPAs were Rs 30,518.92 crore as against Rs 35,675.12 crore.

The New Delhi-headquartered lender also reported widening of net loss for 2018-19 to Rs 11,335.90 crore from that reported earlier (at Rs 9,975.49 crore) because of divergence in NPA provisioning as assessed by the RBI and what the bank had reported.

For 2018-19, PNB had reported gross NPAs or bad loans of Rs 78,472.70 crore while the RBI reported it to be at Rs 81,089.70 crore, thus leading to a gap of Rs 2,617 crore.

Likewise, net NPA reported by bank stood at Rs 30,037.66 crore in 2018-19, while the RBI assessed it at Rs 32,654.66 crore.

Divergence in provisioning for 2019-20 was also adjusted to Rs 2,091 crore.

As per RBI directive, banks are required to disclose divergence from prudential norms on income recognition, assets classification and provisioning in case the additional divergence in assets classification and provisioning for NPAs assessed by the RBI exceeds 10 per cent of the reported profit before provisions and contingencies.

Or if the additional gross NPAs identified by the RBI exceeds 15 per cent of the reported incremental gross NPAs, banks have to report the divergence figures.

"The board of directors in its meeting held on September 5, 2019 has considered and accorded its in-principle approval for amalgamation of the Oriental Bank of Commerce and United Bank of India into Punjab National Bank as advised by the alternative mechanism of government and to commence process of amalgamation subject to all applicable approvals," PNB said in the filing.

The provision coverage ratio as on December 31, 2019 stood at 75.27 per cent.

On the latest tax provisions for corporates, it said the bank is in the process of evaluating the option to opt for lower tax rate. The government through an ordinance in September 2019 had provided for an option to migrate to a lower tax regime for the corporate sector given the condition they forego existing tax exemptions.

PNB stock closed at Rs 56.75 on the BSE, down 1.05 per cent. KPM DP KPM ANU ANU