PNB Q2 Net at Rs 621 cr on fall in deposit cost, NPAs level

New Delhi: Punjab National Bank's net profit rose by 8 percent to Rs 621.03 crore in the July-September quarter of 2015-16 on lower deposit costs even as provisioning for bad assets increased.

The public sector lender's net profit was Rs 575.34 crore in the same quarter of previous financial year.

Total income grew 5.2 percent to Rs 13,702 crore during the second quarter of 2015-16, from Rs 13,020 crore earned in the same period of 2014-15.

"Our cost of deposits declined to 5.95 percent during the second quarter from 6.14 percent during the second quarter of previous fiscal," PNB CEO and Managing Director Usha Ananthasubramanian told reporters here.

"On the asset quality, gross non-performing assets reduced to 6.36 percent sequentially from 6.47 percent during the quarter ended June."

The provisioning for bad loans and NPAs rose to Rs 1,882 crore during the quarter under review against Rs 1,768 crore in the same period of last year.

On yearly basis, gross NPAs or bad loans as a percentage of gross advances as of September 2015 were higher from a year ago's 5.65 percent.

Net NPAs too increased at 3.49 percent during the second quarter review, as against 3.26 percent a year earlier; but down sequentially from 4.05 percent as of June 2015.

"Bank's fresh slippages have come down in the sense that there were no incremental slippages. And there was a better management of the interest rate scenario," said bank's Executive Director Ram S Sangapure.

"We are using treasury to make greater profit so are using a combination of all these things," he said.

Ananthasubramanian said that the bank is taking series of measures to minimise the bad loans.

"We have taken measures such as specialised sale (of bad assets), normally we go for auction. But now we are segregating the assets and then placing them for the auction

"We have measures such as the mega sale campaign, which had the segmented placement of the assets such as residential on certain dates, commercial on certain dates and industrial on certain dates," she said.

The bank chief also said that the success rate of auction is higher now and the bank is also considering to sell its bad loans to the Asset Reconstruction Companies (ARCs), as there have been no single asset sale to the ARCs in the last six years.

Sangapure said: "For the third quarter (Oct-Dec), we have finalised almost Rs 1,000 crore to be sold to the ARCs. We are planning to sell (bad assets) of almost about Rs 3,000-4,000 crore (to ARCs) this financial year (2015-16)."

"This is a very decidedly taken decision to strengthen the provision coverage ratio; the bank could have otherwise made huge profits. But it has been decided to increase the provision coverage ratio which is...A decision in taking care of the NPAs," said the CEO & MD.