New Delhi: Even after making adequate provisions towards the jeweller duo Mehul Choksi and Nirav Modi fraud as well as non-performing assets (NPAs), state-owned Punjab National Bank (PNB) narrowed its loss by nearly 65 per cent Rs 4,750 crore during the fourth quarter of the financial year ended March 2019.
“The bank earned a healthy operating profit of Rs 2,861 crore during the quarter and Rs 12,995 crore for the year as a whole, indicating strong fundamentals. Besides, the other reasons of our good performance is that the slippage has come down drastically due to huge recovery of a couple of key accounts—Jet Airways and IL&FS,” said PNB Managing Director Sunil Mehta, while announcing the financials here.
“We suffered a setback of Nirav Modi fraud last year, of which 50 per cent provisioning was done last year and 50 per cent have been made this year. We have taken a conscious step to clean up the book and take provision coverage ratio to a reasonably high level, which gives high degree of safety to our stakeholders,” he added.
The PNB stock fell by 3.47 per cent on the BSE to close at Rs 86.20 a share. During the day, it plunged 4.59 per cent to Rs 85.20.
The scam-hit lender had posted the highest ever loss of Rs 13,417 crore in the corresponding January-March period of 2017-18. “The bank’s total income during the March quarter of 2018-19 rose to Rs 14,725.13 crore from Rs 12,945.68 crore in the year-ago period,” the bank statement said.
The bank expects better performance in the next quarter from debt resolution. “Two-three major accounts have already been resolved by the NCLT, they were on the table, but that money could not be unlocked as against that we had to make 100 per cent provisioning,” he said.
On the assets front, PNB witnessed improvement as the gross NPAs were brought down to 15.50 per cent of gross advances at the end of March 2019 as against 18.38 per cent at the end of March 2018. “Net NPAs also came down to 6.56 per cent as against 11.24 per cent in the year-ago period,” the statement said.
In absolute value, gross NPAs stood at Rs 78,472.70 crore at the end of the financial year 2018-19, lower than Rs 86,620.05 crore reported in 2017-18. Net NPAs were valued at Rs 30,037.66 crore as against Rs 48,684.29 crore.
PNB also said it received capital infusion of Rs 5,908 crore from the government during March quarter of 2018-19 in lieu of over 80 crore equity shares on a preferential basis. On divergence in asset classification and provisioning for NPAs, in compliance with the Reserve Bank of India’s (RBI) risk assessment report for 2017-18, PNB has reported a gap of Rs 895.70 crore in respect of divergence in gross NPAs.
Talking about the way forward, Mehta said the focus area would be recovery of NPAs, conservation of capital, rationalising operation and sale of non-core assets, among others. The bank still has a handful of non-core assets and things are in the process. “We expect roughly Rs 1,000 crore from non-core asset sale,” he said.
He said the stake sale in PNB Housing Finance could not take place “because of some regulatory permission. We are yet to take a call on PNB Housing Finance stake sale. It will all depend on market conditions.”