Punjab National Bank’s fiscal first quarter net profit rose four times to Rs 1,255.4 crore due to a sharp decline in bad loans and higher core income. 

In the year-ago quarter, the state-owned bank had reported a net profit of Rs 308.4 crore. Sequentially, the profit rose 8.3%.

Total income in the quarter ended June 2023 rose 34% to Rs 28,579 crore versus Rs 21,294 crore a year before.

NII and NIM

Net interest income, which is the difference between interest earned and interest expended, rose 26% to Rs 9,504.3 crore from Rs 7,542.8 crore in Q1 of FY23. 

Other income rose 0.3% to Rs 3,433.8 crore quarter-on-quarter. 

The bank’s global net interest margin increased to 3.08% in the quarter ended June 2023, from 2.79% a year ago.

Asset quality

The bank's asset quality improved, with gross non-performing asset (NPA) ratio declining to 7.73% from 8.74% in the previous quarter and 11.27% a year ago. 

Net NPA ratio fell to 1.98% from 2.72% sequentially and 4.28% a year ago.

The slippage ratio in the June quarter improved to 1.19% from 3.75%.

Punjab National Bank managing director and CEO Atul Kumar Goel said the healthy asset quality has prompted the bank to revise its guidance for gross NPAs to 6.5% and net NPAs to 1% for FY24.

Provisions

Provisions declined 17.2% to Rs 3,965.26 crore year-on-year from Rs 4,790.19 crore in the same quarter last year.

Provision coverage ratio improved by 679 basis points YoY to 89.83% as on 30 June from 83.04% a year before.

Advances

The bank’s loan book grew 16.3% to Rs 8,63,731 crore year-on-year, from Rs 7,42,643 crore.

The bank's core retail advances rose 16.2% year-on-year, led by growth in personal loan segment by 46.4% year-on-year. Vehicle loans rose 27% year-on-year.

Deposits

Deposits for the fiscal first quarter rose 14.18% year-on-year to Rs 12.98 lakh crore from Rs 11.37 lakh crore. 

Savings deposits increased to Rs 4.64 lakh crore as on June 2023 from Rs 4.47 lakh crore a year before.

The bank is eyeing 12-13% growth in credit and 10-11% growth in deposits for FY24, Goel said.

Capital adequacy

The capital adequacy ratio improved to 15.54% compared to 14.82% in the same quarter a year ago.

"We are confident of achieving double profitability as compared to last year. In Q1 FY24, we have already achieved Rs 1,255 crore. As far as revision of guidance is concerned, we will wait and see the performance of the quarter ending September," Goel said.