Punjab National Bank (PNB) reported a 44% year-on-year drop in net profit to Rs 628.88 crore for the December 2022 quarter due to aggressive provisioning despite bad loans coming down. 

On a sequential basis, though, the state-run bank’s net profit was up 53.04% from Rs 411.27 crore in September 2022 quarter.

Provisions in the December quarter rose 40% to Rs 4,713.3 crore from Rs 3,353.5 a year ago even as gross non-performing assets (NPAs) reduced by 14% to 9.80%.

“Going by the performance so far, we should be in a position to close the entire current fiscal with net profit of Rs 2,000 crore,” Punjab National Bank managing director and chief executive officer Atul Goel  said.

While in the September quarter net profit was at Rs 411.27 crore, in the fiscal first quarter it was Rs 308 crore.

The bank’s fiscal third-quarter performance has improved in all its parameters, Goel said. “Our interest income has gone up by 17.6% YoY, the non-interest income by 23.6% and credit growth by over 13%. Our asset quality has also improved.”

The net interest income, which is the difference between interest earned and interest expended, stood at Rs 9,179.4 crore in the December 2022 quarter versus Rs 7,803.2 crore a year ago. The non-interest income grew YoY by 23.6% to  Rs 3,338 crore.  

Net interest margin (NIM) expanded to 3.16% in Q3FY23 from 2.93% a year ago.

Total income rose 17% to Rs 25,722 crore in the December quarter  versus Rs 22,026 crore a year ago.

The bank’s asset quality improved with the gross NPAs declining to 9.76% (Rs 83,584 crore in value terms) from 12.88% a year ago. It improved by 312 basis points on year basis and 72 bps on quarter basis. 

Net NPAs fell to 3.30% from 4.90% on a YoY basis.

The fresh slippages rose marginally to Rs 3,865 crore from Rs 3,831 crore. The provision  coverage ratio improved by 332 basis points to 85.17%.

“We are sticking to our recovery and upgrade target of Rs 32,000 crore for the year. This quarter we were expecting some accounts to resolve, but now it will get resolved in the fourth quarter. So, the remaining Rs 10,000 crore of recoveries will happen in the fourth quarter,” Goel explained.

PNB’s gross advances grew 13.43% YoY to Rs 856,757 crore. The core retail credit of the bank grew YoY by 13.54%  to Rs 130,421 crore. While home loans grew by 9.16% to Rs 78,684 crore, vehicle loans rose by 39.15%  to Rs 15,404 crore and personal loans by 40.40% to Rs 15,805 during this period.

The bank’s domestic NIM improved to 3.30% at the end of the quarter from 3.01% in the year-ago period as the bank was able to price its loans higher. NIM is the net of interest that the bank expends on its deposits and the interest it earns on its loans.

The yield on advances rose to 7.35% from 7.29% a year ago as interest rates began to climb after a series of rate hikes by the Reserve Bank of India (RBI).

PNB’s deposits rose to Rs 12.1 lakh crore as of December 2022 as against Rs 11.2 lakh crore in the year-ago quarter.

The lender's capital adequacy ratio during the third quarter stood at 15.15% with CET-1 ratio at 10.84%.