Punjab & Sind Bank has turned profitable in the January-March period after posting losses for eight straight quarters as it laid focus on recovery of bad loans and arresting fresh slippages.

The state-run bank reported a net profit of Rs 161 crore in the March quarter versus a net loss of Rs 236.3 crore a year ago, signaling that its worst phase is possibly over.

Managing director and chief executive S Krishnan said that he now expects the bank to post profit in each quarter of this fiscal. This means that the bank would move to full-fiscal profitability. In FY21, a year impacted by the coronavirus pandemic, Punjab & Sind Bank widened its loss to Rs 2,732.9 crore versus Rs 990.8 crore a year ago.

"Though it has been challenging times, we were able to make a reasonable amount of recoveries. We were also able to arrest slippages to a great extent. This has helped in bringing down the credit costs, which enabled us to register profit," the bank’s managing director and CEO S Krishnan told reporters.

Outlining the steps the bank has taken to sustain future profitability, Krishnan said the bank has created a dedicated department at head office which will be monitoring the accounts that are under stress very closely. “We have formed a task force at zonal offices which will be in touch with customers directly. That way, we will be able to ensure that we are able to arrest the slippages."

The bank has also set up a separate recovery vertical and a stressed asset management vertical.

Bad loans

The bank’s gross non-performing assets (NPAs) fell to 13.76% of its advances as of 31 March 2021, from 14.18% a year ago. Net NPA halved to 4.04% from 8.03% a year earlier.

But sequentially, gross NPAs grew from 13.14% after Supreme Court vacated an earlier order that had directed lenders not to classify an account as NPA if it was not so until 31 August 2020. Net NPA, too, jumped from 2.84% to 4.04%.

Provisioning

The bank has provided for 83% of its bad loans. Provisions for bad loans were down at Rs 19.93 crore in Q4 FY21 compared to Rs 683.80 crore a year ago. Cash recoveries in the fourth quarter stood at Rs 531.19 crore, while for the full year it was Rs 926.57 crore.

The bank upgraded Rs 76.94 crore of loans during the March quarter. Fresh slippages stood at Rs 1,509.66 crore while provision coverage ratio (PCR) improved to 82.89% from 66.74% in March 2020.

Net interest margin

The bank’s net interest margin (NIM) declined to 1.7% in the March quarter from 1.87% a year ago. The provisions and contingencies fell to Rs 4.38 crore from Rs 817.83 crore.

Capital-to-Risk (Weighted) Assets ratio rose to 17.06% in March 2021 from 12.76% a year ago as the government infused as much as Rs 5,500 crore. CASA (current account, savings account) grew almost 19% year-on-year.

The bank’s total business grew 7.68% to Rs 11,687 crore. Advances rose 8.39% to Rs 67,811 crore as of 31 March 2021.

Retail the focus area

Retail, agriculture and MSME advances, which were the bank’s focus areas, grew 12.25%, 15.52% and 7.17%, respectively.

The government’s capital infusion last year would take care of growth in the current financial year, Krishnan said.