PNB Q3 Result: Net profit tanks 44% to Rs 628.8 crore

PNB Q3 results: A 40% increase in provisions in the December quarter drove down the lender’s net earnings.

On January 30, Punjab National Bank (PNB) Ltd reported a whopping 44 percent year-on-year drop in net profit at Rs 628.8 crore for the December quarter.

A year-on-year increase in provisions drove down the bottom line.


The public sector lender’s provisions increased by 40% in the reporting quarter to Rs 4,713 crore from Rs 3353 crore the previous year. The provisions for bad loans reached Rs 3908.1 crore, a 6.90 percent rise over the previous year and a 9.9 percent increase sequentially.

Despite its bad loan backlog shrinking by xx% year on year, PNB has increased provisions. Gross non-performing assets were 9.76 percent of the loan book in December, down from 12.88 percent the previous year. The net NPA ratio declined from 4.90 percent to 3.30 percent. As of December, the outstanding NPA stockpile was at Rs 83,583. 9 crore, down from Rs 97,258.7 crore the previous year.

Fresh slippages increased slightly to Rs 3865 crore from Rs 3831 crore the previous year.

Business Growth Strong

Net interest income at the bank increased by 17.6 percent year on year to Rs 9179 crore. Non-interest revenue increased by 23.6 percent to Rs 3338 crore. While fee income increased by 8.8 percent, non-interest income increased by 82 percent year on year due to a drop in profit from investment sales.

Domestic loan growth of 11.8 percent and a sequential increase in net interest margin to 3.30 percent drove NII growth.

The retail category drove loan growth, which increased 13.5 percent year on year. Home loans, the safest asset type, increased by 9.16 percent year on year, while riskier unsecured personal loans increased by 40 percent. In addition, the corporate loan book increased by 12.5 percent year on year.

Loans to small firms, on the other hand, fell by 1.76 percent, despite strong growth in this area among PNB’s private sector counterparts.

Bank deposits increased by 7.37 percent, with low-cost current and savings account deposits accounting for 43.7 percent of total deposits.

Margins hold up

PNB was able to mitigate part of the rise in the cost of deposits by passing on policy rate hikes through increases in lending rates. This, together with a lower proportion of loans priced at the marginal cost-based lending rate (MCLR), guaranteed that margins improved consecutively.

The bank’s deposit cost increased to 4.15 percent from 4.00 percent a year ago, but its advance yield increased to 7.35 percent from 7.29 percent. Domestic net interest margin increased from 3.01 percent to 3.30 percent in the December quarter.