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Punjab National Bank Q2 Results Update.

Punjab National Bank Q2 Results Update.

Last updated: 02 Nov, 2020 | 04:54 pm

Punjab National Bank Q2 Results Update.

State run PNB, reported a two-fold increase in Net profit quarter-on-quarter, at ₹ 620.8 crore. The bank had reported a net profit of ₹ 308.5 crore last quarter. As of April 2020, PNB, Oriental Bank of Commerce and United Bank of India were amalgamated into one single entity with effect from April 1, 2020 making it the second-largest state-owned bank after consolidation.

Net Interest Income (NII): NII grew 24.4% quarter-on-quarter to ₹ 8,393.2 crore, almost doubling from the same period year ago.

Asset Quality: PNB reported improving asset quality with Gross NPA and Net NPA as a percentage of total advances at 13.43% and 4.75% respectively, as against 14.11% and 5.39% in the previous quarter.

Provisions: Provisions and contingencies grew to ₹ 4,696.15 crore, a marginal increase quarter-on-quarter. The bank made provisions amounting to ₹ 400 crore as a matter of ‘prudence for asset classification benefit’ extended due to moratorium on loan repayments, ₹ 342 crore towards its investment in associate bank JSC Tengri(formerly Bank of Kazakhstan),as the banks license was revoked by the country’s regulator. PNB also made ₹ 180 crore worth of contingent provision for accounts that were not classified as NPA as on 31st August 2020, based on interim judgement of the Supreme Court.

PNB extended resolution timeline for 8 stressed accounts, involving total of ₹ 1,790 crore, in accordance with circular issued by RBI.

Ratios:

1.Provision coverage ratio: The provision coverage ratio, measures the ability of banks to service its debt and meet its financial obligations such as interest payments or dividends, stood at 0.83 for quarter ending September 2020.

2.Tier 1 Capital Ratio (CET1)- From regulators point of view, this ratio measures the bank’s financial strength, with core capital in the numerator and total risk weighted assets in the denominator. The ratio was at .0953, which shows bank’s strengthened capital adequacy.

3.Capital adequacy Ratio, the ratio of a bank's capital to its risk, stood at 0.1284. The RBI requires banks to maintain this ratio at minimum 0.115.

Recovery

1.With ₹ 93,000 crore dues from 652 accounts, as per the MD, 93% of this amount is secured and will be settled.

2.₹ 1.96 lakh crore out of ₹ 4 lakh crore due under IBC resolution mode for banking sector has been recovered on a consolidated level basis.

Capital Raising

1.The bank will follow up with fresh ₹ 1,500 crore Tier-II issue and ₹ 3,000 crore additional Tier-I bonds, offering, expected to close by November this year.

2.Post this, the bank is looking to raise ₹ 7000 crore capital via sale of shares.

Rating upgrade

Ind-Ra, on basis of fresh capital raising request in exchange filing, sound recovery of dues expected going forward and technological upgradation scheduled to complete by March which will enhance the digital services and presence offered by bank, upgraded PNB’s long term rating to IND AAA from IND AA+ with a positive outlook during the quarter ending  September 2020.

PNB ended the day’s trade at ₹ 27.95, up 4.5% from previous close. MD and CEO of PNB, Mallikarjuna Rao, in a statement said, ‘while PNB presence is good in North and central India, the bank is now looking to expand in West and southern part of the nation. We are now working on PNB 2.0 agenda to ride out the current phase of uncertainty.’ With increasing asset quality and marginal increase in provisions, India’s second-largest public sector bank, is gearing itself to meet the challenges of eroding cash flows and extended working capital cycle.

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