PNB Back In Black, Posts ₹247-crore Profit In Q3

Bouncing back into the black, Punjab National Bank (PNB) reported a net profit of ₹247 crore for the third quarter ended December 31, 2018.

The turnaround has come after three consecutive quarterly losses that the bank posted after the ₹14,000-crore scam perpetrated by diamantaire Nirav Modi and his uncle Mehul Choksi came to light in February 2018.

The bank had reported a net loss of ₹4,532 crore in the second quarter and a net loss of ₹940 crore in the first quarter of this fiscal year.

The latest bottomline performance is also higher than the net profit of ₹230 crore recorded in the same quarter in the previous fiscal year.

Operating profit for the quarter under review came in at ₹3,100 crore (₹4,245 crore).

PNB reported a net loss of ₹5,226 crore for the nine months ended December 31, 2018. It had recorded a net profit of ₹ 1,134 crore in the same period during the previous fiscal year.

Sunil Mehta, Managing Director and CEO, PNB, said the rebound was largely led by aggressive recoveries undertaken by the bank this fiscal year. In the three quarters this fiscal, PNB, in aggregate, recovered ₹16,608 crore, which is almost three times the total recovery in the entire previous fiscal (₹5,617 crore), he said.

Fraud provided for fully

“Once pushed to the wall, we have now bounced back. The one-off incident (fraud perpetrated at its Brady House branch in Mumbai), which was the most turbulent period for the bank in its history, has been fully absorbed. We have now made 100 per cent provision for this incident,” Mehta said.

He said that PNB has in the three quarters (April-December) this fiscal provided ₹7,200 crore for the incident. For the quarter under review, PNB has provided ₹2,014 crore in this regard. “If we take off the impact of provisioning of the one-off incident, we would have actually returned a profit of about ₹2,000 crore in the nine months this fiscal. That shows the fundamentals of the bank are strong”, he said.

Exposure to IL&FS

On exposure to the IL&FS Group, Mehta said that PNB had accounted for slippages to the tune of ₹331 crore. He also said that DHFL continued to be a standard account for the bank.

As for beleaguered Kingfisher Airlines, the PNB Managing Director and CEO said that the bank has already fully provided for its nearly ₹850-crore exposure.

He added that NPA slippages of the bank had come down steadily in the first three quarters of this fiscal year, from ₹5,225 crore in the first quarter to ₹4,400 crore in the second and ₹3,359 crore in the third quarter.

Mehta later told BusinessLine that he was confident that the bank would continue this strong performance even in the fourth quarter.

There are several reasons for this optimism — he expects bad loan recoveries to the tune of about ₹8,000 crore in the last quarter, mainly from big corporate insolvency resolution cases that are now before the NCLT; secondly, the bank would not be required to provide more towards the ₹14,000-crore fraud.