PNB back in the red with Rs4,750-cr loss in January-March quarter

State-run Punjab National Bank (PNB) has reported a net loss of Rs4,750 crore, on the back of increased provisioning over stressed assets that are now stuck in insolvency courts, according to its CEO Sunil Mehta.  

The bank had posted a net profit of Rs247 crore in the preceding quarter.
The bank posted losses of Rs13,417 crore in the year-ago period.
PNB’s provisioning, however, declined 41.3 per cent year-on-year to Rs7,611 crore in the January-March 2018-19 quarter
PNB managing director and chief executive officer (CEO) Sunil Mehta on Tuesday blamed the increased loss to stressed assets of Rs5,000-6,000 crore stuck in insolvency courts.
“A few things which we thought will happen during this quarter didn’t materialise. In two-three major accounts (Essar Steel and Bhushan Steel and Power), which have already been resolved by the National Company Law Tribunal (NCLT), were on the table, but that money could not be unlocked. Against that, we had to make 100 per cent provisioning because of the ageing," Mehta said. The bank expects a write-back of roughly Rs4,000 crore, he added.
Mehta expects the lender to be back in black soon and hopes to garner  Rs1,000 crore from the sale of non-core assets during the current fiscal year.
“Because of some regulatory permission we could not get in time, our stake sale for PNB Housing Finance didn’t materialize. These were the expected inflows that would have given us a net profit (in January-March)," he said. There has been a delay in the recovery of stressed assets because of litigations. A slowdown in the economy affects the prospect of investment proposals for stressed assets and, thus, slows down resolution. Bad loans also restrict the bank’s ability to finance more projects.
PNB’s gross non-performing assets (NPAs) in the quarter fell to 15.5 per cent from 18.38 per cent year-on-year, while net NPAs declined to 6.56 per cent from 11.24 per cent.
The lender’s exposure to collapsed Jet Airways was also less than Rs900 crore, a senior PNB official said. 
The lender’s net interest income grew 37.1 per cent year-on-year to Rs4,200 crore in the January-March 2018019 quarter. Net interest margin rose to 2.45 per cent in Q4FY19 from 1.90 per cent in the March quarter of FY18. 
And, despite fresh slippages, PNB’s net loss, however, narrowed to Rs9,975 crore in 2018-19, from Rs12,283 crore a year ago. Asset quality also improved with higher NPA provisioning.
Gross NPA fell to Rs78,473 crore during 2018-19 from Rs86,620 crore a year ago. Similarly, net NPAs fell by 38 per cent year-on-year to Rs30,038 crore in 2018-19.
The bank had incurred net losses during the fiscal year 2017-18, after it discovered fraud of more than Rs14,000 crore involving jewellers Nirav Modi and Mehul Choksi at its Brady Road branch in Mumbai in January 2018.
Thereafter, PNB had posted losses for three consecutive quarters, beginning January-March 2017-18.
“The bank has strong fundamentals. We suffered a setback last year of which 50% provisioning was made last year and 50% has been made this year. We have taken a conscious step to clean up the book and take provision coverage ratio to a reasonably high level, which gives a high degree of safety to our stakeholders," Mehta added. Mehta said he expects PNB to be back in black soon and hopes to garner ?1,000 crore from the sale of non-core assets during the current fiscal year. PNB will focus on the recovery of NPAs, conservation of capital, rationalization of operation, and sale of non-core assets, he said.
Mehta also said that the bank has not received any proposal for taking control of two-three small state-owned banks and has not thought about it.