CRISIL reaffirms rating of Punjab & Sind Bank; maintains negative outlook

29 Aug 2022 , 01:52 PM

CRISIL said that the rating continues to factor in the expectation of strong support from the majority owner, the Government of India (GoI). These strengths are partially offset by the banks weak asset quality and modest earnings. The negative outlook on the debt instruments reflects the banks weak asset quality and profitability, especially in relation to the rating category. Gross non-performing assets (NPAs) of the bank improved in fiscal 2022 and stood at 12.2% as on 31 March 2022. Also, the bank reported a profit of Rs 1,039 crore for fiscal 2022 with a return on assets (RoA) of 0.9%. However, the pace of improvement remains slower than expected. Nevertheless, the first quarter of fiscal 2022 saw further improvement in gross NPAs at 11.3% and a profit after tax of Rs 205 crore. Under the RBI August 2020 and May 2021 resolution framework for COVID-19-related stress, the bank implemented restructuring on around 3.7% of gross advances as on 30 June 2022. This is over and above around 0.6% of advances restructured under the MSME scheme. The performance of the restructured portfolio and the ability of the bank to manage collections and asset quality will remain a key monitorable, CRISIL said in a statement. Punjab & Sind Bank is a relatively small PSB, founded in 1908 in New Delhi. The bank has 1526 branches and 802 ATMs as on 30 June 2022, primarily in northern India. GoIs ownership stood at 98.25% as on 30 June 2022. For the quarter ended 30 June 2022, net profit was Rs 205 crore and total income (net of interest expense) was Rs 824 crore, against a net profit of Rs 174 crore and total income (net of interest expense) of Rs 897 crore for the corresponding period of the previous fiscal. The scrip shed 0.90% to currently trade at Rs 15.48 on the BSE. Powered by Capital Market – Live News