Punjab National Bank

28 Jan 2022 , 03:39 PM

Punjab National Bank has reported 123% surge in the net profit to Rs 1126.78 crore for the quarter ended December 2021 (Q3FY2022). The bank has exhibited improvement in margins, asset quality, loan growth, Casa ratio and cost to income ratio on sequential basis, helping to report strong net profit growth for Q3FY2022. The bank has also witnessed improved growth in core fee income, while the provisions declined 35% in Q3FY2022. Business growth of the bank has remained steady at end December 2021. Bank exhibited improvement in Credit-Deposit ratio eased in Q3FY2022.

Asset quality improves: Bank has recorded improvement in the asset quality in absolute as well as percentage terms, while reducing fresh slippages in the quarter ended December 2021.

Fresh slippage of advances to NPA category eased to Rs 4983 crore in Q3FY2022 compared to Rs 9077 crore in the previous quarter.

NPA reductions (though recoveries, upgradations and write-offs) stood at Rs 8015 crore during Q3FY2022.

The bank has improved provision coverage ratio to 81.9% end December 2021 from 80.8% a quarter ago and while it remained closed to 85.2% a year ago.

Asset Quality Indicators: Punjab National Bank
	Dec-21	Sep-21	Jun-21	Mar-21	Dec-20	Variation
QoQ	YTD	YoY
Gross NPA (Rs Crore)	97258.67	100290.85	104075.56	104423.42	94479.33	-3	-7	3
Net NPA (Rs Crore)	33878.56	36934.20	38580.58	38575.70	26598.13	-8	-12	27
% of GNPA	12.88	13.63	14.33	14.12	12.99	-75	-124	-11
% of NNPA	4.90	5.49	5.84	5.73	4.03	-59	-83	87
Provision coverage ratio %	81.85	80.77	80.26	80.14	85.16	108	171	-331
CRAR Basel III %	14.91	15.20	15.19	14.32	13.88	-29	59	103
Tier I – Basel III %	12.22	12.50	12.47	11.49	10.90	-28	73	132
Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business Performance

Steady business growth: Business of the bank increased 4% to Rs 1882623 crore at end December 2021. Advances increased 4% yoy at Rs 755306 crore, while the deposits also rose 4% yoy to Rs 1127317 crore at end December 2021. Credit deposit ratio rose to 67.0% at end December 2021 from 66.0% a quarter ago and remained flat from 67.2% a year ago.

CASA ratio improves: Bank has witnessed an improvement in the CASA ratio to 45.6% at end December 2021 compared to 45.4% a quarter ago and 44.7% a year ago. CASA deposits of the bank increased 8% to Rs 505958 crore, driven by 9% increase in saving bank deposits to Rs 434394 crore at end December 2021.

Advances growth improves: Gross advances grew at improved pace of 4% yoy to Rs 755306 crore at end December 2021. The overseas advances declined 7% to Rs 20934 crore, while domestic advances increased 4% to Rs 734372 crore at end December 2021.

Agriculture sector credit galloped 24% to Rs 136449 crore, retail advances moved up 4% to Rs 134885 crore and MSME rose 2% to Rs 126969 crore, while credit to large industry fell -1% to Rs 336069 crore at end December 2021 from year earlier.

The share of RAM loans has increased to 54.2% end December 2021 from 51.8% end December 2020.

Gross Investment book declined -4% yoy to Rs 386470 crore at end December 2021. AFS book dipped -33% to Rs 80850 crore, while HTM book moved up 10% to Rs 300950 crore. HFT book declined -45% to Rs 157 crore at end December 2021 over December 2020. The modified duration of AFS+HFT book stood at 2.71 years end December 2021 compared with 2.8 years end December 2020.

NIM improves: NIM of the bank jumped to 2.93% in Q3FY2022 from 2.39% in Q2FY2022, while remained lower from 3.09% in Q3FY2021. The cost of funds eased -19 bps yoy to 3.42%, while the yield on funds declined -39 bps yoy to 5.73% in Q3FY2022.

Network expansion: Bank added reduced -264 branches and -106 ATMs in the quarter ended December 2021, pushing down the branch network to 10264 branches and ATMs network to 13400 ATMs at end December 2021.

Book Value per share stood at Rs 83.1 per share at end December 2021, while adjusted book value (net of NNPA and 25% of restructured advances) stood at Rs 47.0 per share at end December 2021.

Quarterly Performance

NII decline moderates, as NIM improves: The NII of the bank declined -7% to Rs 7803.24 crore in Q3FY2022, snapping sharp 25% decline in previous quarter. Interest income of the bank declined -5% to Rs 19325.43 crore, while the interest expenses eased -4% to Rs 11522.19 crore in Q3FY2022.

Fee based income rises: The non-interest income rose 1% to Rs 2700.59 crore, supported by core fee income rising 8% fall in core fee income to Rs 1420 crore, while the recoveries in written off accounts zoomed 94% to Rs 653 crore. On the other hand, the trading income declined -51% to Rs 614 crore in Q3FY2022.

The net total income declined -5% to Rs 10503.83 crore in the quarter ended December 2021.

Expenses ratio rises: Operating expenses increased 11% to Rs 5427.52 crore in the quarter under review, mainly on the back of 13% rise in employee expenses to Rs 3310.68 crore, while the other expenses moved up 8% to Rs 2116.84 crore. The expense ratio rose to 51.7% in Q3FY2022 from 44.4% in Q3FY2021.

The operating profit declined -17% to Rs 5076.31 crore for Q3FY2022, on yoy basis.

Provisions decline: Provisions and contingencies dipped -35% to Rs 3353.55 crore. Bank has written back standard asset provisions of Rs -120 crore and other provisions of Rs 192 crore, while investment provisions dipped -72% to Rs 11 crore. The NPA provisions have increased 17% to Rs 3654 crore in Q3FY2022.

With the decline in provisions, the bank posted 80% surge in the profit before tax to Rs 1722.76 crore.

Tax rate declines: The effective tax rate for bank dipped to 34.6% in Q3FY2022 from 47.2% in Q3FY2021, helping the net profit to jump 123% to Rs 1126.78 crore in Q3FY2022.

Financial Performance – 9MFY2022

For the nine months ended December 2021 (9MFY2022), Bank posted 127% jump in net profit to Rs 3255.39 crore. The net interest income fell -9% to Rs 21390.32 crore, while non-interest income increased 6% to Rs 9869.91 crore in 9MFY2022. The expense ratio rose to 50.4% in 9MFY2022 compared to 46.3% in 9MFY2021. The operating expenses increased 3% to Rs 15763.17 crore, while provision and contingencies declined -23% to Rs 11593.95 crore. The profit before tax surged 54% to Rs 3903.11 crore in 9MFY2022. Effective tax rate dipped to 16.6% in 9MFY2022 compared to 43.29% in 9MFY2021, allowing net profit to surge 127% to Rs 3255.39 crore in 9MFY2022.

Punjab National Bank: Results
Particulars	2112 (3)	2012 (3)	Var %	2112 (9)	2012 (9)	Var %	2103 (12)	2003 (12)	Var %$
Interest Earned	19325.43	20357.44	-5	56234.41	62009.60	-9	80749.77	53800.03
Interest Expended	11522.19	12011.69	-4	34844.09	38420.81	-9	50272.79	36362.24
Net Interest Income	7803.24	8345.75	-7	21390.32	23588.79	-9	30476.98	17437.79
Other Income	2700.59	2684.48	1	9869.91	9345.11	6	12811.85	9274.13
Net Total Income	10503.83	11030.23	-5	31260.23	32933.90	-5	43288.83	26711.92
Operating Expenses	5427.52	4896.03	11	15763.17	15263.31	3	20308.75	11973.37
Operating Profits	5076.31	6134.20	-17	15497.06	17670.59	-12	22980.08	14738.55
Provisions & Contingencies	3353.55	5175.99	-35	11593.95	15139.46	-23	19500.68	13999.56
Profit Before Tax	1722.76	958.21	80	3903.11	2531.13	54	3479.40	738.99
Provision for Tax	595.98	452.18	32	647.72	1095.84	-41	1457.78	402.79
PAT	1126.78	506.03	123	3255.39	1435.29	127	2021.62	336.20
EPS*(Rs)	4.1	1.8		3.9	1.7		1.8	0.3
* Annualized on current equity of Rs 2202.2 crore. Face Value: Rs 2 per share, Figures in Rs crore, $ figure for FY2021 relates to merged entity and not comparable with FY2020
Source: Capitaline Corporate Database

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