Punjab National Bank Q3 net profit falls as bad loans surge

Public sector Allahabad Bank reported a loss of Rs 486.14 crore for the third quarter ended December 31, due to higher provisioning against bad loans.

Net loss was 15.06 billion rupees ($220.31 million) for its fiscal third quarter to December 31, compared with 1.73 billion rupees profit in the year-ago quarter, the lender said in a statement on Thursday.

Mumbai, Feb. 9: Surging bad loans and a resultant hike in provisions have smudged the bottomlines of four PSU banks – with three of them suffering losses in the third quarter of 2015-16.

PNB’s gross bad loan ratio jumped to 8.47 per cent at end-December from 6.36 per cent in September. The Delhi-based bank would have suffered a loss of Rs 858 crore had it not been for a tax write-back of Rs 909 crore.

The public sector lender ascribed the poor performance to “increased provisions for domestic and overseas advances including provisions made for asset quality review as per Reserve Bank of India directions”.

RBI Governor Raghuram Rajan recently announced a March 2017 deadline for banks to clean up their balance sheets which are plagued by high incidence of bad assets.

With gross NPAs of a couple of these banks nearing 10 per cent, the RBI could take prompt corrective action which could see restrictions being imposed on dividend payments.

Total income of the bank declined to Rs 6,446 crore during the quarter from Rs 6,776 crore in the same period a year ago. Provisions, including for bad loans, more than doubled from a year earlier to 37.76 billion rupees.

Besides, Allahabad Bank’s write-off figure stood at Rs 2,109 crore, Central Bank of India Rs 1,995 crore, IDBI Bank Rs 1609 crore, Bank of Baroda Rs 1,564 crore, Syndicate Bank Rs 1,527 crore, Canara Bank Rs 1,472 crore and Uco Bank Rs 1,401 crore.

For 2014-15, SBI topped the chart of PSBs by writing off Rs 21,313 crore followed by Punjab National Bank Rs 6,587 crore and Indian Overseas Bank Rs 3,131 crore.