State-owned Punjab National Bank posted a pre-tax loss of Rs 969 crore in the fourth quarter (Q4FY20), compared to a loss of Rs 7,209 crore in the corresponding period last year.
The lender reported a net loss of Rs 697 crore in Q4FY20 before completing the amalgamation process, as it posted a second continuous quarterly loss.
The net loss of the bank was significantly lower than a loss of Rs 4,750 crore in Q4FY19. In the third quarter of 2019-20, PNB’s net loss stood at Rs 492 crore.
The bank made a provisioning of Rs 4,518 crore towards bad loans in Q4FY20, almost half of the Rs 9,153 crore it had made in the same quarter of the previous financial year. The bank’s net interest income (difference between interest earned through lending and interest paid to depositors) rose 11 per cent to Rs 4,678 crore from the year-ago period.
For the entire FY20, PNB’s net profit stood at Rs 336 crore, compared to a loss of Rs 9,975 crore in the previous year. Significantly, the bank’s gross non-performing assets (NPAs) reduced to 14.21 per cent in Q4, compared to 16.3 per cent in the previous quarter.
The bank’s capital adequacy ratio, considered to be one of the key indicators for its health, inched up to 14.14 per cent in this quarter, compared to 14.04 per cent in the previous one.
The RBI requires banks to maintain the capital adequacy ratio at 11.5 per cent. Banks are required to maintain a minimum capital to ensure they do not lend all the money they receive as deposits and keep a buffer to meet future risks.
The bank said that the situation related to the Covid-19 pandemic continues to remain uncertain and it is “evaluating the situation on an ongoing basis.”
“The major identified challenges for the bank would arise from eroding cash flows and extended working capital cycles,” the bank said in its balance sheet. However, it added that the bank wasn’t required to make any adjustments to its financial year in FY20 because of it.
The bank said it extended moratorium to its loan accounts, a dispensation given by the RBI to help borrowers tide over the impact of the pandemic, to the tune of Rs 51,773 crore. As a result, the bank had to make a provision of Rs 142 crore during the fourth quarter.
Beginning April 1, Oriental Bank of Commerce and United Bank of India have amalgamated into PNB.