After eight quarters of losses, state-run Punjab & Sind Bank turned the corner in the January-March period with a net profit of Rs 161 crore, aided by healthier recovery. The lender had recorded a net loss of Rs 236 crore in the identical quarter of FY20.
For the complete year (FY21), the bank incurred a net loss of Rs 2,733 cr, compared with that of Rs 991 cr in FY20 (pre-pandemic period). The bank’s gross non-performing assets eased to 13.76% of its advances as of March 31, 2021 from 14.18% a year ago.
Net NPA virtually halved to 4.04% from as a great deal as 8.03% a year earlier.
However, sequentially, when GNPAs grew from 13.14% as of December 2020, net NPA, also, jumped from 2.84%. But the rise in gross undesirable loans was the fallout of the Supreme Court lately vacating an earlier order that had directed lenders not to classify an account (till additional order) as NPA if it was not so till August 31, 2020. So, the accumulated NPAs in earlier months had to be declared as portion of the March quarter financials.
Having offered for 83% of its undesirable loans, the bank now expects to post profit in every single quarter of this fiscal, managing director and chief executive S Krishnan stated, indicating the worst is more than for the bank. Its provision coverage ratio (PCR) enhanced drastically more than the previous year from just about 67% in March 2020.
Capital-to-Risk (Weighted) Assets ratio, also, jumped to 17.06% in March 2021 from 12.76% a year earlier, thanks to the government’s infusion of as a great deal as Rs 5,500 crore. CASA (present account, savings account) level, which reflects the bank’s potential to garner low-expense funds, jumped virtually 19% from a year earlier. However, net interest margin dropped to 1.7% in the March quarter from 1.87% a year just before.
Krishnan stated the expense of the waiver of compound interest for all borrowers who availed of a loan moratorium in the wake of the pandemic (in sync with a current Supreme Court directive) could be about Rs 30 crore for his bank. Asked if the lender is urging the government to compensate it for this waiver, he stated the Indian Banks’ Association was taking up the matter on behalf of all banks with the Centre.
Refuting speculations, Krishnan stated he hasn’t received any communication from the central bank expressing concern about non-interest paying securities (to the tune of Rs 5,500 crore) that the government made use of late last fiscal to recapitalise Punjab & Sind Bank.
Punjab & Sind Bank, Krishnan stated, will not contribute to the equity of the proposed “bad bank” (National Asset Reconstruction Company), which is anticipated to be operational in June. However, the bank will look at transferring specific undesirable loans to it.