PNB profit grows 12% in Q2 despite higher provisioning

Punjab National Bank has reported a 12.1 per cent increase in net profit during the quarter-ended September 30.

Announcing the results on Tuesday, Mr K.R. Kamath, Chairman and Managing Director of PNB, said even after high provisioning for various loan accounts, profits rose to Rs 1,205 crore during the second quarter from Rs 1,075 crore in the same quarter last fiscal.

The bank managed to record a total business of Rs 5,90,803 crore, showing a year-on-year increase of 22.5 per cent.

The bank's net interest margin declined from 4.06 per cent to 3.95 per cent. This was mainly because of the cost of deposits going up from 4.96 per cent to 6.52 per cent.

Interestingly, the total interest amount paid on deposits and borrowings grew by 58.09 per cent, while interest earned on advances, investment, balance with Reserve Bank, inter-bank lending and others rose by 38.67 per cent.

However, PNB's net non-performing assets (NPAs) increased by 46.53 per cent to Rs 2,088.77 crore during the first six months of this fiscal. But, the proportion of total advances increased to 0.84 per cent from 0.69 per cent.

On hike in interest rate on savings bank account, the bank said it would take a decision only after assessing the market's response to such moves by private banks.

Mr Kamath said that the bank's asset liability committee would take a call on increasing the interest rate. No date has yet been fixed for the meeting, he added.