Feeble Inflow From NCLT Cases Pushes PNB Into The Red In Q4

After staging a turnaround in the third quarter, Punjab National Bank on Tuesday reported a surprise net loss of ₹4,750 crore for the fourth quarter ended March 31, 2019.

The loss was, however, much lower than the net loss of ₹13,417 crore recorded in the same quarter last fiscal. It may be recalled that PNB had returned to the black in the third quarter ended March 31, 2019, recording a net profit of ₹247 crore. For the quarter under review, the public sector bank has recorded an operating profit of ₹2,861 crore, compared with an operating loss of ₹447 crore in the March quarter last fiscal.

For the entire fiscal 2018-19, PNB has recorded a net loss of ₹9,975 crore, lower than the net loss of ₹12,283 crore in the previous fiscal.

Shares of PNB reacted to the surprise net loss in the fourth quarter, falling nearly 3.5 per cent to close at ₹86.20 on the BSE on Tuesday.

Asserting that the fundamentals of the bank are still strong, Sunil Mehta, Managing Director and CEO, PNB, attributed the fourth-quarter net loss to the less-than-anticipated inflow of funds from the large cases stuck before the National Company Law Tribunal (NCLT), among others.

The bottom line was affected as some of the expected inflows, especially from two of the large cases before the NCLT, did not materialise, Mehta said.

It may be recalled that Mehta had, post the third-quarter results announcement early this year, expressed confidence that PNB would recover about ₹8,000 crore from the large cases during the fourth quarter. However, the actual flows belied the expectations and the bank managed to recover very little from the six NCLT cases (of the first list of 12 referred to by the RBI) during the fourth quarter.

Mehta is now hopeful that the recovery from large cases will happen during the current fiscal. PNB is betting big on two specific large cases — where its exposure in aggregate is ₹6,000 crore and there would be a write back of ₹4,000 crore to its profit and loss account — getting resolved this fiscal.

To drive home the message that the fundamentals of the bank are strong, Mehta highlighted that PNB’s operating profit grew 26 per cent in 2018-19.

Mehta also said that PNB had in the fourth quarter taken a conscious decision to clean up the books and the provision coverage ratio has now been increased to 75 per cent from 58 per cent earlier.

Jet Airways

Asked if PNB had treated the grounded Jet Airways as a non-performing asset (NPA), Mehta replied in the negative. However, PNB has, as a matter of abundant caution, made a small provision in the fourth quarter, even though the account is not classified as an NPA.

As on date, PNB, which is not part of the SBI-led consortium, has an exposure of about ₹950 crore to Jet Airways, sources said.

PNB Housing Finance

To another question from BusinessLine as to what would be the bank’s approach towards PNB Housing Finance, Mehta said that PNB was undecided on whether to go in for another attempt to offload a stake in the housing finance company.

“It (whether the bank will go for complete exit or partially offload stake and the timing) will all depend on the market conditions. Nothing has been decided,” he said.