PNB Q2 Results: Net Profit Jumps 327% To Rs 1,756 Cr On Strong Asset Quality

On October 26, Punjab National Bank (PNB) revealed a 327 per cent rise in net profit, from Rs 411.27 Cr in Q2FY23 to Rs 1,756 crore during the July-September quarter of the current financial year.

The net interest income of the bank jumped by 20% YoY to Rs 9,922 crore from Rs 8,271 crore in the corresponding quarter of the previous fiscal. The lender's other income jumped to Rs 3,028 crore or 6.3% in Q2FY24. During the quarter, its operating expenses dropped by 21% YoY to Rs 6,734 crore. From Rs 4,906 crore in the prior year to Rs 3,444 crore in the September 2023 quarter, provisions decreased. As of September 30, PNB's capital adequacy ratio was at 15.09% and it had a CET-1 ratio of 10.23%.

PNB said its total income for Q2 FY'24 was at Rs 29,383 Crore and Rs 57,962 Crore for HY1FY'24 recording growth of 27.7% and 30.9%, respectively on a YoY basis.

The total interest generated by the bank during the quarter grew from Rs 20,154.02 crore in the year-ago quarter to Rs 26,354.92 crore during the quarter under review, representing a growth of 30.7% YoY. As of September 30, the bank's gross non-performing assets (NPAs) plummeted to 6.96 per cent from 7.73 per cent in the prior quarter. The gross non-performing assets (NPAs) for the July-September quarter of 2022 were 10.48%. At the end of Q2FY24, GNPAs were Rs 65,563.12 crore.

In Q2FY24, the bank's Capital Adequacy Ratio - Base-III of PNB was 15.09%, down from 15.54 in Q1FY24 and 14.74% in Q2FY23.

According to the bank, savings deposits rose from Rs 4,51,707 crore on September 22 to Rs 4,71,238 crore on September 23. As of September 23, the bank had current deposits worth Rs 67,038 Crore. As of September 23, its Domestic ASA Share was 42.15%, down from 41.90% on June 23. According to the bank, as of September 23, its total retail advances climbed YoY by 16.5% to Rs 1,47,247 crore.

According to PNB, its non-interest income increased by 6.4% and 20.0% on a year-on-year basis to Rs 3,028 crore for Q2 FY'24 and Rs 6,462 crore for HY1FY'24, respectively. PNB reports that its operating expenses climbed by 21.3% and 33.7% on a year-on-year basis to Rs 6,735 crore for Q2 FY'24 and Rs 13,705 crore for HY1FY'24, respectively. According to PNB, its Return on Equity (RoE) jumped by 759 bps to 10.15% in Q2FY'24 and 652 bps to 8.82% for HY1FY'24, while its Return on Assets (RoA) rose by 34 bps to 0.46% in Q2FY'24 and 29 bps to 0.40% for HY1FY'24.

According to PNB, its Net Non-Performing Assets (NNPA) were at Rs 13,114 crore as of September 23, down from Rs 29,348 crore as of September 22, down by Rs 16,234 crore on a year-on-year basis, and its Gross Non-Performing Assets (GNPA) were at Rs 65,563 crore as of September 23, down from Rs 87,035 crore as on September 22, by Rs 21,472 crore. The bank's Provision Coverage Ratio (PCR) Excluding TWO grew from 66.28% in the September 22 quarter to 80.0% in Q2FY24-a 1372 bps YoY growth. According to PNB, its Credit Cost plummeted from 2.13% in HY1FY'23 to 1.67% in H1FY'24.

The bank had 10092 domestic branches as of September 30, 2023, comprising a total of 2 international branches, 12645 ATMs, and 20447 BCs.

Commenting on the results, Shreyansh Shah, Research Analyst, StoxBox said, "As expected, the state-owned Punjab National Bank gave strong numbers in Q2FY24. The bank delivered a three-fold jump in net profit, beating market estimates while maintaining robust asset quality. The NPAs were down significantly on an annualised basis, and we are of the view that the bank has cleared a large part of its pain and can focus on building the business. With the bank's focus on growing its loan disbursals in the housing segment, we believe that it will be able to generate higher yields in the medium term. Thus, we remain positive on the bank from a medium to long-term perspective."