The bank’s fresh slippages — the amount of loans that turned from good to bad —doubled to Rs 6,783 crore from Rs 3,324 in same quarter last year. Majority of the fresh slippages for the bank came from agriculture (Rs 2,100 crore) and micro, small and medium enterprises (MSME) sectors (Rs 1,400 crore). The bank had to provide for Rs 1,189 crore towards housing finance company Dewan Housing Finance Corporation.
The bank has an exposure of around Rs 1,000 crore towards Vodafone Idea which will add to the stress. The bank expects fresh NPAs to the tune of Rs 3,000 crore in the next two quarters but mostly on account of stress in the agriculture and MSME accounts.
“Cases worth Rs 8,800 crore will come up for resolution in the bankruptcy courts in the fourth quarter and we expect a recover of Rs 3,000 crore from these accounts,” PNB
managing director and chief executive officer SS Mallikarjuna Rao told CNBC-TV18 on Tuesday.
The bank, however, saw a mild improvement in the asset quality. Gross NPAs came down to 16.3 per cent from 16.76 per cent in the previous quarter. Net bad debt assets inched down from 7.65 per cent at the end of September to 7.18 per cent at the end of December 2019. The Provisioning Coverage Ratio of PNB
was 75.27 per cent at the end of December, meaning it has accounted for three-fourth of NPAs in its balance sheet.
Punjab National Bank, Oriental Bank of Commerce and United Bank of India will combine to form the nation’s second-largest lender beginning April 1, 2020. The bank had sufficient capital buffer three months before going in for amalgamation. Its common equity tier (CET)-1 ratio rose stood at 10.64 per cent (of risk-weighted assets) at the end of Q3, up from 6.93 per cent one year back, due to capital infusion of Rs 16,091 crore by the central government in Q2 — much above the regulatory requirements of 5.5 per cent.
PNB is yet to move into a new corporate tax regime and said that it is in the process of "evaluating the option to opt for lower tax rate."