Punjab National Bank (PNB), which saw its standalone net loss narrowing to Rs 697.20 crore in the March quarter of 2020, expects recoveries to gather momentum from the third quarter even as the lender grapples with an uncertain situation amid the Covid-19 outbreak.
The country’s second-largest PSU bank had reported a loss of Rs 4,750 crore in the year-ago period.
A key highlight of its performance was the improvement in asset quality. The gross non-performing asset (NPAs) declined to 14.21 per cent of the gross advances at the end of March 2020 against 15.50 per cent in the previous fiscal. The proportion of net NPAs also declined to 5.78 per cent against 6.56 per cent in the same period of the previous year.
In absolute value, gross NPAs fell to Rs 73,478.76 crore from Rs 78,472.70 crore in the previous fiscal. Provisions for bad loans fell to Rs 4,618.27 crore from Rs 9,153.55 crore in the year-ago period.
Speaking to reporters on Saturday, S. S. Mallikarjuna Rao, managing director & CEO of PNB, said that during the previous fiscal, the bank was successful in cash recovery of Rs 10,000 crore and it also contained the fresh slippages to Rs 20,000 crore. While the bank expects a recovery of Rs 6,000-8,000 crore during the current fiscal, this will gather momentum from the third quarter.
Rao pointed out that some more recoveries carried over from the previous year, including big accounts such as Bhushan Power and Steel, are expected to get resolved in the current financial year.
He disclosed that around one-third of its customers have availed themselves of the moratorium given by the RBI. According to the RBI’s April 17 guidelines, the bank has decided not to make any dividend pay-outs to shareholders.
According to Rao, the bank has restructured 37,409 MSME accounts aggregating Rs 1,761.74 crore as on March 31, 2020.
He added that the Covid-19 impact was seen since March and more clarity would emerge in the third and fourth quarters as the RBI has extended the moratorium till August 31.
“The situation continues to be uncertain. The major challenges of the bank would be from eroding of cash flows and extended working capital cycles,” he said.