'No Worry': Punjab National Bank Allays Concerns About Adani Group Exposure

Punjab National Bank on Monday allayed concerns about its exposure to Adani companies and noted that its loans to the group are diversified into 8-9 companies, which are generating sufficient cash.

Atul Kumar Goel, the bank’s MD & CEO, in a post-earnings call said total exposure to Adani group, so far, stands at Rs 7,000 crore, of which Rs 2,500 crore is in the airport sector. He further said there is “no worry as the exposure is not very big” and that the bank is keeping an eye on the development that is taking place. Adani companies are in focus following a highly critical report about the group by the American short-seller Hindenburg Research.

Earlier in the day, PNB reported a 44.2 per cent year-on-year (YoY) decline in its standalone net profit to Rs 628.9 crore in the October-December quarter (Q3) as provisions for non-performing assets (NPA) went up 7 per cent YoY toRs 3,908 crore and employees cost under operating expenses rose 34.7 per cent YoY to Rs 4,460 crore.

But sequentially, net profit of the Delhi-based public lender jumped 53 per cent from Rs 411.3 crore reported in the July-September period.

The bank’s total income during Q3FY23 was Rs 25,722 crore, against Rs 22,026 crore a year ago, the lender said in an exchange filing. Its interest income during the quarter was Rs 22,384 crore, against Rs 19,325 crore reported a year ago. The net interest income (difference between interest earned and interest expended), on the other hand, showed an increase and stood at Rs 9,179 crore in October-December, up 17.6 per cent over the same quarter in the previous year.

The bank’s global net interest margin (NIM) stood at 3.16 per cent in Q3FY23, up from 2.93 per cent a year ago.

Aashay Choksey, vice-president & sector head-financial sector ratings, ICRA, said: “So far, almost all banks have reported strong year-on-year growth in their respective portfolios, which is largely on the expected lines. Banks have also reported continued sequential improvement in profitability on the back of lower credit costs and higher lending spreads. In Q3FY23, spreads were sequentially higher by 20-30 basis points for most banks, although this advantage would gradually subside as the deposit base/term deposits get repriced.”

The bank’s asset quality showed an improvement with gross non-performing assets (GNPA) as a percentage of gross advances dropped to 9.76 per cent, from 12.88 per cent a year ago. Net NPA stood at 3.30 per cent, against 4.90 per cent a year ago and 3.80 per cent a quarter ago.

Goel said the bank aims to bring GNPA and net non-performing assets (NNPA) down to around 9 per cent and 3 per cent, respectively, by the end of Q4.

On a consolidated basis, including financial results of five subsidiaries and 15 associates, the bank recorded a net profit of Rs 660 crore in the October-December period, against a profit of Rs 1,150.5 crore reported in the same quarter a year ago.

The lender said the Covid-19 pandemic adversely impacted economic activity across the globe for more than two years. However, the bank's results, operations, and asset quality have not been much affected by the pandemic.

Advances by the bank grew 16 per cent YoY on account of a rise in agricultural loans and MSME loans. In the retail credit segment, personal loans and vehicle loans had witnessed the fastest growth -- 40.4 per cent and 39.5 per cent, respectively.

The capital adequacy ratio (CAR) of PNB was at 15.15 per cent as on December 31, comfortably above the regulatory requirement.