State-run Punjab National Bank (PNB) on Friday reported a 12.8% year-on-year increase in net profit for the second quarter, aided by healthy core income growth and a sharp decline in credit provisions, even as fresh slippages showed a marginal uptick.
The state-owned lender posted a standalone net profit of ₹5,532 crore for the quarter ended September 30, compared to ₹4,904 crore in the corresponding quarter of the previous fiscal year.
Core Income & Operating Metrics
Net Interest Income (NII)-the difference between interest earned and interest expended-grew 10.8% year-on-year to ₹11,601 crore from ₹10,469 crore in the year-ago period.
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Net Interest Margin (NIM), a key gauge of lending profitability, expanded by 8 basis points sequentially to 2.58%, up from 2.50% in the preceding June quarter.
Operating profit for the quarter rose 4.2% year-on-year to ₹7,532 crore, against ₹7,227 crore reported in the same quarter last year.
Asset Quality Improves, Credit Costs Drop
Asset quality metrics strengthened during the quarter, with bad loan ratios declining sequentially:
Gross Non-Performing Assets (GNPA): Contracted 23 basis points to 2.55% as of September 30, compared to 2.78% at the end of the June quarter.
Net Non-Performing Assets (NNPA): Improved 3 basis points quarter-on-quarter to 0.25% from 0.28%.
Provisions: Slumped 84.9% year-on-year to ₹97 crore, down from ₹643 crore in Q2 of the previous fiscal. On a sequential basis, provisioning requirements fell 82.1% from ₹541 crore in Q1.
Slippages Pick Up
Despite the overall reduction in bad-loan ratios, fresh additions to non-performing assets edged higher.
Fresh slippages rose to ₹2,233 crore for the July-September period, marking an 11.9% increase sequentially from ₹1,996 crore in Q1, and a 23.2% rise compared to ₹1,812 crore logged in the corresponding quarter of the previous fiscal year.
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