Punjab & Sind Bank continues turnaround momentum, reports net profit of Rs 301 cr in Dec quarter

State-owned Punjab & Sind Bank (PSB) on Monday reported a net profit of Rs 301 crore for the quarter ended December 2021 as the lender saw good growth in overall business mix and better cash recoveries following its turnaround strategy started a year back.

The lender had posted a net loss of Rs 2,376 crore in the same quarter a year ago. Sequentially, the net profit was up by 38.1 per cent from Rs 218 crore in the quarter ended September 2021.

"The bank was undergoing a turbulent time a year before and then the bank turned around in the quarter ended March 2021 after a consecutive loss for about eight quarters.

"Since then, the bank has been continuously making profits. Having said that, if we look into Q3FY22, it is one of the highest bottomline that we have. The net profit is at Rs 301 crore while a year before it was a huge loss," S Krishnan, MD and CEO, Punjab & Sind Bank told a media conference after the earnings announcement.

Total income rose to Rs 2,042.03 crore, as against Rs 1,973.78 crore in Q3 FY21, PSB said in a regulatory filing.

Net interest income was up by 23.1 per cent to Rs 758 crore, from Rs 616 crore.

The net interest margin improved to 3.17 per cent in the December 2021 quarter from 2.86 per cent in the year-ago period. Also, the cost of deposits for the bank fell to 4.24 per cent from 4.97 per cent, while the cost of funds came down to 3.64 per cent from 4.30 per cent.

The bank's provisions for non-performing assets (NPAs) fell to Rs 325 crore during the quarter, as against Rs 1,482 crore reserved for the same period of the previous fiscal.

However, the gross non-performing assets showed a slight deterioration at 14.44 per cent of the gross advances as of December 31, 2021, from 13.14 per cent a year ago. But it improved quarter-on-quarter from 14.54 per cent at the end of September 2021.

Likewise, the net NPAs or bad loans rose to 3.01 per cent year-on from 2.84 per cent, but were down from 3.81 per cent in the preceding quarter.

Krishnan said the rise is NPA when compared year-on-year is attributable to the Supreme Court order post the pandemic that had restrained banks from declaring assets as non-performing.

"All that accounts were only recognised in March 2021 when the Supreme Court lifted the order. Hence, the December 2021 quarter was abnormally low," he noted.

He further said the bank has transformed by changing its strategy completely, both on the business and IT front.

"We are focussing more on the low cost funds and also on the retail advances. Considering the size of the bank, we feel it is a better opportunity, and also to avoid concentration risk...These initiatives have started to yield results which are visible in our results," Krishnan said.

On the business performance, the bank's total business grew by 7.70 per cent on an annual basis to Rs 167,061 crore as on December 31, 2021. Total deposits moved up by 10.87 per cent to Rs 100,351 crore.
Gross advances grew by 3.26 per cent to Rs 66,710 crore in Q3 FY22. RAM (Retail, Agriculture and MSME) business grew by 6.37 per cent.

Retail, agriculture and MSME loan portfolios grew by 12.15 per cent, 3.53 per cent and 4.06 per cent, respectively.

The bank is ensuring that the balancesheet is strengthened, the focus is also on RAM and "we are bringing down the corporate (portofolio) to avoid concentration risk", Krishnan added.

The lender continued its special focus on retail business, as a result of which RAM advances have grown from 48 per cent to 50 per cent, while corporate advance declined from 52 per cent to 50 per cent on quarter-on-quarter basis.

It has also surpassed the regulatory targets of 40 per cent and 18 per cent in priority sector and agriculture credit, respectively. CASA (current account savings account) deposits grew 11.69 per cent, the bank said.

During Q3 2021-22, the bank recovered Rs 430 crore, including recovery of Rs 25 crore in technically written off (TWO) accounts.

Stock of the bank closed at Rs 17.15 apiece on BSE, down by 1.44 per cent from the previous close.