Punjab National Bank (PNB) will earn moderate profit in the current fiscal, aided by treasury income and core banking activities, its managing director SS Mallikarjuna Rao on Saturday said.
For the fourth quarter ended March, the country''s second largest lender has posted a net loss of Rs 697.20 crore.
However, after a gap of two years, the Nirav Modi fraud hit bank posted profit of Rs 363.34 crore during 2019-20.
He also said that the bank has scaled down its loan growth target to 6 per cent for the current fiscal due to the COVID-19 crisis.
"Originally, we planned for credit growth of 12 per cent but due to COVID impact we have moderated credit growth to 6 per cent," he told reporters here.
However, he said, the bank has a treasury advantage due to reduction in interest rates.
PNB has already booked a more than Rs 1,000 crore profit as a result of reduction in government securities (G-sec) prices, he added.
Banks are selling high coupon rate G-sec in the market and booking profit due to sale of these securities.
"My expectation is that the advantage of the treasury will continue. Treasury gain will moderate in the third and fourth quarter if interest rate hardens.
"Second, if you look at operating profit, we have sustained during 2019-20. It was only because of provision, the net profit was very less or net loss we had to declare in the third and fourth quarter. Provisions whatever is pending behind us will be completely over by September 2020," he said.
So third quarter onwards provision impact will be less while operating profit will grow even if treasury impact is not there, he added.
During the fourth quarter, the bank earned an operating profit of Rs 3,932.28 crore as against Rs 2,861.18 crore in the same period preceding fiscal.
"We are confident that quarter-on-quarter we can book moderate profits. We do not like to have higher profit because we want to strengthen the balance sheet during 2020-21.
"We are very confident that we will be creating a better base for the bank not only for booking moderate profit in 2020-21 but also creating a robust situation for 2021-22," he said.
With regard to the sale of some of the assets, he said, the bank is looking at selling some of its properties, including its earlier headquarter building.
He also said the provisioning coverage ratio (PCR) as on March 31, 2020, works out to 77.79 per cent from 74.50 per cent at the end of 2018-19.
Despite an increase in the PCR, the net interest margin (NIM) of the bank stood at 2.45 per cent from 2.59 per cent at the end of previous fiscal.
The bank expects to maintain NIM of 2.5 per cent for the entire financial year, Rao said
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