Published: Wed, May 16, 2018
Business | By Tara Barton

PNB registers biggest loss for Indian bank in a quarter

PNB registers biggest loss for Indian bank in a quarter

For the full year ending March 2018, PNB's net loss stood at Rs 12,130 crore as against a net profit of Rs 1187 crore in FY17.

The filing further said that the bank has made higher than required provisions amounting to Rs 7,178.42 crore. It is the biggest loss reported by an Indian bank for any three-month period.

"After including outstanding amounts under other credit facilities to the above entities, the amount involved now works out to be Rs 14,356.84 crore", PNB said.

"Their capital is very low, and a bank needs it to sustain growth", said Yuvraj Choudhary, an analyst at Mumbai brokerage Anand Rathi, who said PNB's reported loss was more than triple his estimate, calling it a "major concern".

Thanks to a reprieve from RBI, the bank made provisions of Rs 7,178 crore for Nirav Modi fraud during the March quarter, with an equal amount to be set aside during the first three quarters of the current financial year.

It had reported standalone profit of Rs 261.90 crore in the fourth quarter of 2016-17. Over the last couple of years, following the central bank's directive that mandates banks to disclose all their bad and doubtful loans, several public sector banks have been reporting huge amounts of bad loans and Punjab National Bank figures among the banks that are worst hit due to heavy defaults by borrowers. The bank has witnessed deterioration in gross net performing assets (NPAs) or bad loans, which rose to 18.38 per cent of gross advances at the end of March this year, as against 12.53 per cent a year ago.

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Justice Rajiv Shakdher issued notice to the CBI and SFIO, which is also conducting an investigation into the matter, and listed the matter for further hearing on July 25.

Moreover, the bank has created liability in the books in respect of LOUs/FLCs which were due after March 31 amounting to Rs 6959.79 crores. The stock started falling after the bank was hit by Rs 11,400-crore scam committed by Nirav Modi in February 2018.

PNB, which raised 50 billion rupees from a share sale in December and has received almost 55 billion rupees from the government as part of a $32 billion bank recapitalisation programme, has said it is adequately capitalised for now.

The total income for the fourth quarter declined to Rs 12,945.68 crore from Rs 14,989.33 crore in the year-ago period.

PNB's capital ratio fell to 9.2 percent at the end of March from 11.66 percent a year ago, according to a PNB presentation.

As a result, provisions for the bad loans jumped four-fold to Rs 16,202.82 crore for the quarter under review compared to Rs 4,910.39 crore parked aside in the same period a year ago.

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