Public sector bank, Punjab National Bank has reported a good performance in Q1 of this fiscal. But a sudden increase in bad assets has mared the otherwise good performance of the bank. But there is no reason for worry as the bank’s provision coverage ratio is 77.6% for its NPAs as against the 70% limit fixed by the banking regulator, RBI.
Despite the increase in bad assets, the non performing assets (NPAs) comprised mere 0.7% of the total loan book of the bank for first quarter. This shows that the asset quality of the bank is still superior to other banks with industry average for good NPA level being 1%.
The loan book of PNB has growth rate exceeding the industry growth rate. Moreover the string net interest margin (NIM) offers a robust support to its business model.
This quarter displayed a progress in the bank’s NIM by 70 basis points. This posted a robust 45% increase in its net interest income (NII).
While this quarter has not been easy for PNB it certainly has prospects of getting better. The bank must keep a watch on its asset quality over the next few quarters.