Punjab & Sind Bank reported its September-quarter numbers on Saturday evening, October 17, and profit came in ₹412 crore, up 39.66% from ₹295 crore a year ago. The Punjab & Sind Bank Q2 results also show a 24.47% rise over the June quarter’s ₹331 crore. The more telling numbers sit lower down, though: bad loans are shrinking, and loans are growing much faster than deposits.
In this article
Punjab & Sind Bank Q2 results: the profit line, unpacked
Net interest income, which is interest earned minus interest paid, rose 22.32% to ₹1,162 crore, according to the bank’s press release filed with BSE. Net interest margin improved to 2.77% from 2.60% a year earlier. Operating profit grew 22.38% year-on-year to ₹618 crore, and 13.39% from ₹545 crore in Q1.
Provisions helped too. The results statement on BSE puts provisions other than tax at ₹52.11 crore for the quarter. The half-year figure is ₹146.10 crore, which means the June quarter carried about ₹94 crore. Put simply, compared with Q1 the bank set aside about ₹42 crore less for bad loans while operating profit rose by roughly ₹72 crore, and both fed into the bottom line.
Costs moved the right way. Cost-to-income fell to 59.19% from 61.87%, and core fee income grew 23.62% to ₹246 crore. Return on assets rose to 0.88% from 0.72%, while return on equity climbed to 13.21% from 10.41%.
Asset quality keeps improving
Gross NPAs dropped to 2.09% of advances from 2.92% a year ago. In rupee terms, gross bad loans fell 14.47% to ₹2,636 crore from ₹3,082 crore. Net NPAs came down to 0.61% from 0.83%, or ₹751 crore against ₹854 crore. Provision coverage rose 60 basis points to 92.48%.
Capital is the one ratio that went the other way. The capital adequacy ratio (CRAR) fell 64 basis points, from 17.19% to 16.55%, and the results statement shows a CET1 ratio of 15.49%. That is still a comfortable cushion, but it is thinner than a year ago.
Loans are outrunning deposits
Total advances grew 19.28% to ₹1,25,919 crore, while deposits rose 12.97% to ₹1,53,312 crore. The push is in retail, agriculture and MSME lending (the bank calls this RAM), which grew 31.08% and now makes up 61.37% of advances, up from 55.84%. Retail loans alone jumped 42.71%, MSME 28.69% and agriculture 16.01%.
By our arithmetic from the bank’s table, advances now equal about 82% of deposits, compared with about 78% a year ago. That gap is the obvious thing to watch. Faster lending lifts income, but if deposits don’t keep pace, the bank may have to pay more for funds or lean on borrowings, and the lower CRAR leaves a little less room than it had last year.
For the half year, net profit rose 31.74% to ₹743 crore from ₹564 crore. The government of India holds 93.85% of the bank, as per the filing.
How this stacks up
Since the numbers came out on a Saturday, Monday is the first session where the stock can react. The quarter reads well on credit quality and margins; funding is the soft spot. For other bank results from the same weekend, see our notes on Central Bank of India’s Q2 and IDBI Bank’s Q2 results, plus PNB’s September quarter.
Disclaimer: This article is for information only and is not investment advice or a recommendation to buy or sell any security. Figures are from the bank’s exchange filings linked above. Consult a SEBI-registered investment adviser before making investment decisions.
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