NEW DELHI: Punjab National Bank (PNB) reported a third straight quarterly loss on Friday as it set aside more money to account for a massive fraud, potentially frustrating the lender’s plan to return to a profit for the year.
Net loss came in at Rs 4,532 crore ($622.74 million) for the three months ended September 30, compared with a profit of Rs 561 crore a year earlier, and much bigger than an estimated average loss of Rs 1,438 crore, according to Refinitiv data.
PNB said earlier this year that staff at a Mumbai branch issued fake bank guarantees between 2011 and 2017 to help the firms of diamond magnate Nirav Modi and his uncle Mehul Choksi raise billions of dollars in foreign credit.
Including Rs 3,295 crore the lender set aside to cover the fraud, total provisions in the quarter nearly quadrupled to Rs 9,758 crore.
PNB owes banks a total Rs 14,357 crore for the illegal guarantees. The central bank has allowed the lender to spread the scam-related provisions over four quarters to December 2018.
However, asset quality, an issue troubling mainly state-run banks in the country, improved quarter-on-quarter at PNB. Gross bad loans as a percentage of total loans stood at 17.16 per cent at the end of September, compared with 18.26 per cent at the end of June, and 13.31 per cent a year earlier.
Earlier in the quarter, PNB had outlined measures to recover Rs 20,000 crore worth of bad loans, and said it planned to report a profit for the full year as it completes provisioning for the fraud and as bad loan additions slow.
Shares of the 124-year-old bank, which have lost more than half their value since the fraud came to light in late January, rose as much as 5.9 per cent after the results but then reversed direction to be down 1.3 per cent.