Punjab & Sind Bank down 5% after dismal Q1 performance

The Punjab & Sindh Bank stock was trading over 5 percent lower in the morning on August 7 following a weak first quarter performance.

The public sector lender reported a profit of of Rs 153 crore in the June quarter, down 25.4 percent from the year-ago period, as higher provisions (up 121 percent YoY), and tepid operating income growth weighed on the performance.

Net interest income grew 4 percent to Rs 738 crore, with gross advances rising 10.4 percent and deposits increasing 12.5 percent, while operating profit rose by 2 percent to Rs 257 crore in Q1FY24.

On the asset quality front, gross non-performing assets fell 17 basis points QoQ to 6.80 percent but net NPA increased 11 bps to 1.95 percent during the quarter.

Mutual fund foray

To expand fee-based income, the state-owned lender is planning a foray into mutual fund space and hopes to find a partner by September, a senior official has said.

“The bank has already floated a Request for Proposal to finalise a partner in the Fintech space, and we hope to conclude the process soon,” Punjab & Sind Bank managing director Swarup Kumar Saha told news agency PTI.

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He hoped the bank would be able to zero in on a partner by the end of the second quarter and start operations in the current financial year.

He said the asset management business would help the bank increase fee income by cross-selling products.

There are 44 asset management companies in India. Assets Under Management (AUM) management by these companies stood at Rs 44,39,187 crore as of June 30, 2023, more than a five-fold increase over 10 years.

Many public sector lenders, including the State Bank of India (SBI), have their mutual fund subsidiaries. Talking about the growth plan for the current fiscal, Saha said credit growth is expected to be 13-14 percent, while deposit mobilisation would grow 8-10 percent.

Also Read: SBI gains on almost three-fold jump in Q1 net profit

The bank expects a recovery of Rs 1,500 crore and aims to keep fresh slippages under Rs 1,500 crore in the current financial year. further said that the provision coverage ratio should increase to 90 percent from 88.58 percent.

In terms of asset quality, the bank aims to bring down gross NPA to 6 percent, while net NPA below 1.5 percent during the year, he said.

Stock Performance

Punjab & Sindh Bank has given a return of 14.05 percent over the last six months, outperforming the Nifty Bank which has given a return of 8.20 percent.

At 11.06 am, the stock was trading at Rs 31.25 on NSE, down 5.30 percent from the previous close.

(With PTI inputs)

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