Punjab National Bank (PNB) reported a $802 million quarterly net loss, the worst ever for a local bank due to a surge in provisions for sour debt, and said a clean-up of its bad loans was not over yet.
Banks in India have seen a surge in bad loans after a clean-up ordered by their regulator, the Reserve Bank of India. The central bank wanted banks to classify some troubled accounts as non-performing and make adequate provisions for those through the December and March quarters.
PNB, the fourth-biggest of the state-run lenders by assets, said its net loss was 53.67 billion rupees ($802 million) for its fiscal fourth quarter to March 31, compared with a net profit of 3.07 billion rupees a year earlier. The loss was the first for the bank since it went public in 2002.
"It is very easy to say the bad days are over, but I will never say that," Chief Executive Usha Ananthasubramanian told a news conference on Wednesday, adding the pace of economic growth needed to quicken for a clean-up of sour loans.
The bank with an impaired asset ratio of 17.55 percent in March has about 110 billion rupees worth of loans where borrowers have delayed repayment beyond 60 days, she said, adding some of those loans could become non-performing.
In the March quarter, the bank's provisions, including for loan losses, nearly tripled from a year earlier to 104.85 billion rupees. Gross bad loans as a percentage of total loans rose to 12.9 percent in March from 8.47 percent in December, and 6.55 percent a year earlier.
"Mounting provisions and sustained pressure on asset quality and margins will keep earnings soft," Religare Institutional Research analysts wrote in a note, retaining their "sell" rating on the stock.
Corporation Bank Ltd, a smaller state-run lender, also reported on Wednesday a fourth-quarter net loss of 5.11 billion rupees.
Including PNB and Corporation Bank, 10 state-run banks have so far reported losses in the March quarter.