On Wednesday, Stock value of Punjab National Bank tanked over ten percent in stock market after PNB on Tuesday said its losses widened to Rs 13,417 crore in the January-March 2018 quarter from Rs 262 crore in the same period last year. Higher provisioning made by the PNB for NPA (Non-Performing Assets) is behind the unprecedented jump in its loss.
In the same quarter a year ago, the bank had turned around due to write-back in pension provisions to report a profit of Rs 261.9 crore as against a massive loss of Rs 5,367.1 crore in March-end quarter 2016.
The scrip was trading 10.99 per cent down at Rs 76.50 on NSE at around 9.19 am (IST). Shares of the scam-hit bank opened at Rs 79.15 and touched a high and low of Rs 80 and Rs 76.10, respectively, in trade so far. Benchmark NSE Nifty index was down 44 points, or 0.41 per cent, at 10,757.50 at around the same time.
The state-owned bank had reported an Rs 11,000 crore fraud in February that shook public confidence in the country’s banking system.
With regards to provision made for the loss incurred on account fraud, the bank said it provided for Rs 7,178 crore, 50 per cent of the total amount of Rs 14,356 crore in the fourth quarter of 2017-18. The remaining amount will be covered in the three quarters of the current fiscal year.
The bank added that it has paid Rs 6,586.11 crore to other banks to discharge its liabilities towards Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) issued fraudulently and in unauthorized manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with CBS (core banking solutions).
Brokerage firm Nomura downgraded PNB shares to ‘reduce’ with a target price of Rs 75 from Rs 115 earlier. “QFY18 loss of Rs 134 billion and FY19 loss estimate of Rs 80 billion could lead to a spiral of capital-raising at low multiples,” the global brokerage house said.