Hit by over Rs 14,000 cr fraud, PNB reports surprise profit of Rs 247 cr in December quarter

New Delhi: Indian state-run Punjab National Bank (PNB), which has been hit badly by a $2 billion (Rs 14,357 crore) fraud, posted a surprise quarterly profit on Tuesday, helped by a sharp drop in provisions.

The results come nearly a year after PNB disclosed that two jewellery groups had defrauded it in India’s biggest banking scam, raising credit overseas with fake guarantees issued by rogue bank staff.

PNB, India’s second-largest state-run lender by assets, reported losses for three straight quarters following the scam, on account of higher provisions. This included the biggest ever quarterly loss for an Indian bank recorded by PNB in the March quarter last year.

In the three months to Dec. 31, PNB posted a profit of Rs 247 crore ($34.44 million), compared to a profit of Rs 230 crore a year earlier, and compared to analysts’ expectations for a loss of Rs 1,063 crore, according to Refinitiv Eikon data.

“We are back in (the) black, after 100% provisions for all our commitments,” PNB chief executive Sunil Mehta told an earnings briefing.

Mehta also said the recovery of about 160 billion rupees in the quarter helped the bank improve its performance.

Provisions in the quarter, which included those for bad loans and funds set aside in relation to the scam, dropped 38.3% to Rs 2,754 crore.

The bank set aside Rs 2,014 crore in the quarter for the illegal guarantees, completing its provisioning for the Rs 14,357 crore it owes banks for the scam.

Asset quality improved quarter-on-quarter, with gross bad loans as a percentage of total loans easing to 16.33% at the end of December from 17.16% at the end of September. This was still higher than 12.11% a year earlier.

PNB shares were up about 1% on Tuesday afternoon after the results.

(With inputs from Reuters)