CARE Ratings upgrades Punjab National Bank ratings from AA Stable to AA

CARE Ratings has revised the ratings on Punjab National Bank's various debt instruments from AA Stable to AA Stable. The bank has a low-cost and stable Current Account Savings Account CASA deposit base and makes its liability profile strong, as per CARE Ratings.

The bank has raised equity capital, improved capitalisation, and increased its ability to absorb asset quality pressures after the merger of United Bank of India UBI and Oriental Bank of Commerce with PNB on April 1, 2020.

CARE believes that the government will provide capital support to PSBs on a need basis so that covenants for coupon payment are not breached in the future.

As per CARE, PNB has seen a significant increase in distributable reserves and capital cushion over the minimum regulatory requirement. The bank's CAR's total capital adequacy ratio has improved and stood at 15.20 per cent.

PNB reported a standalone net profit of Rs 620.81 crore for the quarter ended September 30, 2020, which is a 22.43 per cent increase from Rs 507.05 crore in the year-ago period.

Net interest income NII, the difference between interest earned and interest expended, stood at Rs 8,393 at the end of the second quarter of the financial year 2020 -- 21. 20, as opposed to Rs 4,263. 84 were in the year-ago period.

PNB reported an improvement in asset quality, with net NPAs at Rs 30,919. There were 84 crore. Net NPAs as a per cent of net advances during Q 2 FY 21 was 4.75 per cent, as opposed to 7.65 per cent in Q 2 FY 20 and 5.39 per cent in Q 1 FY 21.

The Punjab National Stock is trading at Rs 40.05, 0.40 paise or 0.99 per cent, as compared to the previous session close of Rs 40.45 on the NSE.