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Punjab National Bank posts fiscal Q4 net loss on provision against alleged fraud

Punjab National Bank, India's second-largest state bank, swung to a fiscal fourth-quarter net loss after setting aside cash for an alleged fraud involving jeweler Nirav Modi.

The bank on May 15 posted a net loss of 134.17 billion Indian rupees for the three months ended March 31, compared to a net profit of 2.62 billion rupees in the prior-year period. Loss per share for the quarter stood at 54.89 rupees, compared to an EPS of 1.23 rupees.

During the quarter, the bank made provisions of 71.78 billion rupees as it honored claims linked to the alleged fraud. The remaining provisions of 71.78 billion rupees will be made during the first three quarters of the fiscal year ending March 31, 2019, the bank said.

The bank is still dealing with the fallout from the alleged US$2 billion fraud case, where junior officials at one of its branch allegedly extended fraudulent loans to Modi and his uncle Mehul Choksi between 2011 and 2017. The case came to light in February when the lender issued a voluntary disclosure.

The bank's total provisions and contingencies for the quarter amounted to 203.53 billion rupees, compared to 57.54 billion rupees in the prior-year period.

For the fiscal full-year ended March 31, the bank's consolidated net loss was 121.30 billion rupees, compared with a net profit of 11.87 billion rupees in the prior year. Loss per share for the year stood at 54.71 rupees, compared to an EPS of 5.78 rupees.

Interest earned for the fiscal year rose to 487.25 billion rupees from 480.58 billion rupees. Income from investment rose to 139.79 billion rupees from 126.05 billion rupees.

Total income rose to 576.08 billion rupees from 572.26 billion rupees, while operating profit dropped to 104.35 billion rupees from 149.80 billion rupees. Meanwhile, operating expenses rose to 136.43 billion rupees from 95.24 billion rupees.

The bank's gross nonperforming assets ratio was 18.38% as of March 31, down from 12.53% at March 31, 2017. Its net NPA ratio for the period was 11.24%, up from 7.81% in the prior-year period.

As of May 14, US$1 was equivalent to 67.57 Indian rupees.