New Delhi: The country's second largest state-run lender Punjab National Bank on Thursday posted a marginal 3.4 percent rise in net profit to Rs 1,105 crore for the first quarter on account of higher provisioning against bad debts and decline in treasury income.
The bank had a net profit of Rs 1,068 crore during the April-June quarter of the previous fiscal.

Total income during the first quarter, however, grew by 36.9 percent at Rs 9,399 crore against Rs 6,863 crore in the same period during 2010-11.
The net profit has been impacted due to higher provisioning, decline in treasury income during the quarter, PNB Chairman and Managing Director K R Kamath told reporters here.
However, the operating profit of the bank during the quarter rose by 18 percent to Rs 2,474 crore as compared to Rs 2,098 crore in the same quarter a year ago, he said.
During the quarter, the bank made total provision of Rs 1,368 crore. Of this, Rs 566 crore was towards bad debts and Rs 475 crore was towards income tax.
At the same time, the net interest income of the bank grew by 20 percent at Rs 3155 crore during the quarter.

On revision of interest rates, Kamath said, "There is upward bias on the rates. The bank will decide on the hike tomorrow".
Earlier this week, the RBI raised the key policy rates by a hefty 50 basis points making cost of fund expensive.

Total business crossed Rs 5.67 lakh crore at the end of the quarter, he said, adding, this is higher by 25.4 percent.

During the year, the bank's net interest margin declined to 3.84 per cent from 3.91 percent at the end of June, 2010.

On the margin outlook for the current fiscal, Kamath said, "We will try to hold the net interest margin at 3.5 percent during the year".
Capital adequacy of the bank as at the end of June as per the Basel-II norms was 12.42 percent at the end of June, 2011.
Significantly, the gross non-performance asset (NPA) as a proportion of advances went up to 2 percent against 1.82 per cent at the end of June last year. Net NPA also rose to 0.86 percent during the year from 0.66 percent.
Asserting gross NPA level is not alarming, he said, adding, the bank has put focus on recovery. There is a perception that the increasing rate scenario, there is pressure on asset quality, he said, adding, the bank has put in mechanism for strict credit monitoring system.