One year after being hit by a $2 billion scam, Punjab National Bank (PNB) is set to return to annual profits and strong loan growth in fiscal 2020 even as investigations continue into the country's biggest banking fraud.
State-run PNB has already surprised markets with an earlier-than-expected profit for the quarter ended Dec. 31 as it completed setting aside funds to cover for the scam and its bad loan levels eased.
While the lender is still likely to post a loss of 59.84 billion rupees ($837.16 million) for this fiscal year ending March 31, analysts expect PNB to return to a full-year profit in the next fiscal, according to Refinitiv data.
The bank is expected to clock a net profit of 22.66 billion rupees for the year ending March 2020, which would be its highest annual profit in five years.
“The way the bank is shaping up, it is quite clear FY20 promises to be a much cleaner and better year for them,” said Abhinesh Vijayaraj, vice president equity research for Spark Capital Advisors (India).
PNB's loan growth is estimated to be 8.33 percent for fiscal 2020, its highest in 4 years, as per the mean of analysts' estimates from Refinitiv. Its total assets are projected to grow at the highest rate in three years.
The lender said in February 2018 two jewellery groups used fake bank guarantees issued by rogue staff to raise credit overseas, triggering a plunge in its stock and driving it to three straight quarterly losses due to fraud-related provisions.
PNB's loss for the quarter following the scam's discovery was also a massive $1.90 billion - the biggest ever for an Indian lender.
Market participants believe fiscal 2020 will likely be good for other lenders as well.