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PNB
For 3QFY2011, Punjab National Bank (PNB) registered moderate net profit growth of 1.4%
qoq and 7.8% yoy to `1,090cr, in line with our estimates of `1,100cr. However, provisioning
expenses were more than 30%, higher-than-estimated, which were offset by higher noninterest
income. NII was above estimates as the bank was relatively aggressive in increasing
its Base and BPLR rates. During the quarter, the yield on funds increased by 10bp
sequentially to 8.3% and the cost of funds increased by 15bp sequentially to 4.5%. As a
result, reported NIMs expanded by 7bp sequentially to 4.13%. However, going forward, with
the rising cost of funds, the bank’s NIM is expected to be under pressure.
Operating income during the quarter registered strong growth of 32.7% on the back of
37.5% yoy growth in NII and 17.3% yoy growth in non-interest income to `857cr.
Advances grew sequentially by 6.0% (29.8% yoy) to `221,252cr, while deposits grew
sequentially by 5.7% to `288,873cr (23.5% yoy). Asset quality pressures continued for the
bank, with gross NPAs rising by 12.8% qoq and net NPAs increasing by 10.5% qoq. On a
qoq basis, the annualised slippage ratio increased by 14bp to 2.1%. Fresh additions stood at
`977cr (higher by `66cr compared to 2QFY2011) and deductions stood at `460cr (lower by
`39cr compared to 2QFY2011). The provision coverage ratio including technical write-offs
improved marginally to 77.2% from 77.1% in 2QFY2011. We maintain our cautious stand
on the bank’s asset quality.
At the CMP, the stock is trading at 1.5x FY2012E ABV. We recommend Accumulate with a
Target Price of `1,259.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
PNB
For 3QFY2011, Punjab National Bank (PNB) registered moderate net profit growth of 1.4%
qoq and 7.8% yoy to `1,090cr, in line with our estimates of `1,100cr. However, provisioning
expenses were more than 30%, higher-than-estimated, which were offset by higher noninterest
income. NII was above estimates as the bank was relatively aggressive in increasing
its Base and BPLR rates. During the quarter, the yield on funds increased by 10bp
sequentially to 8.3% and the cost of funds increased by 15bp sequentially to 4.5%. As a
result, reported NIMs expanded by 7bp sequentially to 4.13%. However, going forward, with
the rising cost of funds, the bank’s NIM is expected to be under pressure.
Operating income during the quarter registered strong growth of 32.7% on the back of
37.5% yoy growth in NII and 17.3% yoy growth in non-interest income to `857cr.
Advances grew sequentially by 6.0% (29.8% yoy) to `221,252cr, while deposits grew
sequentially by 5.7% to `288,873cr (23.5% yoy). Asset quality pressures continued for the
bank, with gross NPAs rising by 12.8% qoq and net NPAs increasing by 10.5% qoq. On a
qoq basis, the annualised slippage ratio increased by 14bp to 2.1%. Fresh additions stood at
`977cr (higher by `66cr compared to 2QFY2011) and deductions stood at `460cr (lower by
`39cr compared to 2QFY2011). The provision coverage ratio including technical write-offs
improved marginally to 77.2% from 77.1% in 2QFY2011. We maintain our cautious stand
on the bank’s asset quality.
At the CMP, the stock is trading at 1.5x FY2012E ABV. We recommend Accumulate with a
Target Price of `1,259.
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