Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Punjab National Bank (PNBK.BO)
Buy Equity Research
In line with expectations on higher recoveries, other income
What surprised us
Punjab National Bank (PNB) reported 4QFY11 net profit of Rs12bn (up 4%
yoy), in line with Gse and 6% ahead of Bloomberg consensus. Key
takeaways: (1) NII adjusted for one-off dividend income came in at
Rs31.5bn (+24% yoy), 5% below GSe despite credit growth of 30% yoy as
CASA declined 60bp qoq to 38.5% and the bank reduced its duration on
investments. Unadjusted for the above, NIM compressed 22bp qoq to
3.91%. We estimate a 21bp decline in spreads in FY12E vs. FY11; (2) Noninterest income came in 42% ahead of GSe, driven by higher recoveries
(Rs2.2bn) and misc income of Rs1.7bn. Given the significant write-off taken
in FY11, PNB expects recovery to remain high; (3) Opex was 3% below
GSe. PNB made net provisions of Rs2.9bn for gratuity and pension,
including Rs5.8bn for retired employees in FY11 (after adjusting for
amortization of gratuity vs. taking a charge up-front in 9MFY11). Mgmt
stated it would take balance provisions of Rs26.6bn over the next four
years; (4) Loan loss provisions (1.1% of loans) came in 18% higher than
GSe. NPLs remain a concern: Gross NPLs declined 4% qoq to Rs43.8bn
(1.8% of advances), net NPLs grew 29% qoq to Rs20.4bn (0.85%) and
restructured assets grew 7% qoq to Rs153bn (6.3% of loans). However,
slippage remained high at 2.65% in 4Q (vs. 2.26% in 3Q).
What to do with the stock
We fine-tune our EPS estimates and retain our 12-m CAMELOT-based target
price of Rs1,350. While the environment remains challenging, we maintain
our Buy rating on PNB given strong earnings growth, high RoA of about
1.24% and RoE of over 22% for FY12E-FY13E. Key risk: (1) Higher slippage;
(2) higher growth leading to dilution in margins.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Punjab National Bank (PNBK.BO)
Buy Equity Research
In line with expectations on higher recoveries, other income
What surprised us
Punjab National Bank (PNB) reported 4QFY11 net profit of Rs12bn (up 4%
yoy), in line with Gse and 6% ahead of Bloomberg consensus. Key
takeaways: (1) NII adjusted for one-off dividend income came in at
Rs31.5bn (+24% yoy), 5% below GSe despite credit growth of 30% yoy as
CASA declined 60bp qoq to 38.5% and the bank reduced its duration on
investments. Unadjusted for the above, NIM compressed 22bp qoq to
3.91%. We estimate a 21bp decline in spreads in FY12E vs. FY11; (2) Noninterest income came in 42% ahead of GSe, driven by higher recoveries
(Rs2.2bn) and misc income of Rs1.7bn. Given the significant write-off taken
in FY11, PNB expects recovery to remain high; (3) Opex was 3% below
GSe. PNB made net provisions of Rs2.9bn for gratuity and pension,
including Rs5.8bn for retired employees in FY11 (after adjusting for
amortization of gratuity vs. taking a charge up-front in 9MFY11). Mgmt
stated it would take balance provisions of Rs26.6bn over the next four
years; (4) Loan loss provisions (1.1% of loans) came in 18% higher than
GSe. NPLs remain a concern: Gross NPLs declined 4% qoq to Rs43.8bn
(1.8% of advances), net NPLs grew 29% qoq to Rs20.4bn (0.85%) and
restructured assets grew 7% qoq to Rs153bn (6.3% of loans). However,
slippage remained high at 2.65% in 4Q (vs. 2.26% in 3Q).
What to do with the stock
We fine-tune our EPS estimates and retain our 12-m CAMELOT-based target
price of Rs1,350. While the environment remains challenging, we maintain
our Buy rating on PNB given strong earnings growth, high RoA of about
1.24% and RoE of over 22% for FY12E-FY13E. Key risk: (1) Higher slippage;
(2) higher growth leading to dilution in margins.
No comments:
Post a Comment