Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PNB -------------------------------------------------------------------------------- Maintain OUTPERFORM
Revenues strong; slippages still high
● PNB's 4Q11 profit (Rs12 bn; 6% YoY) was in line with estimates
(pension provisions were offset by excess gratuity provision made
earlier). Revenues were strong while asset quality was weaker.
● Despite high gross slippages of 2.3% (credit costs of 0.9%), PNB’s
profitability remained strong in FY11 (1.3% ROA; 23% ROE; NIMs
up 39 bp to 4.0%) and coverage was healthy at 73%.
● Loan growth was robust at 30% YoY (9% QoQ) and 4Q margins
were slightly better than expected at 3.9% (down 8 bp). With rising
cost of deposits (and increasing share of term deposits) and
higher LDR (77%), we expect FY12 NIMs to moderate to 3.6%.
● Gross slippages continued to be high (2.1% in 4Q) similar to
trends at other govt banks. Higher write-offs (1.7%) and credit
costs (0.9%) led to gross NPLs declining 24 bps QoQ to 1.8%.
● Our FY12-13E EPS reduces by 5% (with higher savings rate) and
target price reduces to Rs1,254. Despite slower loan growth
(FY12-13 loan growth of 19-20%) and NIM compression, we
expect ROEs to stay around 20% and retain OUTPERFORM.
Healthy operating performance
Loan growth continued to be strong at 30% YoY and growth was
driven by corporate, retail and SME. Management is targeting to grow
at ~20% in FY12. Margins contracted 8 bp QoQ (versus our
expectation of a 15 bp drop) to 3.9% (driven by a 37 bp QoQ rise in
cost of funds). Loan yields were up 24 bp QoQ and the bank has
hiked base rate by 50 bp. NII growth was, however, weak at -5% QoQ
due to an income tax refund in 3Q and back ended loan growth in 4Q.
Share of CASA was stable QoQ at 39%. With increasing share of term
deposits (term deposits contributed 76% of the incremental deposits in
2H11) and LDR at a high 77%, we expect NIMs to moderate to 3.6%
in FY12. Fee income growth during the quarter was very strong (+53%
YoY) led by the strong recoveries from the written-off accounts. Total
pension for existing employees are at Rs27.6 bn and the provisions
for the retire employees are at Rs5.8 bn. The bank has made pension
provisions of Rs3.4 bn during the quarter (bank has adjusted against
earlier excess gratuity provisions). Outstanding pension provisions are
at Rs22 bn (Rs5.5 bn per year). Tier-I is currently at 8.4% and the
bank might be looking to raise capital in the near future.
Slippages continue to be high
Gross slippages in 4Q were higher than expected at 2.1% (Rs12.5 bn)
similar to the trends being witnessed at other government banks. 40%
of slippages are from the restructured assets. With the bank writing off
Rs10 bn during the quarter, gross NPLs were down 24 bp QoQ to
1.8% and coverage was down 340 bp QoQ to 73% (despite credit
costs of 0.9%). Restructured loans continue to be high at 5.5% of
loans and the bank has restructured Rs9.2 bn of loans (0.4% of loans)
during the quarter (cumulative slippages are at 13% of restructured
loans). Our FY11-12 credit cost estimates are at 0.8-0.7%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PNB -------------------------------------------------------------------------------- Maintain OUTPERFORM
Revenues strong; slippages still high
● PNB's 4Q11 profit (Rs12 bn; 6% YoY) was in line with estimates
(pension provisions were offset by excess gratuity provision made
earlier). Revenues were strong while asset quality was weaker.
● Despite high gross slippages of 2.3% (credit costs of 0.9%), PNB’s
profitability remained strong in FY11 (1.3% ROA; 23% ROE; NIMs
up 39 bp to 4.0%) and coverage was healthy at 73%.
● Loan growth was robust at 30% YoY (9% QoQ) and 4Q margins
were slightly better than expected at 3.9% (down 8 bp). With rising
cost of deposits (and increasing share of term deposits) and
higher LDR (77%), we expect FY12 NIMs to moderate to 3.6%.
● Gross slippages continued to be high (2.1% in 4Q) similar to
trends at other govt banks. Higher write-offs (1.7%) and credit
costs (0.9%) led to gross NPLs declining 24 bps QoQ to 1.8%.
● Our FY12-13E EPS reduces by 5% (with higher savings rate) and
target price reduces to Rs1,254. Despite slower loan growth
(FY12-13 loan growth of 19-20%) and NIM compression, we
expect ROEs to stay around 20% and retain OUTPERFORM.
Healthy operating performance
Loan growth continued to be strong at 30% YoY and growth was
driven by corporate, retail and SME. Management is targeting to grow
at ~20% in FY12. Margins contracted 8 bp QoQ (versus our
expectation of a 15 bp drop) to 3.9% (driven by a 37 bp QoQ rise in
cost of funds). Loan yields were up 24 bp QoQ and the bank has
hiked base rate by 50 bp. NII growth was, however, weak at -5% QoQ
due to an income tax refund in 3Q and back ended loan growth in 4Q.
Share of CASA was stable QoQ at 39%. With increasing share of term
deposits (term deposits contributed 76% of the incremental deposits in
2H11) and LDR at a high 77%, we expect NIMs to moderate to 3.6%
in FY12. Fee income growth during the quarter was very strong (+53%
YoY) led by the strong recoveries from the written-off accounts. Total
pension for existing employees are at Rs27.6 bn and the provisions
for the retire employees are at Rs5.8 bn. The bank has made pension
provisions of Rs3.4 bn during the quarter (bank has adjusted against
earlier excess gratuity provisions). Outstanding pension provisions are
at Rs22 bn (Rs5.5 bn per year). Tier-I is currently at 8.4% and the
bank might be looking to raise capital in the near future.
Slippages continue to be high
Gross slippages in 4Q were higher than expected at 2.1% (Rs12.5 bn)
similar to the trends being witnessed at other government banks. 40%
of slippages are from the restructured assets. With the bank writing off
Rs10 bn during the quarter, gross NPLs were down 24 bp QoQ to
1.8% and coverage was down 340 bp QoQ to 73% (despite credit
costs of 0.9%). Restructured loans continue to be high at 5.5% of
loans and the bank has restructured Rs9.2 bn of loans (0.4% of loans)
during the quarter (cumulative slippages are at 13% of restructured
loans). Our FY11-12 credit cost estimates are at 0.8-0.7%.
No comments:
Post a Comment