Punjab National Bank Q4FY11 Result Update; Profits protected; slippages rise; Emkay

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Punjab National Bank Q4FY11 Result Update; Profits protected; slippages rise; Accumulate; Target: Rs1,300

n    PNB’s Q4FY11 net profit of Rs12.0bn and NII of Rs30.3bn inline with expectations. However sharp rise in slippages to Rs12.5bn a negative surprise

n    The NII grew by 21.3%yoy (down 5.5%qoq) driven by 30%yoy (9.4%qoq) growth in advances, albeit NIM’s contracted by 22bps qoq to 3.9%

n    Rs4.8bn of slippages have arisen from restructured asset portfolio. The PCR including tech w/offs has also declined by ~400bps to 73.2%

n    Stock performance to hinge on controlling slippages and push up PCR. Valns not unreasonable at 1.6x FY12E/1.2x FY13E ABV. Maintain ACCUMULATE  with TP of Rs1,300