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Result Reviews
Punjab National Bank
For 4QFY2011, Punjab National Bank (PNB) reported moderate net profit growth of 5.8%
yoy to `1,201cr. At the PBT level, results were slightly below our expectations. Results were,
however, above expectations on the net profit front due to lower tax rate for the quarter
than built in by us. A substantial 29.4% qoq increase in net NPAs was the key negative
from the results. Business growth momentum was strong with advances and deposits
growing by 9.4% qoq and 8.3% qoq, respectively. On a yoy basis, advances and deposits
grew by 29.8% and 25.5%, respectively.
Reported NIM declined by 22bp qoq to 3.91% during 4QFY2011. Consequently, NII
growth was below expectations, declining by 5.4% qoq. Non-interest income growth was
strong both sequentially as well as on a yoy basis, registering growth of 33.6% qoq and
22.6% yoy.
Operating expenses increased by 51.5% yoy, primarily due to a 72.9% increase in
employee expenses due to the hit of employee benefit-related liabilities. However, on a
sequential basis, operating expenses declined by 2.6% due to a 7.7% fall in employee
expenses. The bank put the figure for liability under the second pension option at
`2,758cr, lower than the estimate of `3,600cr projected by the management in
3QFY2011. Liability for enhancement in gratuity limits is pegged at `566cr as per
actuarial valuations.
On the asset-quality front, the annualised slippage ratio increased to 2.7% from 2.1% in
3QFY2011. However, on account of higher write-offs, gross NPAs declined by 3.6% qoq.
However, net NPAs increased substantially by 29.4% qoq to `2,039cr. Consequently, gross
NPA ratio improved sequentially to 1.8% but net NPA ratio deteriorated to 0.9% from 0.7%
in 3QFY2011. The provision coverage ratio including technical write-offs declined to
73.2% from 77.2% in 3QFY2011.
Post the recent correction across the board, the stock is trading at 1.3x FY2013E ABV.
Hence, we recommend Buy on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
Punjab National Bank
For 4QFY2011, Punjab National Bank (PNB) reported moderate net profit growth of 5.8%
yoy to `1,201cr. At the PBT level, results were slightly below our expectations. Results were,
however, above expectations on the net profit front due to lower tax rate for the quarter
than built in by us. A substantial 29.4% qoq increase in net NPAs was the key negative
from the results. Business growth momentum was strong with advances and deposits
growing by 9.4% qoq and 8.3% qoq, respectively. On a yoy basis, advances and deposits
grew by 29.8% and 25.5%, respectively.
Reported NIM declined by 22bp qoq to 3.91% during 4QFY2011. Consequently, NII
growth was below expectations, declining by 5.4% qoq. Non-interest income growth was
strong both sequentially as well as on a yoy basis, registering growth of 33.6% qoq and
22.6% yoy.
Operating expenses increased by 51.5% yoy, primarily due to a 72.9% increase in
employee expenses due to the hit of employee benefit-related liabilities. However, on a
sequential basis, operating expenses declined by 2.6% due to a 7.7% fall in employee
expenses. The bank put the figure for liability under the second pension option at
`2,758cr, lower than the estimate of `3,600cr projected by the management in
3QFY2011. Liability for enhancement in gratuity limits is pegged at `566cr as per
actuarial valuations.
On the asset-quality front, the annualised slippage ratio increased to 2.7% from 2.1% in
3QFY2011. However, on account of higher write-offs, gross NPAs declined by 3.6% qoq.
However, net NPAs increased substantially by 29.4% qoq to `2,039cr. Consequently, gross
NPA ratio improved sequentially to 1.8% but net NPA ratio deteriorated to 0.9% from 0.7%
in 3QFY2011. The provision coverage ratio including technical write-offs declined to
73.2% from 77.2% in 3QFY2011.
Post the recent correction across the board, the stock is trading at 1.3x FY2013E ABV.
Hence, we recommend Buy on the stock.
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