Punjab National Bank - Stellar performance ACCUMULATE ::Emkay,

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Punjab National Bank

Stellar performance

ACCUMULATE

CMP: Rs1,013                                        Target Price: Rs1,270

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n     PNB reports stellar results with NII (Rs34.5bn) and PAT (Rs12.1bn) sharply ahead of our/street estimates. Improved reco/upgrades (60% of op GNPAs) remain stand-out points

n     Loan growth at 2.5% qoq remained broad based; deposits up 5.5% qoq largely in the nature of term deposit. CASA eases to 37%, but NIMs still expand 11bps qoq led by better yields

n     Asset quality surprised +vely with slippages at Rs9.9bn. Major restructuring in troubled segments of Power (SEB) and drilling – a prudent step

n     With material improvement in asset quality, we are now factoring in lower credit cost (avg 81bps). Valuations at 1.4x FY12E/1.1x FY13E ABV appear reasonable