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P a c e o f b u s i n e s s g r o w t h t o s l o w d o w n …
We met the management of Punjab National Bank (PNB) to get an insight
of present scenario in banking industry and PNB’s current state of affairs.
The management was circumspect about credit growth and expects the
proportion of non-interest income to improve as the business slowdown
compels banks to look for other sources of revenue. Management
expects to maintain NIM >3.5% for FY12E and expects the same to
moderate gradually. Hence, we are revising our credit growth estimate
from 19.5% to 18% for FY12E, thereby reducing the PAT estimate from |
4942.9 crore to | 4886.9 crore for FY12E (10.2% YoY growth). We
expect16.3% CAGR PAT growth over FY11-13E to | 5991 crore
ƒ Credit growth revised from 19.5% to 18% for FY12E
The management has suggested slowing economy and high interest rate
environment may lead to a deceleration in the pace of credit growth to
16% for the industry by FY12E. It has guided moderate credit growth of
18% for PNB by FY12E compared to 30% for FY11.
ƒ Outstanding restructured assets at 6% of advances
In the Q2FY12 investor presentation, PNB had reported total restructured
assets to date worth | 19966 crore. However, the management has later
presented that outstanding restructured assets stood at | 14995 crore
(6% of advances), which is an appropriate measure. Power (SEB
exposure worth | 7800 crore), aviation and small steel companies are the
major sectors, which are under stress. In line with the management, we
expect the GNPA ratio at 2.03% and NNPA ratio at 0.89% for FY12E.
V a l u a t i o n
Strong NIM of >3.5% coupled with other income results in healthy net
profits enabling PNB to make adequate provisions for slippages. We
expect RoE and RoA at 21.3% and 1.2%, respectively, for FY13E. CAR for
the bank stands at 12.2% with the Tier I ratio at 8.4%. It expects | 1000
crore from government by FY12E, not factored in our estimates and value
the bank at 1.2x FY13E ABV maintaining our target price of | 1050.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P a c e o f b u s i n e s s g r o w t h t o s l o w d o w n …
We met the management of Punjab National Bank (PNB) to get an insight
of present scenario in banking industry and PNB’s current state of affairs.
The management was circumspect about credit growth and expects the
proportion of non-interest income to improve as the business slowdown
compels banks to look for other sources of revenue. Management
expects to maintain NIM >3.5% for FY12E and expects the same to
moderate gradually. Hence, we are revising our credit growth estimate
from 19.5% to 18% for FY12E, thereby reducing the PAT estimate from |
4942.9 crore to | 4886.9 crore for FY12E (10.2% YoY growth). We
expect16.3% CAGR PAT growth over FY11-13E to | 5991 crore
ƒ Credit growth revised from 19.5% to 18% for FY12E
The management has suggested slowing economy and high interest rate
environment may lead to a deceleration in the pace of credit growth to
16% for the industry by FY12E. It has guided moderate credit growth of
18% for PNB by FY12E compared to 30% for FY11.
ƒ Outstanding restructured assets at 6% of advances
In the Q2FY12 investor presentation, PNB had reported total restructured
assets to date worth | 19966 crore. However, the management has later
presented that outstanding restructured assets stood at | 14995 crore
(6% of advances), which is an appropriate measure. Power (SEB
exposure worth | 7800 crore), aviation and small steel companies are the
major sectors, which are under stress. In line with the management, we
expect the GNPA ratio at 2.03% and NNPA ratio at 0.89% for FY12E.
V a l u a t i o n
Strong NIM of >3.5% coupled with other income results in healthy net
profits enabling PNB to make adequate provisions for slippages. We
expect RoE and RoA at 21.3% and 1.2%, respectively, for FY13E. CAR for
the bank stands at 12.2% with the Tier I ratio at 8.4%. It expects | 1000
crore from government by FY12E, not factored in our estimates and value
the bank at 1.2x FY13E ABV maintaining our target price of | 1050.
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