Punjab National Bank | Q3FY15 Result Update | Disappointment continues. Negative outlook remains unchanged, rating changed to HOLD from SELL with target price of Rs 173... :: IndiaNivesh

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PNB’s Q3FY15 results were marginally below our expectation on Net Interest income front which came in at Rs 42.3 bn (vs exp of Rs 44.1 bn) led by higher NPAs and lower loan growth. Operating profit was inline with our expectation at Rs 27.5 bn on back of higher non interest income of Rs 12.9 bn. Net Profit was inline with expectation at Rs 7.7 bn. Asset quality deterioration continues with fresh slippages of Rs 55.5 bn (6.2% ann) vs Rs 35.7 bn (4.1% ann) in Q2FY15 and fresh restructuring of Rs 25 bn. Gross / Net NPA increased by 32 / 56 bps qoq to 5.97% / 3.82%. Revising our estimates by -9% / -1% for FY15E / FY16E and introducing FY17E earnings. We revise our rating to HOLD from SELL with target price of Rs 173 mainly due to sharp correction in stock price on result day and roll over of multiple to 1x FY17E. Result update Retail advances drive Loan growth: Loan growth of PNB came in at 11% yoy to Rs 3721 bn. Domestic advances growth was at 8% yoy led by strong growth in retail advances (up 28% yoy to Rs 462 bn). Chunk of the growth in retail book has come from secured advances of Housing and Car which grew by 24% and 21% yoy respectively. Large industry advances have come down by 3% qoq mainly due to conscious decision of not growing this segment due to stress.

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