Motilal Oswal's research report on Punjab National Bank
PNB reported a mixed quarter, with an 8% miss in PAT and in-line growth in NII. PAT of INR11.5b was affected by high opex. NII grew 30% YoY to INR94.9b as domestic margin expanded 8bp QoQ to 3.4%. The bank also benefitted from interest on the IT refund of INR8.7b. The loan book grew 14% YoY to INR8.3t (in line), driven by healthy traction in retail loans. Deposits grew 12% YoY to INR12.8t (4% beat), led by 7.4% QoQ growth in term deposits. Slippages moderated to INR39.9b (2.2% annualized). GNPA/NNPA ratios thus improved by 102bp/58bp QoQ to 8.7%/2.7%. PCR increased 233bp QoQ to 70.8%. Total SMA overdue (>INR50m) too moderated to 0.01% of domestic loans. We increase our earnings estimates by 5%/9% for FY24/25 to factor in low provisions, and project RoA/RoE of 0.6%/8.9% by FY25E. Maintain Neutral.
Outlook
We increase our earnings estimates by 5%/9% for FY24/25 to factor in lower provisions, and project RoA/RoE of 0.6%/8.9% by FY25E. Maintain Neutral with a TP of INR55 (0.7x Sep’24E ABV).
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