Views on Punjab National Bank 4QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP Research – Banking, Angel Broking) on Punjab National Bank 4QFY2014 results:

"PNB's operating numbers came below ours as well as street's estimates, while asset quality witnessed pressures (as compared to improvement witnessed in last quarter). On the operating front, NII for bank grew by 6.0% yoy (5.2% de-growth qoq) largely due to interest reversals on bad loans. Non-interest income grew 18.8% yoy higher than our estimates. Opex growth for the bank moderated to 5.9% (as compared to ~20% growth witnessed in last 2 quarters). Overall the Pre-Provisioning operating profit grew by 11.3% yoy (aided by higher-than-estimated non-interest income). On the asset quality front absolute gross NPAs increased by 13.8% qoq while absolute net NPAs increased by 9.2% sequentially. Slippages surged significantly qoq at Rs. 4,182cr (Rs. 1,505cr in 3QFY14) while incremental restructuring came at Rs. 2,900cr (Rs. 2,150cr in 3QFY14) both much higher than our estimates. Thus gross and net NPAs ratios increased by 29bp and 5bp qoq to 5.3% and 2.9% respectively. Overall earnings for the bank de-grew by 28.7% yoy. At CMP, the stock trades at relatively cheaper valuations of 0.7x FY2016E ABV compared to its peers. We recommend Buy rating on the stock."

Source : Equity Bulls

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