MOSL: PUNJAB NATIONAL BANK (Neutral)-Elevated provisions to remain a drag on earnings
Punjab National Bank: Elevated provisions to remain a drag on earnings
(PNB IN, Mkt Cap USD5.4b, CMP INR82, TP INR80, 2% Downside, Neutral)
- PNB reported loss of INR47.5b (our est. PAT of INR4.4b) for 4QFY19, dragged by higher provisions of INR100.7b (NPL provisions of INR91.5b). NII grew 37% YoY (-2% QoQ) to INR42b (5% miss) as domestic NIM declined 20bp QoQ to 2.44%. For FY19, NII/PPoP grew 15%/26% YoY, even as the bank reported full-year loss of INR99.8b (v/s loss of INR122.8b in FY18).
- Other income grew 21%/4% YoY/QoQ in a seasonally strong quarter to INR18.9b, driving 32% YoY growth in total income. Opex increased 7% QoQ to INR32.3b, resulting in PPoP of INR28.6b (-8% QoQ). CI ratio stood at 53%.
- Loan growth stood at 5.7% YoY/5.5% QoQ, driven by growth of 21.7% YoY in retail loans. Within retail, home loans grew 25.4% YoY. Deposit base increased 5.3% YoY, led by 8.3% YoY growth in CASA deposits. The CASA mix, thus, stood at 43.5% (v/s 43.4% in 3QFY19).
Punjab National Bank is a commercial banking group based in India. Co. is engaged in offering its customers personal, social, agricultural, international and corporate banking services. Co. specialized in offering commercial banking, retail banking, SME banking, rural banking, transaction banking, merchant banking, financial inclusion, credit syndication, treasury, internet & mobile banking services. Co. maintains over 6,300 branches and 7,900 ATMs across 764 cities. Co. has a banking subsidiary in the U.K., as well as branches in Hong Kong, Dubai and Kabul. Co. maintains representative offices in Almaty (Kazakhstan), Dubai, Shanghai (China), Oslo (Norway) and Sydney (Australia).
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