PNB's Q1FY16 results were below estimates as the earnings declined by 49% YoY (135% QoQ growth due to lower base) to Rs 7.2 bn led by weak NII growth (-6.3% YoY) and higher provision expenses. NIMs improved by 11 bps QoQ to 2.9%. Only positive came in from asset quality which improved marginally after 5 quarters of sequential deterioration. GNPA and NNPA declined to 6.47% and 4.05% vs 6.55% and 4.06% respectively in Q4FY15.