Punjab National Bank (PNB) negatively surprised us on both earnings and asset quality fronts in 3Q, primarily due to higher slippages as the bank recognised impairment as well as the ensuing provisioning impact of the asset reclassification in accordance with ongoing RBI's evaluation. Slippages came in quite high at Rs127bn (annualized ratio of 13.4%) v/s Rs26bn (2.7%) in 2QFY16 and Rs46bn (5.1%) in 3QFY15. As a result, the bank reported a higher chunk for provision of Rs37.8bn, an increase of 157% yoy and 101% qoq. GNPA increased 211bps qoq to 8.47% and NNPA increased by 187bps qoq to 5.86%. Consequently, PCR decreased to 33.1% v/s 39.1% in 2QFY16...