Punjab National Bank share price target

Punjab National Bank (PNB) has reported to exchanges about fraudulent and unauthorised transactions in its Mumbai branch where the liability can run up to $1.7 billion (bn) (| 11300 crore). The estimated value of this fraud is equivalent to ~27% of net worth as of FY17. Select account holders, related to the jewellery sector, colluded with officials to obtain letter of understanding (LoU) to receive funds from the overseas branches of Indian banks. The aforesaid LoUs were issued by officials without the prerequisite...

PNB reported PBT loss of Rs 2.2 bn on higher provisions, despite one-time gain of Rs 12.3 bn on stake sale in PNB Housing Finance. However, profit came in at Rs 2.3 bn (up 11.1% YoY) on tax write-back, which was lower than our and consensus estimates.

Punjab National Bank Q3FY18 results comment NII fell to Rs. 3988.7 Cr in Q3FY18 compared to Rs. 4015.18 Cr in Q2FY18. The NII had been increasing from Q1FY18 to Q2FY18. The NII decreased in Q4FY17 and Q3FY18.

ICICI Securities Ltd | Retail Equity Research Asset quality remained healthy with flattish GNPA at | 57519 crore & NNPA at | 34076 crore. Led by growth, GNPA & NNPA ratio declined by 119 bps & 89 bps to 12.11% & 7.55%, respectively. Slippage came lower at ~| 3174 crore vs | 3460 crore in Q2FY18 NII growth came at 6.9% YoY to | 3989 crore. Other income grew 22.6% YoY to | 3082 crore, led by stake sale in home loan subsidiary. Advances surged 17% YoY, led by 22% YoY growth in domestic book...

PNB reported PPoP of INR42.4b (+29.5%/52.7% QoQ/YoY; in-line), supported by higher-than-expected other income (11% beat, even after considering PNBHF stake sale gains) and lower-than-expected opex due to controlled employee expense. Provisions of INR44.7b (35% higher) led to PBT loss of INR2.2b. Slippages moderated to INR31.7b (2.8% annualized), but strong loan growth enabled 121bp/89bp QoQ improvement in the GNPL/NNPL ratios. Coverage ratio stood largely unchanged at 40.8%. PNB needs to make total additional provisions of INR10.58b toward NCLT in 4QFY18. Stressed assets stood at INR671.3b (14.1% of advances) v/s INR728.5b as on 3QFY17. Domestic NIM for 9MFY18 shrunk 17bp YoY to 2.59%, with a 30bp decline in cost of funds and a 42bp decline in yield on advances YoY. Loan book grew 10%/17% QoQ/YoY, driven by retail, agri and MSME loans. Retail loans grew 5%/22% QQ/YoY, driven by 22% YoY growth in housing loans.

PNBs Q2 PAT at Rs 5.6 bn (up 2% YoY), higher than our and street's estimate, was aided by lower-than-expected provisions. Asset quality improved slightly with GNPA/NNPA ratio declining by 35/23bps QoQ to 13.3%/8.4%.

Though we believe PNB will be one of the major beneficiaries of recently announced mega PSB recapitalisation plan, we expect its credit cost to rise in the medium-term, which will adversely impact its earnings over next 2-3 quarters. Further, the Government of India is mulling consolidation of PSBs, which creates a very high level of uncertainty for the banks' future earnings trajectory. We expect the Bank would continue to witness elevated level of credit cost, which will keep its earnings and return ratios subdued over next 3-6 quarters. Hence, we continue to maintain our HOLD recommendation on the stock with a revised SOTP-based Target Price of Rs187 (from Rs167 earlier) based on 1.2x FY19 Adj. BV implying standalone value at of...

ICICI Securities Ltd | Retail Equity Research Post surge in GNPA in Q1FY18, asset quality came in healthy with flattish NPA numbers. GNPA was at | 57631 crore and NNPA at | 34570 crore. GNPA & NNPA ratio declined 35 bps & 23 bps to...

Domestic NIM improved 8bp QoQ to 2.64%, with a 4bp decline in cost of funds and a 3bp increase in yield on advances. Loan book grew 3%/4% QoQ/YoY, impacted by muted growth in the corporate segment. Retail loans grew 5%/16% QoQ/YoY, driven by 34% YoY growth in housing loans. Other highlights: a) CASA deposits grew 19% YoY, driven by 21% YoY growth in SA deposits; average CASA ratio stood at ~44.4% v/s 44% a quarter ago and 42.1% a year ago. b) Fee income growth was strong at 15% YoY, helped by better retail fees. c) CET1 ratio of ~7.67% remains a concern ...

PNBs reported PAT was higher at Rs 3.4 bn (up 12% YoY), aided by lower than expected provisions; however, management guided for ~Rs 20 bn PAT in FY18 which is much lower than our and Street estimates. GNPA ratio increased 113 bps QoQ to 13.7% with a coverage ratio of ~40%.