Punjab National Bank share price target

ICICI Securities Ltd | Retail Equity Research Asset quality pressure continued but at a slower pace with fresh slippages at ~| 5089 crore vs. | 7533 crore seen in Q1FY17. With healthy recoveries and upgradation, absolute GNPA declined marginally by 0.3% QoQ to | 56466 crore (GNPA ratio improved ~13 bps at 13.62%). Restructured assets declined further to | 18094 crore in Q2FY17 vs. | 18909 crore in Q1FY17. The stressed asset (GNPA + restructured asset) stayed higher at 18% of assets...

Restructured assets (RA) declined further to Rs 18909 crore. The stressed asset (GNPA + RA) stayed higher at 18.55% of assets. The account sleeping to NPA category with exposure of above Rs 100...

ICICI Securities Ltd | Retail Equity Research Asset quality pressure continued with fresh slippages at ~| 7500 crore vs. | 23545 crore seen in Q4FY16. Recoveries and upgradation were healthy in Q1FY17. Accordingly, absolute GNPA increased by merely 1% QoQ to | 56654 crore (GNPA ratio at 13.75%). Restructured assets (RA) declined further to | 18909 crore. The stressed asset (GNPA + RA) stayed higher at 18.55% of assets Slippages from RA book amounted to | 1530 crore. Out of slippages,...

than expected NPA provisions. NII growth continued to remain weak (10% yoy to Rs 37bn)belowourexpectationduetoweakloangrowth. Assetqualitycontinuedtodeteriorate,contrarytoourexpectationofimprovementas Slippages amounted to Rs 92.3bn (higher than expectation) vs. Rs 235bn in Q4FY16, consequentlyGNPA%increased85bpsqoqto13.75%,andNNPA%increased55bpsqoq to 9.16%. Recovery/upgrades were robust at Rs 48.3bn/11.8bn as a result absolute increaseinGNPAwasmarginalat86bpssequentially. NIM declined 45bps yoy to 2.45%, as yields declined (102 bps yoy to 8.54%) due to...

We expect asset quality stress would continue to persist along with lofty credit cost in next 5-6 quarters, which would keep PNB's RoAs depressed at ~0.2-0.7% & RoEs at ~5-12% over FY17E-18E. Its provisioning converge ratio excluding technical writtenoff loans at 37% is way below the comfort level for which profitability will continue to get impacted owing to higher credit cost. As we remain cautious on PNB's asset quality and operational performance, we continue to assign REDUCE recommendation on the...

Absolute GNPA remained stable QoQ; gross slippages moderated sequentially to INR9.2b (annualized slippage ratio of ~10% v/s 25% in 4QFY16). Cash recoveries improved significantly (INR48.3b or 8.6% of opening GNPA v/s 4-6% historically) led by one-off benefit of INR16b (bonds received against SEB debt and sold); resulting in lower net slippage ratio (3.4% v/s 24% in 4QFY16). While the net slippage ratio has moderated significantly, it still remains elevated. Other highlights: (1) NIMs expanded ~60bps to 2.45% (2) Loans de-grew 5% QoQ (+3% YoY) while deposits were flat QoQ and +7% YoY, (3) Overall net...

Outlook and valuation: The impact of AQR and recognition of stress asset has severely impactedtheassetquality.Themanagementisoftheviewthatcompletecleaningupofthe balancesheetisnotyetdone.TheSMA2loansstandsatRs110bnwhiletherestructured...

ICICI Securities Ltd | Retail Equity Research Asset quality pressure increased sharply in Q4FY16, led by AQR related bad asset recognition and slippages from restructured book....

Punjab National Bank (PNB) has incurred highest ever loss in its history in 4QFY16, mainly due to higher slippages owing to recognition of further impairments and provisioning impact of asset reclassification. Slippages surged to Rs235.5bn (at slippage ratio of 23.4%) in 4QFY16 v/s Rs12.1bn (at slippage ratio of 13.4%) in 3QFY16 & Rs422.5bn (at slippage ratio of 11.1%) in FY16 for which its provisioning rose 173.5% yoy & 178% qoq to Rs104.9bn. Its GNPA rose 443bps qoq to 12.9% while NNPA rose by 275bps qoq to 8.61%. PNB's PCR declined to 51.1% in 4QFY16 vis-vis 53.9% in 3QFY16 & 58.2% in 4QFY15. As a result, PNB has incurred Rs53.7bn loss in 4QFY16 v/s Rs3.1bn & Rs510mn profit in 4QFY15 & 3QFY16, respectively....

Sharp asset quality deterioration led by aggressive recognition of RL to NPA Punjab National Bank (PNB) reported pre-tax loss of INR72.6b and net loss of INR53.7b (v/s loss est. of INR4.7b). Weak core operating performance, sharp...