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Punjab National Bank (PNB) | Q3FY13 Result Update




IndiaNivesh Securities Pvt Ltd


31 Jan 2013





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Punjab National Bank (PNB) | Q3FY13 Result Update Asset quality shown relief…. valuation looks reasonable, maintain BUY with target price of Rs 1058… Loan growth was lower at 13% yoy largely driven by Overseas advances. Deposits growth was much lower at 8% yoy with sequentially improvement in CASA ratio of 113 bps to 37%. NIMs were stable at 3.5%, however cost and yield on funds has come down by 9 and 6 bps qoq respectively. Net interest income was inline with street expectation at Rs 37.3 bn, up 6% yoy. Asset quality surprised positively as Gross / Net NPA which has come down by 5 / 13 bps qoq to 4.6% / 2.6%. Restructured Rs 37 bn (1.2% of loan book) in Q3FY13 as against Rs 27.8 bn in Q2FY13. Valuation: PNB’s Q3FY13 results were positive surprise on asset quality front, however loan growth was muted due to conscious decision of bank. Despite CASA ratio improving to 37%, NIMs were stable mainly due to reversal of interest income on account of NPAs resulting in lower net interest income growth. However excluding this, both NIMs and yields would have shown an improvement on sequential basis. Further we are not worried on margins front as it is likely to be sustained at current levels. Asset quality improvement on back of lower fresh slippages and higher recoveries and improving provisioning coverage was the key positive in results. At CMP of Rs 912, the stock is trading at P/ABV 1.2x and 1x for FY13E and FY14E respectively. We upgrade target price to Rs 1058 implying 1.1x FY14E ABV and retain BUY on the stock.

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