punjab national bank a market performer
Punjab National Bank a market performer: IIFL
"In our recent interaction, PNB reiterated to grow its advances marginally ahead of the system. As compared to 9%+ qoq expansion witnessed in the previous three years, the bank expects lower sequential loan growth in Q4 FY12 at 7-7.5%. The large corp. book is expected to grow at steady pace after having declined in Q3 FY12 due to deliberate shedding of short term loans. International loans and vehicle loan portfolio would continue to grow strongly. Bank intends to grow MSME book at healthy pace by focusing on quality and pricing risks adequately via higher yields. We estimate 20% loan CAGR for PNB over FY12-14. Increasing rate differential between savings deposits and retail TDs has driven sharp CASA correction. Recent initiatives towards mobilizing CASA balances are expected to contain the slide."
"Bank's NIM is set for contraction over Q4 FY12-Q2 FY13 driven by lowered CASA, higher rates of bulk deposits and quicker reprising of advances (60% floating) in a rate-cut cycle. Aided by relatively strong fee growth and modest increase in employee cost, C/I ratio is expected to remain stable. PNB expects pressure on credit book to persist in the near term with slippages to remain above Rs10bn/quarter. Restructuring remains lofty with Air India (~Rs20bn) and Rajasthan SEB (~Rs15bn) restructured in Q4 FY12 and exposures to UP SEB (~Rs15bn) and HCC to be restructured in Q1 FY13. Margin correction coupled with high provisioning would retain pressure on RoA. Capital infusion of ~Rs28.5bn by Government and LIC before March-end is estimated to shore-up Tier-1 capital by ~90bps. Near-term RoA concerns would preclude upside in stock.
ASHRAF HUSSAIN
PGDM-2nd semester
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