Vaibhav Agrawal, banking analyst, Angel Broking in an interview to CNBC-TV18 reviewed Q4 earnings of Punjab National Bank and Union Bank.
PNB reported more than 18% year-on-year jump in Q4 net profit at Rs 1,424. Its net interest income increased 9.3% to Rs 3,310 crore from Rs 3,029 crore year-on-year.
Gross non-performing assets (NPAs) increased at 2.93% in the quarter as against 2.42% in previous quarter. Net NPAs too moved up at 1.52% versus 1.11% quarter-on-quarter.
"The big disappointment is that net NPAs are up quite a bit and provision coverage is down by a significant almost 700-800 bps quarter-on-quarter," he said.
Meanwhile, Union Bank of India reported 29% year-on-year jump in Q4 net profit at Rs 773 crore, aided by a fall in non-performing assets (NPAs) and a rise in other income component. Net interest income rose more than 9% to Rs 1,876 crore.
According to Agarwal, the sentiment for banking stocks is a little weak in general.
Below is the edited transcript of Agrawal’s interview with CNBC-TV18. Also watch the accompanying video.
Q: What have you made of the Punjab National Bank numbers, a fairly bad jump in gross and net NPLs?
A: PNBs numbers are quite representative of the symptoms seen in the other results so far. The asset quality has impacted all the line items. Net interest income is also lower than estimates because of that. At the PBT levels it is lower than estimates again because provisions were also slightly higher. The big disappointment is that net NPAs are up quite a bit and provision coverage is down by a significant almost 700-800 bps quarter-on-quarter.
Q: The other interesting point is the way Union Bank shares have behaved. Let’s pull up the intraday of Union Bank after the numbers showed. The profit was higher than expected and the NPLs were lower than what they were in the second quarter, the third quarter, the share went into the green and has given up all the gains. Any guess on what may have spooked the market?
A: We have to see the Union Bank’s numbers a little bit more in detail. We still don’t have all the numbers over there as well and the sentiment is a little weak for the banking stocks in general.