Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the banking sector. The brokerage house expects Punjab National Bank to report a 2.1 percent degrowth quarter-on-quarter (degrowth of 11 percent year-on-year) in net profit at Rs 1108.1 crore.
Net interest income is expected to increase by 1.2 percent Q-o-Q (up 3.5 percent Y-o-Y) to Rs 3823.2 crore, according to Motilal Oswal. Motilal Oswal report on Punjab National Bank
With management's focus shifting on consolidation, business growth is expected to be moderate, with loan growth of 11% YoY and deposit
growth of 5% YoY.
NIM expected to be stable QoQ at ~3.5%. Pressure on lending yields would continue but its impact is expected to be neutralized by reduction in high cost bulk deposits and containment of cost of funds.
Led by muted fee and forex income, overall non-interest income is expected to decline by 7% YoY. The fall, however, is expected to be
contained by better trading gains.
Net slippage ratio is likely to increase QoQ led by increased pressure in large corporate segment. Further, restructuring is expected to be
high which would continue to pressurize asset quality.
The stock trades at 0.7x FY14E and 0.6x FY15E BV, and 4.6x FY14E and 3.7x FY15E EPS.
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