Moneycontrol
Last Updated : Feb 05, 2019 08:57 AM IST | Source: Moneycontrol.com

PNB Q3 preview: Brokerages expect mounting losses on high provisions

Motilal Oswal expects loan growth to stay largely flattish, whereas deposits growth is expected to be around 2.5 percent YoY.

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Punjab National Bank, the country's fourth largest public sector lender, is expected to post big loss for December quarter. Likely elevated provisions and tepid NII & loan growth is expected to dent bottomline, but there could be improvement in asset quality, sequentially.

According to brokerage houses, loss for the quarter could be in the range of Rs 300-2,000 crore.

Antique Stock Broking expects a loss of Rs 276 crore while Prabhudas Lilladher sees it at Rs 2,036.2 crore for the December quarter against loss of Rs 4,532.4 crore in September quarter and profit of Rs 230.1 crore in the year-ago period.

"PNB will continue to report losses as it continues to do the residual fraud-related provisions and other provisions like MTM losses, gratuity and wage," Prabhudas Lilladher said.

While Edelweiss Securities said further treatment of IL&FS and provisioning on the same can dampen earnings.

Overall, brokerage houses expect tepid growth in net interest income as well as loans for the quarter. The brokerages estimate NII in the range of - down 4.6 percent to increase 5.4 percent YoY.

Even other income and operating income (pre-provision operating profit) are expected to fall sharply compared to the year-ago period. Brokers expect fall in operating profit in the range of 15-40 percent YoY, but there could be increase on sequential basis.

Lack of capital will also lead to tepid loan growth and slower NII, Prabhudas Lilladher said. Edelweiss Securities said business momentum will see softness (albeit improving).

Motilal Oswal expects loan growth to stay largely flattish, whereas deposits growth is expected to be around 2.5 percent YoY.

NII is likely to remain flattish, in line with loan growth, the research house said, margin is expected to improve to around 2.75 percent due to lower interest reversals.

Key issues to watch out for

> Outlook on asset quality, as net stressed loans remain one of the highest in the industry.

> Progress on the fraud account and its impact.

> NIMs and CASA performance.
First Published on Feb 5, 2019 08:57 am
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