Motilal Oswal's research report on Punjab National Bank
Punjab National Bank (PNB) reported a 1QFY25 PAT of INR32.5b (8% beat), led by sharply lower provisions (67% YoY decline). NII grew 10.2% YoY to INR104.8b (in line), while NIM contracted slightly by 3bp QoQ to 3.07% (3.21% domestic). Opex declined 8.4% QoQ; however; was still higher than our estimate due to the PSLC charges. PPoP thus stood at INR65.8b (5% miss). Loan book grew 14% YoY (5.3% QoQ) to INR9.8t, led by a healthy traction in retail loans (5.4% QoQ growth). The C/D ratio inched up to 70%, which still remains lower than most peers. CASA mix moderated 136bp QoQ to 40.1%. Slippages increased marginally to INR17.6b (0.9% annualized), while healthy recovery and upgrades along with accelerated w-off enabled a sharp decline in GNPA/NNPA ratios by 75bp/13bp to 4.98%/0.6%. PCR improved 50bp QoQ to 88.4% in 1QFY25.
Outlook
We raise our EPS estimates by 5.6%/0.8% for FY25/FY26, factoring in lower provisions, healthy NII, and steady margins. We estimate an RoA/RoE of 1.0%/14.5% in FY26. Reiterate Neutral with a revised TP of INR135 (vs. INR130), based on 1.1x FY26E BV.
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