PUNJAB NATIONAL BANK
Punjab National Bank is India’s first Swadeshi Bank. PNB is a Banking and Financial service bank owned by the Government of India with its headquarters is in New Delhi, India. It is the Third largest PSU after SBI and BOB.
Revenue Break-Up
Treasury Operations : 26%
Corporate/Wholesale Banking-42%
Retail Banking-28%
Other Banking Operations- 2.3%
Shareholding Pattern
–PUBLIC GROUP
-PROMOTER GROUP
Financial Summary
| Particulars | March 2022 | March 2023 | March 2024 |
| Revenue | 76,242 | 86,845 | 109,065 |
| Interest | 46,823 | 51,817 | 68,534 |
| Expenses | 36,026 | 41,502 | 39,623 |
| Financing Profit | -6,607 | -6,473 | 908 |
| FPM% | -9% | -7% | 1% |
| Net Profit | 3,908 | 3,359 | 9,157 |
| EPS in Rs | 3.51 | 3.04 | 8.27 |
Synopsis of Financials
- Total Business Growth: Achieved total business of ₹24 trillion, with a gross business increase to ₹24.39 trillion, reflecting a growth rate of 10%.
- Deposits: Deposits grew to ₹14.08 trillion, an increase of 8.5%.
- Gross Credit Growth: Reached ₹10.28 trillion, marking a robust year-on-year growth of 12.2% and a quarter-on-quarter growth of 4.63%.
- Credit-to-Deposit (CD) Ratio: Maintained a comfortable CD ratio of 73.05%.
- Savings Bank Growth: Positive growth in savings bank accounts, increasing from ₹4.64 trillion in June ’23 to ₹4.84 trillion in June ’24.
Final Outlook
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%
Sharp decline in GNPA/NNPA ratios by 75bp/13bp to 4.98%/0.6%. PCR improved 50bp QoQ to 88.4% in 1QFY25.
Earnings were above estimates in Q1FY25 driven by lower credit cost resulting in RoA at 0.82%. Core credit cost stood at 41 bps annualised vs 85 bps q-o-q.
The bank has been guiding that quality of loans sanctioned in post-COVID times is far superior with very low delinquency. Thus, lower slippages trends is likely to sustain and narrow the perceived gap in underwriting with respect to peers.
System-level credit offtake (ex-HDFC Ltd) grew by ~16% y-o-y in the fortnight ending June 14, 2024, indicating loan growth has been healthy and sustaining given distinct signs of improved macros, a revival in private capex, and healthy demand. Additionally, improvement in operating performance led by a moderate opex growth is expected to support earnings.
Recommendation: Given levels of performance are decent, with potential upside of 11-15%, target price for some being as high as 140. If risk appetite is smaller we can wait till the next quarter to see for further improvements in performance ratios, and asset quality improvement. Currently giving HOLD recommendation, considering that lower credit rates will improve business.
PNB-