PNB Quarterly Results: PNB Q4 earnings turn around after amalgamation, asset quality concerns remain

Last updated: 09 Jun, 2021 | 02:19 pm

PNB Quarterly Results: PNB Q4 earnings turn around after amalgamation, asset quality concerns remain

PNB’s bottomline turns around: Punjab National Bank has turned in a profit of Rs 701 cr as compared to a net loss of Rs 821 cr, aided by a sharp rise in revenues after amalgamation of United Bank of India and Oriental Bank of Commerce with the bank. 

Net Interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income for Punjab National Bank grew  rose 50% to Rs 7,072 crore for the period under review.  It was Rs 4,677 crore in the same quarter a year earlier.

Asset quality woes: PNB's continues to struggle with asset quality concerns. Gross NPAs at 14.12%, are much higher than all of its peers. However, net NPAs at 5.73% indicates that the bank has provided for a majority of these bad loans. Capital adequacy (at 14.32%) is above the statutory requirement of (12%). However, the bank is likely to be hungry for capital to shore up its Tier-1 base capital (currently at 10.61%).

Provisions: Provisioning for bad loans during the March quarter rose to Rs 5,293.89 crore compared to Rs 4,618.27 crore in the previous year. However, provision other than tax and contingencies declined to Rs 4,686.04 crore from Rs 4,901.31 crore.

Outlook: Following the results, global brokerage firm Jefferies has maintained an ‘Underperform’ rating on Punjab National Bank shares with a target price of Rs 33. The firm noted that while the bottomline was slightly ahead of estimates, the asset quality metrics were weaker with slippages. PNB’s plan to sell written-off loans to new ARC (Asset Reconstruction Company) can lift estimates in the upcoming quarter. However, analysts have trimmed estimates and continue to maintain a cautious view.

Finzoom Investment Advisors Private Limited (Brand Name - INDmoney, INDwealth, IND.app, IND.money, INDsave.com) makes no warranties or representations, express or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services.

Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Marketing and distribution of various financial products such as loans and deposits are powered by Finzoomers Services Private Limited.

INDmoney, INDwealth, IND.app are brand and product of Finzoom Investment Advisors (P) Limited.

© Finzoom Investment Advisors Private Limited

[SEBI RIA Registration No: INA100012190] [Type of Registration: Non-Individual] [Validity of registration: December 17, 2018-Perpetual] [Address: 616, 6th Floor, Suncity Success Tower, Golf Course Extension Road, Sector – 65, Gurugram, Haryana- 122005] [Principal Officer details: Mr. Gaurav Sharma, Email id: principalofficer@indwealth.in, Contact No. 8800826254] [Corresponding SEBI local office address: Securities and Exchange Board of India, Local Office, First Floor, SCO 127-128, Sector 17C, Chandigarh-160017]

[ARN - 151913] [Platform Partner : BSE (Member code-24801)] [CIN - U67190HR2018PTC073294] [GST No : 06AADCF3538Q1Z8]