Punjab National Bank Q2 Results Review - PPoP Inline; Lower Provisions Drive Earnings: Motilal Oswal

Motilal Oswal Report

Punjab National Bank reported a healthy quarter, with a 28% beat on profit after tax primarily driven by lower provisions. Profit after tax surged 327% YoY to Rs 17.6 billion, while net interest income grew 20% YoY (inline) to Rs 99 billion as net interest margins improved 3 basis point QoQ to 3.11% in Q2 FY24.

Loan book grew 15% YoY (3% QoQ) to Rs 8.9 trillion, led by a healthy traction in corporate and retail loans. Deposits grew 10% YoY (flat QoQ) to Rs 13 trillion. Current account and savings account ratio increased 25 bp QoQ to 42.2%.

Punjab National Bank's slippages dipped to Rs 18b (0.9% annualised) enabling a 77 bp/51 bp QoQ decline in gross/net non-performing asset ratios to 6.96%/1.47%. Provision coverage ratio rose 416 bp QoQ to 80%.

We maintain our estimates and project an return on asset/return on equity of 0.6%/9.0% in FY25. Reiterate 'Neutral' with a target price of Rs 75 (premised on 0.8 times FY25E adjusted book value).

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