PNB Q1FY15 Net Profit Up By 10.2% Y-o-Y

One of the larger public sector lender, Punjab National Bank (PNB) posted healthy set of numbers for the quarter ended June 2014, however, asset quality weakened in the quarter. Net profit of the bank jumped by 10.2% on yearly basis and stood at Rs 1405.12 crore in Q1FY15. The street was actually expecting fall in the profit of the bank by 10% in the same period. The increase in the profit was mainly attributed to better performance in net interest income (NII) and fall in the provisions & contingencies.

NII of PNB increased by 12.1% on yearly basis to Rs 4379.7 crore for Q1FY15, which was above what analysts were estimating, a jump of 8.3%. Net interest margin (NIM) of the bank improved by 22 basis points sequentially to 3.42%. Other income of the bank saw a fall of 8% on yearly basis to Rs 1236 crore for the April-June quarter. It was fall in the trading income that led to such drop in other income of the bank. This impacted the operating profit of the bank, which grew by mere 5.1% on yearly basis and stood at Rs 3125 crore for Q1FY15 against the same quarter previous year. Nonetheless, net profit increased due to 13% fall in provision and contingencies in the same period. Provision & contingencies for quarter ended June 2014 stood at Rs 927.61 crore. 

The asset quality of the bank deteriorated sequentially in both absolute terms as well as as ratio of advances. In absolute terms, gross non-performing asset (NPA) and net NPA of the bank increased by 30% and 15.5% sequentially to Rs 19602.84 crore and Rs 10463.6 crore in Q1FY15. Even as ratio of gross advance and net advances, the asset quality has worsened both sequentially as well as yearly. On sequential basis, gross NPA and net NPA ratio of the bank has increased by 64 basis points and 4 basis points to 5.48% and 3.02% respectively.

After the bank posted its numbers, shares of the bank witnessed volatility and closed marginally down by 0.51% at Rs 924. Shares of the bank are currently trading at price to book value of 0.95x.