PNB 4Q FY 2013

7/30/2019 PNB 4Q FY 2013

1/12

Please refer to important disclosures at the end of this report 1

Particula rs (` cr ) 4Q FY13 3Q FY13 % chg (qoq) 4 Q F Y 1 2 % chg (yoy)

N II 3 , 7 7 9 3 , 7 3 3 1 .2 3 , 3 1 0 1 4 . 2

Pre-prov. profit 2,852 2,682 6.3 2,936 (2.9)

PAT 1 ,13 1 1 ,30 6 ( 1 3 . 4 ) 1 , 4 2 4 ( 2 0 . 6 )

Source: Company, Angel Research

During 4QFY2013, PNB registered moderate operating performance

(pre-provisioning profit de-grew by 2.9% yoy), which was on expected lines.

However, on the asset quality front, the bank witnessed improvement, as its Gross

NPA levels declined sequentially by 3.8%. The bank prudently increased its PCR

(up by 286bp qoq) and hence provisioning expenses grew by 43.8% yoy and

earnings declined by 20.6% yoy.Business growth m uted, N IM s la rgely stable sequentia lly: During 4QFY2013, the

bank witnessed moderate growth in its business, with advances and deposits

registering a growth of 5.1% and 3.2% yoy, respectively.CASA deposits grew by

14.3% yoy, much higher than the growth of 3.2% yoy registered in overall

deposits. Reported CASA ratio for the bank improved by 466bp yoy to 40.9%.

During the quarter, the bank shed around `10,150cr of differential rate deposits

(including CDs), thereby leading to substantial reduction in share of differential

rate deposits (including CDs) from 15.3% in 3QFY2013 to 12.5% in 4QFY2013.

NIM remained largely stable sequentially at 3.5%.Non-interest income (excluding

treasury) de-grew by 23.2% yoy, due to a poor performance on the fee income

front. During the quarter, the bank reported improvement in asset quality, as

slippages ratio for the year FY2013 moderated to 2.94%, as compared to

annualized slippage ratio of 3.48% recorded for 9MFY2013. Also,

recoveries/upgrades as a proportion to opening advances remained stable at

1.0% for FY2013 as compared to 1.0% for 9MFY2013. Consequently, on an

absolute basis, gross and Net NPAs improved by 3.8% and 4.6%, sequentially,

respectively. PCR for the bank improved by 280bp qoq to 58.8%. Additionally, the

bank restructured advances worth ~`6,444cr during the quarter, thereby taking its

outstanding restructured book, to`32,143cr (of which ~38%, come from power sector).

O utlook and valuation:The banks valuations are currently at a low of 0.7x

FY2015 ABV compared to its eight year range of 1.01.6x and median of 1.4x.

due to the asset quality concerns facing the sector. The bank structurally has lower

cost of deposits than peers and has cyclically already experienced relativelyhigher asset quality pain than peers. With asset quality improvements and

consolidation of balance sheet, we expect prospects to improve for the bank. Even

valuation-wise, the stock is trading below the lower end of its historical range.

Hence, werecomm end Buy with a target price of `9 4 5 .

Key financialsY/ E Ma rch (` cr ) FY20 12 FY20 13 FY20 14 E FY2014 E

N I I 1 3 , 4 1 4 1 4 , 8 5 7 1 6 , 6 2 5 1 9 , 2 8 3

% chg 13.6 10.8 11.9 16.0

N et p ro fit 4 ,88 4 4 ,74 8 5 ,36 3 6 ,25 6

% chg 10.2 (2.8) 13.0 16.6

NIM (%) 3.3 3.3 3.3 3.4

EPS (`

) 1 4 4 . 0 1 3 4 . 3 1 5 1 . 7 1 7 7 . 0P/E (x) 5.4 5.8 5.1 4.4

P/ABV (x) 1.1 1.0 0.8 0.7

RoA (%) 1.2 1.0 1.0 1.1

RoE (%) 21.1 16.5 16.1 16.5


BU YCMP `773

Target Price `945

Investment Period 12 Months

Stock Info

Sector Banking

Market Cap ( cr) 27,311

Beta 1.1

52 Week High / Low 992/659

Avg. Daily Volume 90,405

Face Value ( ) 10

BSE Sensex 20,122

Nifty 6,107

Reuters Code PNBK.BO

Bloomberg Code PNB@IN

Shareholding Pattern (%)

Promoters 57.9

MF / Banks / Indian Fls 16.3

FII / NRIs / OCBs 18.0

Indian Public / Others 7.8

Abs. (%) 3m 1yr 3yr

Sensex 3.4 23.5 17.4

PNB (10.1) 3.6 (24.0)

Vaibhav Agrawa l

022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia

022 3935 7800 Ext: 6872

[email protected]

Akshay N ara ng

022 3935 7800 Ext: 6829

[email protected]

Harshal Patkar

022 3935 7800 Ext: 6847

[email protected]

Punja b N a tiona l Ba nk

Performance Highlights

4QFY2013 Result Update | Banking

May 11, 2013

7/30/2019 PNB 4Q FY 2013

2/12

Punjab National Ban | 4QFY2013 Result Updat

May 11, 2013 2

Exhibit 1:4QFY2013 performanceParticula rs (` cr ) 4Q FY13 3Q FY13 % chg (qoq) 4 Q F Y 1 2 % chg (yoy) FY2013 FY2012 % chg (yoy)

Interest earned 10 ,37 9 10 ,54 8 ( 1 . 6 ) 9 , 6 8 0 7 .2 4 1 , 8 9 3 3 6 , 4 2 8 1 5 . 0

- on Advances / Bills 7,793 7,891 (1.2) 7,495 4.0 31,867 28,447 12.0- on investments 2,406 2,518 (4.5) 2,127 13.1 9,517 7,692 23.7

- on balance with RBI & others 102 113 (9.5) 50 105.8 325 213 52.9

- on others 78 27 191.0 8 837.1 184 77 140.5

Interest Expended 6 ,60 0 6,8 1 5 ( 3 . 2 ) 6 , 3 7 0 3 .6 2 7 , 0 3 7 2 3 , 0 1 4 1 7 . 5

N et Interest Income 3,7 79 3,7 33 1 .2 3 , 3 1 0 1 4 . 2 1 4 , 8 5 7 1 3 , 4 1 4 1 0 . 8

O ther income 1 ,17 4 97 1 2 1 . 0 1 , 2 7 6 ( 8 . 0 ) 4 , 2 1 6 4 , 2 0 3 0 .3

Other income excl. treasury 853 848 0.7 1,111 (23.2) 3,496 3,664 (4.6)

- Fee Income 519 509 2.0 608 (14.6) 2,169 2,193 (1.1)

- Treasury Income incl. MF Div. 321 123 161.0 165 94.5 720 539 33.6

- Recov. from written off a/cs 130 145 (10.3) 241 (46.1) 422 510 (17.3)

- Others 204 194 5.4 262 (22.1) 905 961 (5.8)

O perat ing income 4 ,95 3 4 ,70 4 5 .3 4 , 5 8 6 8 .0 1 9 , 0 7 2 1 7 , 6 1 7 8 .3

O perating expenses 2,1 01 2,0 22 3 .9 1 , 6 5 0 2 7 . 4 8 , 1 6 5 7 , 0 0 3 1 6 . 6

- Employee expenses 1,421 1,407 1.0 1,007 41.2 5,675 4,723 20.1

- Other Opex 680 614 10.6 643 5.7 2,490 2,279 9.3

Pre-provision Profit 2 ,85 2 2,6 8 2 6 .3 2 , 9 3 6 ( 2 . 9 ) 1 0 , 9 0 7 1 0 , 6 1 4 2 .8

Provisions & continge ncies 1 ,4 7 8 8 0 2 8 4 . 3 1 , 0 2 7 4 3 . 8 4 , 3 8 6 3 , 5 7 7 2 2 . 6

- Provisions for NPAs 830 466 78.1 939 (11.6) 3,336 2,403 38.8

- Other Provisions 648 336 93.0 88 633.4 9 4 1 8 2 8 13.6

PBT 1 ,37 4 1 ,88 0 ( 2 6 . 9 ) 1 , 9 0 9 ( 2 8 . 0 ) 6 , 5 2 2 7 , 0 3 7 ( 7 . 3 )

Provision for Tax 243 575 (57.7) 485 (49.8) 1,774 2,153 (17.6)

PAT 1 ,13 1 1 ,30 6 ( 1 3 . 4 ) 1 , 4 2 4 ( 2 0 . 6 ) 4 , 7 4 8 4 , 8 8 4 ( 2 . 8 )

Effective Tax Rate (%) 17.7 30.6 (1286)bp 25.4 (770)bp 27.2 30.6 (339)bp


Exhibit 2:4QFY2013 Actual vs Angel estimatesParticula rs (` cr) Actual Estima tes Var. (%)

Net interest income 3,779 3,848 (1.8)

Other income 1,174 1,158 1.4

O perat ing income 4 ,95 3 5 ,00 6 ( 1 . 1 )

Operating expenses 2,101 2,066 1.7

Pre-prov. Profit 2,8 52 2 ,94 0 ( 3 . 0 )

Provisions & cont. 1,478 784 88.6

PBT 1,374 2,156 (36.3)

Prov. for taxes 243 839 (71.0)

PAT 1 ,13 1 1 ,31 7 ( 1 4 . 2 )

Source: Compa ny, Angel Research

7/30/2019 PNB 4Q FY 2013

3/12


May 11, 2013 3

Exhibit 3:4QFY2013 performance analysisParticulars 4 Q FY13 3 Q FY1 3 % chg (qoq ) 4 Q F Y 1 2 % chg (yoy)

Advances ( cr) 308,725 297,313 3.8 293,775 5.1

Deposits (`

cr) 391,560 385,785 1.5 379,588 3.2Credit-to-Deposit Ratio (%) 78.8 77.1 178bp 77.4 145bp

Current deposits ( cr) 29,874 25,345 17.9 28,472 4.9

Saving deposits ( cr) 123,470 117,097 5.4 105,657 16.9

CASA deposits ( cr) 153,344 142,442 7.7 134,129 14.3

Reported CASA ratio (%) 40.9 38.4 242bp 36.2 466bp

CAR (%) 12.7 11.7 106bp 12.6 9bp

Tier 1 CAR (%) 9.8 8.6 114bp 9.3 48bp

Profitability Ratios (%)

Cost of deposits 6.6 6.8 (13)bp 6.8 (18)bp

Yield on advances 10.7 10.9 (17)bp 11.4 (67)bp

Yield on investments 7.9 7.9 0bp 7.6 22bp

Yield on funds 8.5 8.8 (31)bp 8.7 (17)bp

Cost of funds 5.4 5.7 (28)bp 5.7 (31)bp

Reported NIM 3.5 3.5 4bp 3.5 1bp

Cost-to-income ratio 42.4 43.0 (56)bp 36.0 645bp

Asset q ua lity

Gross NPAs ( cr) 13,466 13,998 (3.8) 8,720 54.4

Gross NPAs (%) 4.3 4.6 (34)bp 2.9 134bp

Net NPAs ( cr) 7,237 7,586 (4.6) 4,454 62.5

Net NPAs (%) 2.4 2.6 (21)bp 1.5 83bp

Provision Coverage Ratio (%) 58.8 56.0 286bp 62.7 (390)bp

Slippage ratio (%) 1.3 4.0 (272)bp 4.7 (334)bp

Credit cost (%) 0.7 0.4 30bp 0.9 (18)bp


Business growth remains muted

During 4QFY2013, the bank witnessed muted growth in its business, with

advances and deposits registering a growth of 5.1% and 3.2% yoy, respectively.

Slow growth was attributed to the ongoing consolidation of balance sheet. Growth

in advances was primarily on the back of increased lending to the services sector

(growth of 16.7% yoy). While the banks retail book grew at moderate 7.2% yoy,

housing and car loan book, within the retail book grew at relatively higher 13.3%

and 15.1% yoy, respectively.Overseas advances registered a growth of 47.4% yoy.

As of 4QFY2013, these constitute around 10% of the banks total loan book.

On the liabilities front, current deposits witnessed moderate growth of just 4.9%

yoy (higher sequentially by 17.9%), while saving deposits grew stronger at 16.9%

yoy (5.4% qoq). Hence, overall CASA deposits grew by 14.3% yoy, much higher

than the growth of 3.2% yoy registered in overall deposits. Consequently, the

reported CASA ratio improved by 466bp yoy (242bp sequentially) to 40.9%.

During 4QFY2013, the bank shed around `10,150cr of differential rate deposits(including CDs). Consequentially, the banks share of differential rate deposits

(including CDs) has reduced substantially from 15.3% as of 3QFY2013 to 12.5%

as of 4QFY2013.

7/30/2019 PNB 4Q FY 2013

4/12


May 11, 2013 4

Exhibit 4:Higher Corporate/Retail lending aids moderate loan book growthParticula rs (` cr) 4Q FY13 3Q FY13 % chg (qoq) 4 Q F Y 1 2 % chg (yoy)

Agri 38,055 41,750 (8.9) 45,917 (17.1)

Retail 31,310 30,295 3.4 29,196 7.2MSME 33,568 31,186 7.6 32,391 3.6

Medium & Large Corporates 98,421 93,190 5.6 91,392 7.7

Comm. Real Estate 9,220 9,140 0.9 9,661 (4.6)

Services & Others 55,501 60,380 (8.1) 58,015 (4.3)

Dom estic non-food credit 26 6,0 75 265 ,94 1 0 .1 2 6 6 , 5 7 2 ( 0 . 2 )

Food credit 6,057 6,691 (9.5) 5,186 16.8

Dom estic credi t 27 2,1 32 27 2,6 32 ( 0 . 2 ) 2 7 1 , 7 5 8 0 .1

Overseas advances 32,058 30,100 6.5 21,755 47.4

G lobal gross credi t 30 4,1 90 30 2,7 32 0 .5 2 9 3 , 5 1 3 3 .6


Exhibit 5:Business growth subdued


Exhibit 6:CASA ratio im proved sequentially


NIMs largely stable at 3.5%

The banks yield on advances and Yield on investments declined by 17bp and 7bp

qoq. The banks cost of deposits reduced by 13bp qoq to 6.6%. Yield on funds for

the bank declined by 31bp qoq to 8.5%, while cost on funds declined sequentially

by 28bp to 5.4%. Consequently, the reported NIM of the bank remained largelystable at 3.5%.Going forward, the management expects NIMs to moderate to

3.4% in coming few quarters.

21

.3

21

.2

18

.4

13

.2

5.12

1

.3

18

.9

17

.3

8.2

3.2

77.4

76.4

73.6

77.1

78.8

70.0

72.0

74.0

76.0

78.0

80.0

-

5.0

10.0

15.0

20.0

25.0

4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Adv. yoy chg (%) Dep. yoy chg (%) CDR (%, RHS)

35

.3

34

.6

35

.8

36

.9

39

.2

11.59.8

15.6

13.114.3

-

10.0

20.0

20.0

23.0

26.0

29.0

32.0

35.0

38.0


Calculated CASA ratio (%) CASA yoy growth (%, RHS)

7/30/2019 PNB 4Q FY 2013

5/12


May 11, 2013 5

Exhibit 7:Yield on funds lower by 31bp sequentially


Exhibit 8:NIM stable sequentially at 3.5%


Subdued performance on the non-interest income (excludingtreasury) front

During 4QFY2013, the non-interest income (excluding treasury) de-grew by 23.2%

yoy, on back of lower recoveries and poor performance on the fee income as well

as on the forex income front. Bank saw de growth in Recoveries from written-off

accounts substantially by 46.1% yoy to `130cr and Income from forex transactions

by 20.0% yoy to `128cr.CEB fees for the bank de grew by 14.6% yoy, while Bills

and Remittance de grew by 39.6% yoy.Trading profit increased strong by 67.8%

yoy to `267cr.Overall, other income came in `1,174cr registering a de growth of

8.0% yoy.

Exhibit 9:Non-interest inc. remains subdued yoyParticula rs (` cr) 4Q FY13 3Q FY13 % chg (qoq) 4 Q F Y 1 2 % chg (yoy)

CEB 519 509 2.0 608 (14.6)

Treasury incl. MF Dividend 321 123 161.0 165 94.5

Forex 128 114 12.3 160 (20.0)

Recoveries 130 145 (10.3) 241 (46.1)

Others 76 79 (3.8) 102 (25.5)

O ther income 1 ,17 4 97 0 2 1 . 0 1 , 2 7 6 ( 8 . 0 )

Other income excl. treasury 853 847 0.7 1,111 (23.2)


Lower slippages and steady recoveries/ upgrades, leads to

improvement in asset quality

During the quarter, the bank reported improvement in asset quality, as slippages

ratio for the year FY2013 moderated to 2.94%, as compared to annualized

slippage ratio of 3.48% recorded for 9MFY2013. Also, recoveries/upgrades as a

proportion to opening advances have remained stable at 1.0% for FY2013 as

compared to 1.0% for 9MFY2013. Consequently, on an absolute basis, gross and

Net NPAs improved by 3.8% and 4.6%, sequentially, respectively. Gross and net

NPA ratios, for the bank came off sequentially by 34bp and 21bp, to 4.6% and2.6%, respectively.PCR for the bank improved by 280bp qoq to 58.8%.Going

ahead, the management expects NPA ratios to improve in coming quarters, as

they expect recovery levels to improve.

8.67

9.13

8.87 8.81

8.50

7.00

7.50

8.00

8.50

9.00

9.50

4Q FY12 1Q FY13 2Q FY13 3QFY13 4QFY13

(%)

3.50

3.60

3.50 3.47 3.51

2.60

2.80

3.00

3.20

3.40

3.60

3.80


(%)

7/30/2019 PNB 4Q FY 2013

6/12


May 11, 2013 6

Additionally, the bank restructured advances worth ~`6,444cr during the quarter,

compared to `3,700cr restructured in 3QFY2013. As of 4QFY2013, its

outstanding restructured book, which is stated borrower-wise, stood at `32,143cr

(~10% of its advances). Out of the outstanding restructured book, 38.1% comesfrom power sector (majorly discoms).

Exhibit 10:Slippages cool off , so...


Exhibit 11:... Asset quality improves

Source: Compa ny, Angel Research;

Cost-to-income ratio up by 640bp yoy to 42.4%

Operating expenses for the bank were higher by 27.4% on a yoy basis, on back of

41.2% yoy increase in employee expenses due to wage revision and 5.7% yoy

increase in other operating expenses.However, growth in operating income was

modest at 12.9% yoy, which led the cost-to-income ratio to increase by 640bp yoy

to 42.4%.

Exhibit 12:Steady branch expansion continues


Exhibit 13:Cost-to-income ratio increases


2.8

3.8

5.0

3.5

2.9

0.6

0.80.9

0.7 0.7

-

0.2

0.4

0.6

0.8

1.0

-

1.0

2.0

3.0

4.0

5.0

6.0

FY2012 1Q FY13 1HFY13 9MFY13 FY2013

Slippages (%, cumulative) Credit cost (%, cumulative, RHS)

2.9

3.3

4.7

4.6

4.3

1.5

1.7

2.7

2.6

2.4

62.7 62.8

54.356.0

58.8

50.0

52.054.0

56.0

58.0

60.0

62.0

64.0

-

1.0

2.0

3.0

4.0

5.0


Gross NPAs (%) Net NPAs (%) PCR (%, RHS)

5,6

58

5,6

97

5,7

48

5,7

88

5,8

73

6,0096,059

6,0056,058

6,313

5,800

5,900

6,000

6,100

6,200

6,300

6,400

5,550

5,600

5,650

5,700

5,750

5,800

5,850

5,900


Branches ATMs (RHS)

36.0

41.6

44.4

43.0

42.4

1.5

1.81.7 1.7

1.8

1.3

1.4

1.5

1.6

1.7

1.8

-

10.0

20.0

30.0

40.0

50.0


Cost-to-income ratio (%) Opex to average assets (%, RHS)

7/30/2019 PNB 4Q FY 2013

7/12


May 11, 2013 7

Investment arguments

Strong CASA legacy, but losing market share

PNB has a structural advantage of having relatively better CASA ratio of 40.9% (asof 4QFY2013), which is driven by strong rural and semi-urban presence,

especially in North India (total of 5,874 branches and 6,300+ ATMs).Although

the high CASA ratio improved to 40.9% from 36.2% in 4QFY12 and is expected to

help sustain the higher NIMs, the bank has been losing its market share like most

other public sector banks on account of slow branch expansion and competition

from private banks.PNBs savings market share declined by from 7.9% to around

7.3% during FY200813.

Investment concerns

Asset quality im proves but remains under watch

PNB was one of the highest risk-taking banks immediately post the Lehman crisis

and initially, started delivering very high yield on assets and RoEs of as much as

26%. For the last couple of years, we had been concerned that the inevitable

seasoning of that book would lead to asset quality issues for the bank and that is

what was being reflected in the numbers.

During FY2012, slippage ratio for the bank came in at 2.7%, the highest in the

past four years. In 1HFY2013, it spiked sharply to 5.0%. In 2HFY2013, the

annualized slippage ratio has come off from those highs, as slippage ratio for

entire FY2013 has come in at 2.9%. Even during 2HFY2013, the bank registeredan improved performance on the recoveries/upgrades front, which has led to

improvement in its NPA levels. However, going ahead, we still remain cautious on

the incremental asset quality pressures for the bank in the near term, as we take

into account the banks relatively higher exposure to risky sectors and the overall

weak macro-economic environment.

Outlook and valuation

The banks valuations are currently at a low of 0.7x FY2015 ABV compared to its

eight year range of 1.01.6x and median of 1.4x. due to the asset quality concerns

facing the sector. The bank structurally has lower cost of deposits than peers andhas cyclically already experienced relatively higher asset quality pain than peers.

With asset quality improvements and consolidation of balance sheet, we expect

prospects to improve for the bank. Even valuation-wise, the stock is trading below

the lower end of its historical range. Hence, werecommend Buy with a target price

of `9 4 5 .

7/30/2019 PNB 4Q FY 2013

8/12


May 11, 2013 8

Exhibit 14:Key assumptionsParticula rs (%)

Earlier estima tes Revised estim ates

FY2014 E FY20 15 E FY20 14 E FY201 5E

Credit growth 14.0 16.0 14.0 16.0Deposit growth 14.0 16.0 14.0 16.0

CASA ratio 36.4 36.2 38.9 38.6

NIMs 3.2 3.3 3.3 3.4

Other income growth 3.2 12.1 0.8 9.3

Growth in staff expenses 12.0 12.0 12.0 12.0

Growth in other expenses 12.0 12.0 12.0 12.0

Slippages 2.6 2.5 2.5 2.3

Coverage 65.0 70.0 65.0 70.0

Source: Angel Research

Exhibit 15:Change in estimatesParticula rs (` cr)

F Y 2 0 1 4 E F Y 2 0 1 5 E

Earlierestima tes

Revisedestimates

Var. (%)Earlier

estimatesRevised

estima tesVar. (%)

NII 16,827 16,625 (1.2) 19,307 19,283 (0.1)

Non-interest income 4,334 4,251 (1.9) 4,859 4,646 (4.4)

O perat ing income 21 ,161 20 ,876 ( 1 . 3 ) 2 4 , 1 6 6 2 3 , 9 2 9 ( 1 . 0 )

Operating expenses 9,105 9,145 0.4 10,198 10,242 0.4

Pre-prov. profi t 12 ,05 6 1 1,7 31 ( 2 . 7 ) 1 3 , 9 6 8 1 3 , 6 8 7 ( 2 . 0 )

Provisions & cont. 3,840 3,607 (6.1) 4,521 4,210 (6.9)

PBT 8,216 8,125 (1.1) 9,447 9,477 0.3

Prov. for taxes 2,792 2,762 (1.1) 3,211 3,221 0.3

PAT 5 ,42 3 5 ,36 3 ( 1 . 1 ) 6 , 2 3 6 6 , 2 5 6 0 .3

Source: Angel Research

Exhibit 16:P/ ABV band


0

400

800

1,200

1,600

2,000

2,400

2,800

Apr-04

Oct-04

Apr-05

Oct-05

Apr-06

Oct-06

Apr-07

Oct-07

Apr-08

Oct-08

Apr-09

Oct-09

Apr-10

Oct-10

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Price (`) 0.5x 0.9x 1.3x 1.7x 2.1x

7/30/2019 PNB 4Q FY 2013

9/12


May 11, 2013 9

Exhibit 17:Recommendation summaryC o m p a n y Reco.

C M P(`)

Tgt. price(`)

Upside(%)

F Y 2 0 1 5 EP/ ABV (x)

F Y 2 0 1 5 ETgt. P/ ABV (x)

F Y 2 0 1 5 EP/ E (x)

F Y 2 0 1 3 - 1 5 EEPS CAG R (%)

F Y 2 0 1 5 ERoA (%)

F Y 2 0 1 5 ERoE (%)

AxisBk Buy 1,473 1,714 16.4 1.6 1.9 9.7 17.3 1.6 17.6

FedBk Neutral 456 - - 1.0 - 7.7 10.0 1.2 13.7

HDFCBk Neutral 702 - - 3.3 - 16.5 22.8 1.8 21.8

ICICIBk* Buy 1,168 1,357 16.2 1.7 2.0 12.1 15.5 1.5 15.6

SIB Neutral 24 - - 0.9 - 5.4 11.4 1.0 17.1

YesBk Neutral 512 - - 2.2 - 10.7 14.9 1.3 22.1

AllBk Accumulate 124 142 14.6 0.5 0.6 3.4 12.6 0.8 14.2

AndhBk Neutral 92 - - 0.6 - 3.9 4.2 0.8 13.4

BOB Buy 705 815 15.7 0.7 0.9 4.9 17.0 1.0 16.0

BO I Accumulate 339 360 6.2 0.8 0.8 5.0 21.8 0.8 15.1

BOM Neutral 57 - - 0.6 - 4.3 14.8 0.6 15.6

CanBk Accumulate 424 461 8.6 0.7 0.8 4.9 14.0 0.8 14.1CentBk Neutral 72 - - 0.6 - 4.0 42.8 0.6 13.3

CorpBk Accumulate 410 453 10.5 0.5 0.6 3.9 8.3 0.8 14.4

DenaBk Neutral 94 - - 0.5 - 3.5 4.3 0.8 15.3

IDBI# Neutral 88 - - 0.5 - 4.7 15.2 0.7 11.3

IndBk Buy 161 186 15.0 0.5 0.6 3.8 6.5 1.0 14.9

IOB Neutral 63 - - 0.4 - 3.1 53.3 0.7 13.1

J&KBk Neutral 1,359 - - 1.0 - 6.8 (5.2) 1.2 16.0

OBC Accumulate 258 282 9.3 0.5 0.6 4.1 17.5 0.8 13.1

PN B Buy 7 7 3 9 4 5 2 2 . 3 0 .7 0 .9 4 .4 1 2 .4 1 .0 1 6 .3

SBI* Accumulate 2,306 2,572 11.6 1.3 1.4 8.2 16.4 1.0 17.0

SynBk Neutral 130 - - 0.7 - 4.5 (3.5) 0.7 15.2

UcoBk Neutral 74 - - 0.8 - 5.1 36.9 0.6 12.6

UnionBk Accumulate 241 264 9.9 0.7 0.8 5.0 21.2 0.8 15.3

UtdBk Accumulate 60 64 6.4 0.4 0.4 2.9 40.4 0.7 14.7

VijBk Neutral 53 - - 0.6 - 4.9 21.2 0.5 11.7

Source: Compan y, Angel Research; N ote:*Target multipl es= SOTP Targ et Price/ ABV (including subsidia ries), #Without ad justing for SASF

Company Background

Punjab National Bank is the country's second-largest bank, with a balance sheet

size of ~`4.8lakh cr and a pan-India network of over 5,800 branches. The bank'snetwork is primarily spread over northern India, i.e. in Punjab, Haryana and Uttar

Pradesh. Almost 62% of its branches are based in rural and semi-urban

hinterland, which results in a large legacy of low-cost CASA deposits (at 40.9% of

deposits; amongst the highest in the sector).

7/30/2019 PNB 4Q FY 2013

10/12


May 11, 2013 10

Income statement

Y/ E Ma rch (` cr) FY10 FY11 FY1 2 FY13 FY14 E FY1 5 E

N et Interest Income 8 ,47 8 11 ,807 13 ,414 14 ,857 16 ,625 19 ,283

- YoY Growth (%) 20.6 39.3 13.6 10.8 11.9 16.0O th er I nco m e 3 , 6 1 0 3 , 6 1 3 4 , 2 0 3 4 , 2 1 6 4 ,2 5 1 4 , 6 4 6

- YoY Growth (%) 23.6 0.1 16.3 0.3 0.8 9.3

O p e ra tin g I nco m e 1 2 , 0 8 8 1 5 , 4 2 0 1 7 , 6 1 7 1 9 , 0 7 2 2 0 , 8 7 6 2 3 , 9 2 9

- YoY Growth (%) 21.5 27.6 14.2 8.3 9.5 14.6

O perat ing Expenses 4 ,76 2 6 ,36 4 7 ,00 3 8 ,16 5 9 ,14 5 10 ,242

- YoY Growth (%) 13.2 33.6 10.0 16.6 12.0 12.0

Pr e - Prov ision Pro f it 7 ,32 6 9 ,05 6 10 ,614 10 ,907 11 ,731 13 ,687

- YoY Growth (%) 27.5 23.6 17.2 2.8 7.6 16.7

Pr ov. & C o n t. 1 , 4 2 2 2 , 4 9 2 3 , 5 7 7 4 , 3 8 6 3 , 6 0 7 4 , 2 1 0

- YoY Growth (%) 44.9 75.3 43.6 22.6 (17.8) 16.7

Pr ofi t Before Tax 5 ,90 5 6 ,56 4 7 ,03 7 6 ,52 2 8 ,12 5 9 ,47 7

- YoY Growth (%) 24.0 11.2 7.2 (7.3) 24.6 16.6

Pr ov. fo r Taxat ion 1 ,99 9 2 ,13 0 2 ,15 3 1 ,77 4 2 ,76 2 3 ,22 1

- as a % of PBT 33.9 32.5 30.6 27.2 34.0 34.0

PA T 3 , 9 0 5 4 , 4 3 4 4 , 8 8 4 4 , 7 4 8 5 , 3 6 3 6 , 2 5 6

- YoY Growth (%) 26.4 13.5 10.2 (2.8) 13.0 16.6

Balance sheet

Y/ E Ma rch (` cr) FY10 FY11 FY12 FY13 FY14 E FY1 5 E

Share Capital 315 317 339 353 353 353Reserve & Surplus 17,408 21,192 27,478 32,323 36,495 41,334

Deposits 249,330 312,899 379,588 391,560 446,378 517,799

- Growth (%) 18.9 25.5 21.3 3.2 14.0 16.0

Borrowings 8,572 20,399 26,074 28,710 32,597 37,629

Tier 2 Capital 10,690 11,190 11,190 10,911 10,638 10,372

Other Liab. & Prov. 10,318 12,328 13,524 15,019 17,239 20,148

Tota l Liab i li ties 29 6 ,63 3 37 8 ,32 5 45 8 ,19 4 47 8 ,87 7 54 3 ,70 1 62 7 ,63 5

Cash Balances 18,328 23,777 18,493 17,886 20,087 23,301

Bank Balances 5,146 5,914 10,335 9,249 9,515 10,984

Investments 77,724 95,162 122,629 129,896 147,370 168,157

Advances 186,601 242,107 293,775 308,725 351,947 408,258

- Growth (%) 20.6 29.7 21.3 5.1 14.0 16.0

Fixed Assets 2,513 3,106 3,169 3,358 3,698 4,141

Other Assets 6,320 8,259 9,793 9,763 11,084 12,795

To ta l A sse ts 2 9 6 , 6 3 3 3 7 8 , 3 2 5 4 5 8 , 1 9 4 4 7 8 , 8 7 7 5 4 3 , 7 0 1 6 2 7 , 6 3 5

- Growth (%) 20.1 27.5 21.1 4.5 13.5 15.4

7/30/2019 PNB 4Q FY 2013

11/12


May 11, 2013 11

Ratio analysis

Y/E Ma rch FY10 FY11 FY12 FY13 FY14 E FY15 E

Profitability ratios (%)

NIMs 3.2 3.6 3.3 3.3 3.3 3.4Cost to Income Ratio 39.4 41.3 39.7 42.8 43.8 42.8

RoA 1.4 1.3 1.2 1.0 1.0 1.1

RoE 26.6 24.4 21.1 16.5 16.1 16.5

B/ S ratios (%)

CASA Ratio 40.8 38.5 35.3 39.2 38.9 38.6

Credit/Deposit Ratio 74.8 77.4 77.4 78.8 78.8 78.8

CAR 14.2 12.4 12.6 13.6 13.2 12.6

- Tier I 9.1 8.4 9.3 10.5 10.4 10.2

Asset Q ua lity (%)

Gross NPAs 1.7 1.8 2.9 4.3 4.7 5.0

Net NPAs 0.5 0.8 1.5 2.3 2.1 1.8

Slippages 1.8 2.3 2.7 2.9 2.5 2.3

Loan Loss Prov. /Avg. Assets 0.4 0.6 0.6 0.7 0.6 0.6

Provision Coverage 81.2 73.2 62.7 58.8 65.0 70.0

Per Share D ata (`)

EPS 123.9 139.9 144.0 134.3 151.7 177.0

ABVPS (75% cover.) 514.8 628.2 734.2 803.0 943.0 1,103.9

DPS 22.0 22.0 21.8 27.0 29.0 34.5

Valua tion Ratios

PER (x) 6.2 5.5 5.4 5.8 5.1 4.4

P/ABVPS (x) 1.5 1.2 1.1 1.0 0.8 0.7

Dividend Yield 2.8 2.8 2.8 3.5 3.8 4.5

DuPont Analysis

NII 3.1 3.5 3.2 3.2 3.3 3.3

(-) Prov. Exp. 0.5 0.7 0.9 0.9 0.7 0.7

Adj. NII 2.6 2.8 2.4 2.2 2.5 2.6

Treasury 0.3 0.1 0.1 0.1 0.0 0.0

Int. Sens. Inc. 2.9 2.8 2.4 2.3 2.6 2.6

Other Inc. 1.0 1.0 0.9 0.8 0.8 0.8

Op. Inc. 3.9 3.8 3.4 3.1 3.4 3.4

Opex 1.8 1.9 1.7 1.7 1.8 1.7PBT 2.2 1.9 1.7 1.4 1.6 1.6

Taxes 0.7 0.6 0.5 0.4 0.5 0.6

RoA 1 .4 1 .3 1 .2 1 .0 1 .0 1 .1

Leverage 18.5 18.6 18.0 16.3 15.3 15.5

Ro E 2 6 . 6 2 4 . 4 2 1 . 1 1 6 . 5 1 6 . 1 1 6 . 5

7/30/2019 PNB 4Q FY 2013

12/12


May 11 2013 12

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or inthe past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

N ote: Please refer to the imp ortant ` Stock Ho lding D isclosure' report on the Angel we bsite (Resea rch Section). Also, plea se refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment p ositions in the stocks recomm ende d in this report.

Disclosure of Interest Statement Punjab National Bank

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Rating s (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral -5 to 5%)

Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below1 lakh fo r Angel, its Group companies and Director

Documents

PNB 4Q FY 2013