(CTN News) – A number of impressive outcomes were published by Punjab National Bank (PNB) during the first quarter of the year.
One of these achievements was a profit that jumped by 159 percent compared to the previous year. This occurred as a result of a substantial reduction in the amount of provisions and strong recoveries.
The percentage of gross non-performing assets (NPAs) has undergone a considerable decrease, and the public sector bank has offered guidance for a reduced gross NPA ratio for FY25. The ratio is now forecast to be 4%, which is a decrease from the earlier expectation of 5%.
In addition, the Philippine National Bank (PNB) has decreased its prediction for the cost of credit for the current year from 1% to 0.5 percent, which is a reduction from the prior advice of 1%.
Even though experts were pleased with the results and expectations for the first quarter, the stock rating upgrade was hampered by the weak return ratios. This was the case despite the fact that analysts were pleased with the numbers.
PNB predicts a lower new slippage rate, too.
This turnaround is something that PNB anticipates coming about.
Additionally, the bank has lowered the amount of capital that is anticipated to be raised during the fiscal year 25 from 7,500 crore to 5,000 crore by reducing the amount of capital that is projected to be raised. It has been decided to keep the NIM guidance for the fiscal year 25 at 2.9-3.0 percent.
The Ministry of Foreign Affairs and Trade (MOFSL) noted that the results of the PNB were distinguished by a substantial reduction in provisions.
According to what was indicated, the NII was, for the most part, in accordance with the expectations, although the NIM suffered a slight reduction during the period.
“PPoP saw a little decrease in earnings during the first quarter as a consequence of increased operating expenses brought on by PSLC expenditures. As a result of the growth of advances exceeding forecasts, management is currently trying to enhance the company’s share of the RAM portfolio, which will assist in maintaining profitability.
Additionally, despite the fact that recoveries and write-offs have continued to remain at greater levels, the quality of assets continues to demonstrate a significant improvement. The percentage of positive results (PCR) grew even further to 88 percent, as stated by MOFSL, and asset quality ratios also improved over this time period.
The broking firm has boosted its earnings estimates for PNB by 5.6% for the fiscal year 25 and by 0.8% for the fiscal year 26 due to the fact that there are less provisions, steady net interest income, and stable margins.
These factors have contributed to the increase in profits projections. The company recommended a neutral stance with a revised total price of INR135 (which was earlier INR130).
PNB recommended 1.1x FY26E BV for this recommendation.
As of June 2026, Nirmal Bang Institutional Equities has determined that PNB is worth 1.1 times its adjusted book value (ABV). Additionally, the company has proposed a target price of Rs 124, which is a rise from Rs 120 that was previously offered.
According to Nirmal Bang, this accounts for a compound annual growth rate (CAGR) of 40.5 percent in earnings for the period of fiscal year 24 through fiscal year 26E.
This is based on a loan CAGR of 12.1 percent, stable margins, and improving operational expenditure ratios and credit costs. When compared to the average multiple of 0.62 times that has been observed over the course of the previous five years, the valuation is at a premium of 78%.
The statement claimed that we continue to keep a ‘Accumulate’ rating on PNB since the return ratios continue to be lower, despite the fact that recoveries have picked up. This is the reason why we continue to maintain this grade.
SOURCE: BTN
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Salman Ahmad is known for his significant contributions to esteemed publications like the Times of India and the Express Tribune. Salman has carved a niche as a freelance journalist, combining thorough research with engaging reporting.
