PNB announced its 4QFY2011 results today, reporting a moderate net profit growth of 5.8% yoy to Rs1,201cr. At the PBT level the results were slightly below our expectations but were above expectations on the net profit level due to lower tax rate for the quarter than built in by us. A substantial 29.4% qoq increase in Net NPAs was the key negative from the results.
Key highlights:
· Business growth momentum was strong with advances and deposits growing at 9.4% qoq and 8.3% qoq, respectively. On a yoy basis, advances and deposits grew by 29.8% and 25.5%, respectively.
· Calculated NIM declined by rather steep 47bp qoq to 3.44% from 3.91% in 3QFY2011. Consequently, NII growth was below expectations, declining by 5.4% qoq. Non-interest income growth was strong both sequentially as well as on a yoy basis, registering a growth of 33.6% qoq and 22.6% yoy.
· Operating expenses increased by 51.5% yoy, primarily due to 72.9% increase in employee expenses due to the hit of employee-benefit related liabilities. However, on a sequential basis, operating expenses declined by 2.6% due to 7.7% fall in employee expenses. The bank put the figure for liability under the second pension option at Rs2,758cr, lower than the estimate of Rs3,600cr projection by the management in 3QFY2011. Liability for enhancement in gratuity limits is pegged at Rs566cr as per the actuarial valuations.
· Overall Gross NPAs declined by 3.6% qoq, but Net NPAs increased substantially by 29.4% qoq to Rs2,039cr. Consequently, Gross NPA ratio improved sequentially to 1.8% but Net NPA ratio deteriorated to 0.9% from 0.7% in 3QFY2011. The provision coverage ratio excluding technical write-offs declined to 53.5% from 65.3% in 3QFY2011. Provisioning expenses remained stable sequentially but were up by 17.1% yoy.
Post the recent correction across the board, the stock is trading at 1.2x FY2013E ABV. Hence, we recommend a Buy on the stock. We will revise the estimates post interaction with the management.
| Exhibit 1: 4QFY2011 Actual vs. Estimates | |||
| (Rs cr) | Actual | Estimates | Var (%) |
| Net interest income | 3,029 | 3,291 | (8.0) |
| Non-interest income | 1,145 | 906 | 26.4 |
| Operating income | 4,174 | 4,197 | (0.5) |
| Operating expenses | 1,667 | 1,730 | (3.6) |
| Pre-prov. profit | 2,508 | 2,467 | 1.6 |
| Provisions & contingencies | 728 | 650 | 12.0 |
| PBT | 1,780 | 1,817 | (2.1) |
| Prov. for taxes | 579 | 673 | (14.0) |
| PAT | 1,201 | 1,144 | 5.0 |
Source: Company, Angel Research
Exhibit 2: 4QFY2011 Performance summary
| (Rs cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) |
| Interest earned | 7,440 | 7,119 | 4.5 | 5,608 | 32.7 |
| Interest expenses | 4,411 | 3,916 | 12.7 | 3,110 | 41.9 |
| Net interest income | 3,029 | 3,203 | (5.4) | 2,498 | 21.3 |
| Non-interest income | 1145 | 857 | 33.6 | 935 | 22.6 |
| Operating income | 4,174 | 4,061 | 2.8 | 3,433 | 21.6 |
| Operating expenses | 1,667 | 1,711 | (2.6) | 1,100 | 51.5 |
| Pre-prov. profit | 2,508 | 2,350 | 6.7 | 2,332 | 7.5 |
| Provisions & contingencies | 728 | 714 | 2.0 | 622 | 17.1 |
| PBT | 1,780 | 1,636 | 8.8 | 1,711 | 4.0 |
| Prov. for taxes | 579 | 546 | 5.9 | 576 | 0.5 |
| PAT | 1,201 | 1,090 | 10.2 | 1,135 | 5.8 |
| EPS (Rs) | 38.6 | 34.6 | 11.7 | 36.0 | 7.2 |
| Cost-to-income ratio (%) | 39.9 | 42.1 | 32.0 | ||
| Effective tax rate (%) | 32.5 | 33.4 | 33.6 | ||
| Net NPA (%) | 0.9 | 0.7 | 0.5 |
Source: Company, Angel Research
Exhibit 3: Trends in NPAs
| Particulars | 4QFY11 | 3QFY11 | 2QFY11 | 1QFY11 | 4QFY10 | 3QFY10 | 2QFY10 | 1QFY10 |
| Gross NPAs (Rs cr) | 4,379 | 4,541 | 4,025 | 3,613 | 3,214 | 3,156 | 2,619 | 2,865 |
| Net NPAs (Rs cr) | 2,039 | 1,575 | 1,426 | 1,283 | 982 | 812 | 233 | 297 |
| Gross NPAs (%) | 1.8 | 2.0 | 1.9 | 1.8 | 1.7 | 1.8 | 1.6 | 1.8 |
| Net NPAs (%) | 0.9 | 0.7 | 0.7 | 0.7 | 0.5 | 0.5 | 0.1 | 0.2 |
| NPA coverage (%) | 53.5 | 65.3 | 64.6 | 64.5 | 69.5 | 74.3 | 91.1 | 89.6 |
Source: Company, Angel Research; Note: NPA coverage excluding technical write-offs
No comments:
Post a Comment