PNB shares zoom ~7% as Q1 net profit up by 159% y-o-y

29 Jul 2024 , 12:55 PM

Punjab National Bank (PNB) shares rose as much as 7% during the trading session on Monday (July 29), after the public lender posted a good set of first-quarter results, with profit soaring 159% year on year due to a dramatic drop in provisions and healthy recoveries.

The net profit for the period was ₹3,252 Crore, compared to a PAT of ₹1,255 Crore in the same quarter the previous financial year. The bank’s global and domestic net interest margins are approximately 3%.

At around 10.52 AM, PNB was trading 7.03% higher at ₹128.38, against the previous close of ₹119.95 on NSE. The counter touched an intraday high and low of ₹128.66, and ₹123.54, respectively.

The bank’s total income for Q1 FY25 was ₹32,166 Crore, up from ₹28,579 Crore in Q1 FY24, representing a 12.5% increase. The GNPA ratio for the quarter increased by 275 basis points year on year to 4.98% from 7.73% in June 2023, while the NNPA ratio increased by 138 basis points YoY to 0.60%.

The state-owned bank’s savings deposits increased by 4.4% year on year to ₹4,84,377 Crore, while its current deposits and CASA deposits were at ₹64,702 Crore and ₹5.49 lakh Crore, respectively in the June quarter.

Morgan Stanley rated PNB as ‘Underweight’ but boosted the target price to ₹80 per share. That represents a 33% drop from the stock’s previous closing levels.

PNB’s net interest income (NII) climbed 10% year-on-year to ₹10,476 Crore, meeting expectations due to average balance sheet expansion. Margins fell 3 basis points quarter on quarter to 3.07%.

The PSU bank’s asset quality trend exceeded expectations, with lower slippage and credit cost.

Gross non-performing assets (NPAs) ratio fell considerably, with the lender lowering its FY25 gross NPA projection to 4% from 5% previously.

Management has reduced the credit cost projection for fiscal year 2025 to 50 basis points, down from 100 before.

Recovery from written-off accounts declined sequentially. Adjusted for this, the net credit cost was only 2 basis points, compared to zero in the previous quarter.

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