Punjab National Bank Q4 Results Review: NII Below Estimate As NIMs Decline; Motilal Oswal Retains 'Buy'

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Motilal Oswal Report

Punjab National bank Ltd. reported a moderate quarter, characterized by net interest income miss due to net interest margin decline and higher provisions, while other income was healthy. NII declined as NIMs contracted due to cost pressures. Business growth was moderate in Q4; however, the bank outperformed its business growth guidance for FY25.

Q4 saw a spike in slippages amid an increase in agri and MSME slippages, while asset quality ratios improved, led by better recoveries and write-off.

SMA book (with loans over Rs 50 million) improved to 0.02% of domestic loans. We largely maintain our EPS estimates and expect RoA/RoE at 1.05%/15.5% in FY27E.

We reiterate Buy rating on the stock with a target price of Rs 125 (based on 1.0xFY27E).

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