Punjab National Bank reported a Q4 FY25 PAT of Rs 45.7 billion (up 52% YoY, in line), aided by better other income and a lower tax rate, partly offset by net interest income miss (as net interest margins declined) and higher provisions. NII declined 2.5% QoQ (6% miss), while NIMs contracted 12bp QoQ to 2.81% (2.96% domestic NIMs).
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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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