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Punjab National Bank: Pushed in red by bad loans - Views on News from Equitymaster
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Punjab National Bank: Pushed in red by bad loans
Jun 2, 2016

Punjab National Bank (PNB) declared its results for the fourth quarter (4QFY16) and the financial year (FY16). While the net interest income fell by 27% YoY for the quarter, the bank posted a net loss. Even on an annual basis, the bank slipped in the red. Here is our analysis of the results.

Performance summary
  • Interest income fell by 7% YoY in 4QFY16 but was up 2.4% for FY16.
  • Net interest margin (NIM) contracted by 0.55% in FY16.
  • Other income increased by 35.8% YoY in 4QFY16 on the back of a four-fold jump in the recovery of written off accounts. For FY16, other income was up 16.7% YoY.
  • Gross NPA (non-performing assets) to advances surged to 12.9% in 4QFY16 from 6.5% in 4QFY15 on account of the bank's clean-up exercise in line with RBI's Asset Quality Review over the last two quarters of FY16.
  • Capital adequacy ratio as per Basel III norms stands at 11.3% at the end of 31st March 2016.

    Financial performance snapshot
    Rs (m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Interest income 116,505 108,240 -7.1% 463,154 474,244 2.4%
    Interest expense 78,589 80,563 2.5% 297,598 321,126 7.9%
    Net Interest Income 37,916 27,677 -27.0% 165,556 153,118 -7.5%
    Net interest margin (%) 3.15% 2.60%
    Other Income 18,051 24,522 35.8% 58,907 68,770 16.7%
    Other Expense 23,940 19,920 -16.8% 104,916 99725 -4.9%
    Provisions and contingencies 38,342 104,852 173.5% 79,975 179542 124.5%
    Profit before tax -6,315 -72,574 1049.2% 39,572 -57,379 -245.0%
    Tax -9,381 -18,902 8,957 -17,635
    Effective tax rate 148.5% 26.0% 22.6% 30.7%
    Profit after tax/ (loss) 3,066 -53,671 30,616 -39,744
    Net profit margin (%) 2.6% -49.6% 6.6% -8.4%
    No. of shares (m) 1963.6
    Book value per share (Rs)* 180.6
    P/BV (x) 0.4

    * (Book value as on 31st March 2016)

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