Punjab National Bank Share Q3 Results

Punjab National Bank reported 3.14% higher revenues in the Dec-21 quarter at Rs.22,275 crore. However, PNB revenues were down -4.74% sequential basis. PNB reported higher revenues in retail banking vertical. However, the revenues from corporate banking was flat while the treasury income was sharply lower on a YoY basis. The big driver of profitability in the quarter was 36% lower loan loss provisions in the Dec-21 quarter at Rs.3,344 crore.

Let us turn to the operating performance of PNB. For Dec-21 quarter, the operating profits were down -19.32% at Rs.5,083 crore. Clearly, the net income situation was not too encouraging in the quarter. In fact, PNB saw a fall in income from interest income, investment income and also interest on RBI balances.

Of course, the interest cost did taper but it was much less than the fall in income factors. This resulted in a negative spread leading to fall in operating income. Employee costs also went up sharply YoY. The result was that the operating profit margin or OPM contracted from a level of 29.17% in Dec-20 to 22.82% in Dec-21 quarter. Operating margins were higher on a sequential basis, but the YoY pressure was quite palpable.

Profit after tax (PAT) for the Dec-21 quarter was up by 67.25% at Rs.1,250 crore, despite unfavourable net interest margin situation. This growth was largely on account of lower provisions for loan losses by 36% YoY. The provisions fell from Rs.5,224 crore in the Dec-20 quarter to a level of Rs.3,344 crore in Dec-21 quarter propping up net profits. This can be interpreted as a reflection of improved asset quality in the quarter over last year.

The net results is that the PAT margins improved from 3.46% to 5.61% on a YoY basis. But the gross NPAs at 12.88% is largely too high in absolute terms. In fact, even net NPAs at above 4% is just too high for comfort. The other concern for the bank is the low level of capital adequacy at 14.91%, which is much lower than private sector banking counterparts like HDFC Bank and Axis Bank. This makes  fund raising essential for PNB in medium term.

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HDFC Bank Quarterly Results

Axis Bank Financials Numbers