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Informist, Tuesday, Jul. 29, 2025
By Shubham Rana
NEW DELHI – Punjab National Bank is expected to post another sharp rise in its net profit for the June quarter because of falling provisions. The year-on-year growth in net profit, however, is seen at a 10-quarter low because of slower loan growth and lower margins, analysts said.
The New Delhi-based lender's net profit for the June quarter is seen rising 26% on year to INR 40.87 billion, according to the average of the estimates of eight brokerages. Sequentially, however, the net profit is seen declining 11%. PNB had posted a net profit of INR 45.67 billion for the March quarter, up 52% on year, because of a 77?ll in provisions to INR 3.60 billion. The bank had made provisions of INR 13.12 billion in the year-ago quarter.
JM Financial Institutional Securities had the lowest net profit estimate for PNB at INR 35.30 billion and Kotak Institutional Equities had the highest estimate of INR 53.70 billion. The bank will release its financial results for the June quarter Wednesday.
The lender's share price has risen 16% since it released its March quarter earnings. The Nifty Bank index, of which PNB is a constituent, has risen 3% in the same period. Shares of PNB Tuesday closed up 2.3% at INR 109.29 on the National Stock Exchange.
Of the 10 brokerage reports on PNB available with Informist, seven have a 'buy' rating with an average target price of INR 116 while two have a 'hold' rating with an average target price of INR 109. One brokerage maintains a 'sell' rating.
APR-JUN PERFORMANCE
"We expect the bank to report strong earnings growth yoy (year-on-year) driven by a yoy decline in provisions and expected decline in tax rate, while operating profit is expected to decline modestly yoy," Kotak Institutional Equities said in a pre-earnings report. According to Emkay Global Financial Services, slower growth coupled with lower margins could "keep earnings in check".
PNB's global advances grew 9.9% on year to INR 11.31 trillion as of Jun. 30, according to provisional figures released by the bank. The growth in global advances has moderated from 13.6% a quarter ago and 12.2% a year ago. Loan growth is also below the 11-12% guidance for the current financial year.
The net interest income--the difference between interest earned and expended--is seen at INR 104.88 billion for the quarter ended June, largely unchanged from a year ago, as per the average of estimates from eight brokerages. Compared with the March quarter, the net interest income is seen falling 3% in the June quarter.
The net interest margin of the bank is seen moderating 10-20 basis points from 2.8% in Jan-Mar, analysts said. Margins are expected to be lower across the banking sector in the June quarter following the 100 bps reduction in the policy repo rate by the Reserve Bank of India this calendar year, including the 50-bps cut in June.
PNB's asset quality is expected to improve with Motilal Oswal Financial Services projecting the gross non-performing asset ratio at 3.7% at the end of June from 4% a quarter ago and 5% a year ago. The net NPA ratio is seen at 0.4% as of Jun. 30, unchanged from a quarter ago and down 20 bps from a year ago, Motilal Oswal said.
Slippages are likely to be marginally lower quarter-on-quarter in the June quarter after a one-off rise in farm slippages during the March quarter, Kotak Institutional Equities said. Nirmal Bang Institutional Equities sees credit cost at 0.3% in Apr-Jun, down 4 bps on year but up 8 bps on quarter.
Following are the Apr-Jun earnings estimates for Punjab National Bank based on reports from eight brokerages in descending order by the estimate of net profit:
|
Brokerage Firm |
NII (in INR million) |
Net Profit (in INR million) |
|
Kotak Institutional Equities |
103,527.00 |
53,698.00 |
|
Motilal Oswal Financial Services Ltd |
105,856.00 |
41,441.00 |
|
Emkay Global Financial Services Ltd |
104,740.00 |
41,283.00 |
|
Nuvama Wealth Management Ltd |
102,500.00 |
41,200.00 |
|
Antique Stock Broking Ltd |
105,023.00 |
39,947.00 |
|
Nirmal Bang Equities Pvt Ltd |
105,403.00 |
38,129.00 |
|
InCred Research Services Pvt Ltd |
105,000.00 |
36,000.00 |
|
JM Financial Institutional Securities Pvt Ltd |
106,983.00 |
35,296.00 |
|
Average |
104,879.00 |
40,874.25 |
End
Edited by Deepshikha Bhardwaj
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