Why PNB Share Price is Rising

The quarterly earnings season is a crucial period for the stock market. Companies unveil their financial performance, providing investors with valuable insights into their business operations.

These results significantly impact investor sentiment, driving stock prices up or down. Yesterday, we wrote to you about how insurance stocks' share prices are rising after declaring quarterly results.

Positive earnings often lead to a surge in share prices, while disappointing results can trigger sell-offs. Hence investors carefully track the quarterly results season.

One stock that is under investor spotlight after declaring quarterly results is Punjab National Bank (PNB).

It is up 6.2% in the past five days.

Let's take a look at the quarterly results of PNB.

#1 Good Quarterly Results

Punjab National Bank (PNB) reported its highest-ever quarterly standalone profit of Rs 32.5 billion (bn), up 159% year-on-year (YoY).

The increase in net profit was driven by strong performance across various financial metrics. Bad loans declined and interest income improved.

The net interest income (NII) increased 10.2% to Rs 104.8 bn in Q1 FY25 from Rs 95 bn in the same period last year.

NII remained steady, but NIM contracted slightly in Q1 FY25. The global and domestic net interest margins were nearly 3%.

Asset quality improved due to high levels of recoveries and write-offs. The gross non-performing asset (GNPA) ratio improved to 4.9% from 7.7% in June 2023. The net non-performing asset (NNPA) ratio increased to 0.6%.

Savings deposits grew 4.4% YoY to Rs 4,843.8 bn. Current deposits and CASA deposits were Rs 647 bn and Rs 5,490.8 bn, respectively, in the June 2024 quarter.

Global business grew 10% YoY, while global deposits grew 8.5% YoY.

The return on assets (RoA) improved to 0.8% in the June quarter from 0.3%, while the return on equity (RoE) rose to 16.8% from 7.5%.

The capital adequacy ratio improved to 15.79% at the end of June 2024, up from 15.5% a year ago. The provision coverage ratio, including technical write-offs, increased to 95.9%. Excluding technical write-offs, the ratio improved to 88.4%.

Advances showed robust growth. Total retail credit increased 14.4% YoY to Rs 2,345.6 bn. Core retail advances grew 15.5%. Housing loans were up 14.7% to Rs 1,018 bn, and vehicle loans rose 26.9% to Rs 217.3 bn.

Agriculture advances grew 15.8% to Rs 1,685 bn. MSME advances increased 7.9% to Rs 1,428.9 bn.

What Next?

PNB is strategically positioned for significant future growth. With legacy issues resolved, the management believes that the bank is set to outperform its competitors in profitability for the current and upcoming financial years.

The management has implemented several initiatives to enhance underwriting, collections, and digital and HR transformation, which are expected to yield results in the near term.

The bank plans to focus on expanding its retail, agriculture, and MSME portfolios while extending quality corporate loans. Controlling slippages and improving recovery rates are also key priorities.

Additionally, PNB aims to increase forex income and boost fee income from third-party product sales to augment non-interest income.

For the current financial year, the bank intends to maintain credit costs below 1%. The management projects that ROA will rise to 0.8% this year and reach 1% by March 2025, leading to a substantial profit increase.

The bank anticipates a credit growth of 11-12% and deposit growth of 9-10% in the current financial year. To support this growth, the bank has secured approval to raise Rs 175 bn through Tier I and Tier II bonds and share sales via private placement.

To enhance its reach, PNB plans to add 150 new branches in the domestic market and open a representative office in Dubai. Currently, PNB operates 10,136 branches in India and has an international presence in the UK, Bhutan, and Nepal.

The bank's consistent financial performance and strategic initiatives position it well for future growth and enhanced profitability.

How PNB Share Price has Performed Recently

In the past five days, PNB share price has rallied 5.6%. In the last month, it is up 2.2%.

In 2024, so far its share price has surged 27.9% and it has rallied 102.4% in the last one year.

The stock touched its 52-week high of Rs 142.9 on 30 April 2024 and a 52-week low of Rs 58.6 on 2 August 2023.

About Punjab National Bank

PNB is one of the largest PSU banks in India. It has a strong distribution network of 10,925 domestic branches, 13,914 ATMs, and two international branches.

After amalgamation of Oriental Bank of Commerce and United Bank of India with PNB, it has a customer base of over 180 million.

For more details about the company, you can have a look at the PNB fact sheet and quarterly results on our website.

You can also compare PNB with its peers.

PNB vs SBI

PNB vs HDFC bank

PNB vs AU small finance bank

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...