PNB 2023-24 Annual Report Analysis

Mon, 10 Jun

PNB has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

PNB Income Statement Analysis

• Interest income during the year rose 25.6% on a year-on-year (YoY) basis.
• Interest expenses were up by 32.3% YoY during the same period.
• Operating expenses increased by 18.4% YoY during the year.
• The bank's net interest income (NII) increased by 15.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 2.9% in FY24 as against 2.8% in FY23.
• Other income increased by 8.9% YoY during the year.
• Net profit for the year increased by 172.0% YoY.
• Net profit margins during the year increased to 8.4% in FY24 from 3.9% in FY23.

PNB Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	868,453	1,090,646	25.6%
Other Income	Rs m	122,396	133,294	8.9%
Interest Expense	Rs m	518,170	685,342	32.3%
Net Interest Income	Rs m	350,283	405,304	15.7%
Operating Expense	Rs m	243,357	288,090	18.4%
Pre-provision Operating Profit	Rs m	229,322	250,509	9.2%
Provisions & Contingencies	Rs m	198,629	167,220	-15.8%
Profit before tax	Rs m	48,614	133,317	174.2%
Tax	Rs m	17,921	50,028	179.2%
Profit after tax	Rs m	33,485	91,072	172.0%
Minority Interest	Rs m	-103	-500	-383.5%
Net Interest Margin	%	2.8	2.9
Net profit margin	%	3.9	8.4

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PNB Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 13,792.3 bn as compared to Rs 12,903.5 bn in FY23, thereby witnessing an increase of 6.9%.
• Advances for the year stood at Rs 9,417.6 bn as compared to Rs 8,374.6 bn during FY23, a rise of 12.5%.
• Cost of deposits for PNB rose 24.6% and stood at 4.5%, while yield on advances rose to 8.1%.
• The lender's investments rose to Rs 4,464.2 bn during the year from Rs 4,169.1 bn in FY23.
• Borrowing stood at Rs 725.9 bn, a growth of 3.5% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 15,986.4 bn as against Rs 14,936.5 bn during FY23, thereby witnessing a rise of 7.0%.

PNB Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	1,028,805	1,103,867	7.3%
Advances	Rs m	8,374,590	9,417,625	12.5%
Deposits	Rs m	12,903,471	13,792,252	6.9%
Yield on advances	%	6.9	8.1
Cost of Deposits	%	3.6	4.5
Investments	Rs m	4,169,138	4,464,213	7.1%
Borrowings	Rs m	701,486	725,856	3.5%
Total Assets	Rs m	14,936,489	15,986,360	7.0%

Current Valuations for PNB

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 8.3, an improvement from the EPS of Rs 3.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 126.8, stands at 10.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.3 times, while the price to income ratio stands at 0.9 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	78.9	99.1
Earnings per share (Unadj.)	Rs	3.0	8.3
Diluted earnings per share	Rs	3.0	8.3
Avg P/E ratio	Rs	14.8	10.8
Avg P/ABV ratio	Rs	0.5	1.3
Avg Market Cap	Rs	496,046	987,963
Dividends per share (Unadj.)	Rs	0.64	1.50

Ratio Analysis for PNB

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 68.3x during FY24, from 64.9x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 13.15x during FY24, from 13.22x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): PNB's capital adequacy ratio (CAR) was at 0.0% as on 31 March 2024 as compared to 15.5% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 8.3% during FY24, from 3.3% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.57% during FY24, from 0.22% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 10.82% during FY24, from 5.86% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. PNB's gross NPA ratio stood at 0.0% as of 31 March 2024 compared to 8.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of PNB was 0.0% in financial year 2024. This compared with 2.7% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	64.9	68.3
Debt to Equity Ratio	x	13.2	13.2
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	15.5	0.0
Return on Equity	%	3.3	8.3
Return on Assets	%	0.2	0.6
Return on Capital Employed	%	5.9	10.8
% of Gross NPAs	%	8.7	0.0
% of Net NPAs	%	2.7	0.0
Yield on Advances	x	6.9	8.1
Yield on Investments	x	6.5	6.8

To see how PNB has performed over the last 5 years, please visit here.

PNB Share Price Performance

Over the last one year, PNB share price has moved up from Rs 51.4 to Rs 126.8, registering a gain of Rs 75.4 or around 146.8%.

Meanwhile, the S&P BSE BANKEX is trading at 56,902.9 (up 0.2%). Over the last one year it has moved up from 49,874.1 to 56,902.9, registering a gain of 7,028.8 points (up 14.1%).

Overall, the S&P BSE SENSEX is up 22.2% over the year.

(To know more, you can check out historical annual results for PNB here and quarterly results for PNB here)