1QFY2012 Result Update | Banking

July 29, 2011

Punjab National Bank

Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT

Source: Company, Angel Research

ACCUMULATE
CMP Target Price
% chg (qoq) 2.8 (1.3) (8.0) 1QFY11 2,598 2,098 1,068 % chg (yoy) 19.9 17.9 3.4

`1,124 `1,217
12 Months

1QFY12 3,115 2,474 1,105

4QFY11 3,029 2,508 1,201

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Banking 35,617 1.0 1,395/971 38,600 10 18,197 5,482 PNBK.BO PNB@IN

For 1QFY2012, PNB posted moderate net profit growth of 3.4% yoy to `1,105cr, in-line with our estimate of `1,100cr and marginally below streets expectations. However, NIM and asset quality surprised positively with reported NIM declining just 7bp qoq and quarterly annualised slippage ratio falling to sub-2% levels for the first time in the last seven quarters. We maintain Accumulate on the stock. Holding up of NIM and moderating asset-quality pressures Key positives: For 1QFY2012, the banks business momentum moderated in-line with peers. However, business growth remained ahead of the industry, with advances growing by 23.4% yoy (up 0.3% qoq) and deposits increasing by 26.9% yoy (3.6% qoq). However, deposits growth was largely driven by bulk deposits and certificate of deposits, which increased substantially by 62.7% yoy (9.0% qoq). Growth in CASA deposits moderated further to 16.2% yoy, as has been witnessed across almost all banks. Reported CASA ratio declined by 110bp qoq to 38.1%. NIM held up well as compared to peers, with a decline of just 7bp qoq to 3.8% on the back of a 55bp qoq rise in yield on advances, which largely offset the 64bp qoq increase in cost of deposits. Fee income growth was healthy at 28.6% yoy. Even recoveries from written-off accounts rose by healthy 43.4% yoy. On the asset-quality front, the bank surprised positively with slippages rate declining to sub-2% levels in spite of the switchover to system-based NPA recognition system for accounts above `10lakhs (the bank had migrated accounts above `50lakhs in 4QFY2011 itself). Provision coverage ratio (including technical write-offs) improved by ~100bp qoq to 74.3%. Capital adequacy remained healthy at 12.4%, with tier-I CAR of 8.5% (including 1QFY2012 profits at 9.0%). Outlook and valuation: At the CMP, the stock is trading at 1.3x FY2013E ABV vs. its five-year range of 1.11.6x and median of 1.4x. We maintain our Accumulate recommendation on the stock with a target price of `1,217, valuing it at a multiple of 1.4x FY2013E ABV.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 58.0 17.4 19.3 5.3

Abs. (%) Sensex PNB

3m (5.7) (6.2)

1yr 1.1 6.6

3yr 26.8 129.0

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

FY2010 8,478 20.6 3,905 26.4 3.2 123.9 9.1 2.2 1.4 26.6

FY2011 11,807 39.3 4,434 13.5 3.6 139.9 8.0 1.9 1.3 24.4

FY2012E 12,895 9.2 4,438 0.1 3.2 140.1 8.0 1.5 1.1 20.4

FY2013E 14,533 12.7 5,113 15.2 3.0 161.4 7.0 1.3 1.0 20.0

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Please refer to important disclosures at the end of this report

Punjab National Bank | 1QFY2012 Result Update

Exhibit 1: 1QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income incl. MF Div. - Recov. from written off a/cs - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & contingencies - Provisions for NPAs - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) 8,315 6,576 1,686 34 20 5,200 3,115 1,084 910 598 174 109 203 4,199 1,725 1,213 512 2,474 894 566 328 1,580 475 1,105 30.1 7,440 5,904 1,472 22 42 4,411 3,029 1,145 972 470 173 221 281 4,174 1,667 1,129 538 2,508 728 544 184 1,780 579 1,201 32.5 11.8 11.4 14.5 51.5 (52.1) 17.9 2.8 (5.4) (6.4) 27.2 0.6 (50.7) (28.0) 0.6 3.5 7.4 (4.7) (1.3) 22.7 4.0 78.1 (11.2) (17.9) (8.0) (244)bp 5,972 4,676 1,275 16 4 3,373 2,598 892 713 465 179 76 172 3,490 1,392 995 397 2,098 534 548 (14) 1,564 496 1,068 31.7 39.2 40.6 32.2 110.5 351.2 54.2 19.9 21.5 27.6 28.6 (2.8) 43.4 18.0 20.3 23.9 21.8 29.2 17.9 67.3 3.3 1.0 (4.1) 3.4 (162)bp

Exhibit 2: 1QFY2012 Actual vs. Angel estimates

Particulars (` cr) Net interest income Other income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 3,115 1,084 4,199 1,725 2,474 894 1,580 475 1,105

Estimates 3,103 906 4,009 1,563 2,446 817 1,629 528 1,100

Var. (%) 0.4 19.6 4.7 10.4 1.1 9.3 (3.0) (10.1) 0.4

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Exhibit 3: 1QFY2012 performance analysis

Particulars Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) Reported CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Yield on funds Cost of funds Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) Credit cost (%)
Source: Company, Angel Research

1QFY12

4QFY11

% chg (qoq)

1QFY11 % chg (yoy) 23.4 26.9 (215)bp 17.1 15.9 16.2 (350)bp (137)bp (19)bp 126bp 110bp 39bp 70bp 94bp (10)bp 120bp 35.4 18bp 62.9 22bp (333)bp (66)bp (13)bp

242,908 242,107 324,097 312,899 74.9 26,384 94,875 38.1 12.4 8.5 6.3 11.4 7.7 8.7 5.4 3.8 41.1 4,894 2.0 2,091 0.9 74.3 1.9 0.6 77.4 26,838 93,487 39.2 12.4 8.4 5.6 10.8 7.1 8.3 4.9 3.9 39.9 4,379 1.8 2,039 0.9 73.2 2.7 0.6

0.3 196,870 3.6 255,335 (243)bp (1.7) 1.5 (110)bp (2)bp 7bp 64bp 55bp 55bp 42bp 53bp (7)bp 115bp 11.7 21bp 2.6 3bp 106bp (73)bp 1bp 77.1 22,538 81,847 41.6 13.8 8.7 5.0 10.3 7.3 8.0 4.5 3.9 39.9 3,613 1.8 1,283 0.7 77.6 2.6 0.7

121,259 120,325

0.8 104,385

Business growth moderates

During 1QFY2012, business growth for the bank moderated in-line with peers. Advances grew marginally by 0.3% qoq (up 23.4% yoy). The MSME and retail segments advances grew by healthy 36.1% yoy and 24.2% yoy, respectively. Overseas advances showed strong traction, registering growth of 77.6% yoy (11.0% qoq). However, the share of overseas advances in the banks loan book remains relatively small at 5.8%. Among industrial advances, infrastructure credit continued to drive growth. Infra loans grew by 33.3% yoy, in which the power sectors loans increased substantially by 72.7% yoy. However, management indicated that it is taking a cautious view on loans to the power sector and the sequential increase in the power sectors loans was due to disbursals in already sanctioned accounts. With strong growth in infra loans, its share in advances has risen to 15.1% from 14.0% in 1QFY2011. Deposits growth was healthy on a yoy basis at 26.9% (up 3.6% qoq). However, deposits growth was largely driven by bulk deposits and certificate of deposits (CDs), which increased substantially by 62.7% yoy (9.0% qoq). This resulted in the share of bulk deposits to total deposit rising to 24.0% from 18.7% in 1QFY2011.
July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Exhibit 4: CD ratio comes off ~240bp qoq

Adv. qoq chg (%) 10.0 8.0 6.0 4.0 77.1 76.4 Dep. qoq chg (%) 77.4 76.6 74.9 76.0 CDR (%, RHS) 78.0

Exhibit 5: CASA deposits growth moderates

Calculated CASA ratio (%) 42.0 24.3 24.9 22.0 18.1 16.2 20.0 CASA yoy growth (%, RHS) 30.0

39.0

74.0

36.0

10.0

40.9

40.6

39.1

38.5

5.5 2.4

6.0 7.1

6.0 5.7

9.4 8.3

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

0.3 3.6

2.0

72.0

33.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

37.4

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 6: MSME and retail loans show healthy traction yoy

Particulars (` cr) Agri Retail MSME Medium & Large Corporates Comm. Real Estate Services & Others Domestic non-food credit Food credit Domestic credit Overseas advances Global gross credit
Source: Company, Angel Research

1QFY12 34,153 24,154 27,336 87,576 10,434 42,482 4,806 14,318

4QFY11 % chg (qoq) 35,462 23,621 26,848 87,224 9,731 43,780 4,421 12,912 (3.7) 2.3 1.8 0.4 7.2 (3.0) 8.7 10.9

1QFY11 % chg (yoy) 30,240 19,442 20,090 74,146 10,767 32,184 3,722 8,063 12.9 24.2 36.1 18.1 (3.1) 32.0 21.0 29.1 21.2 77.6 23.5

226,135 226,666 230,941 231,087 245,259 243,999

(0.2) 186,869 (0.1) 190,591 0.5 198,654

NIM surprises positively

The bank surprised positively by reporting a far lesser (7bp) sequential decline in reported NIM as compared to peers. The bank had hiked its lending rates by 50bp in May 2011 and got the full benefit of the 50bp hike carried out in February 2011, which aided in improving the yield on advances by 55bp qoq to 11.4%. With moderate growth in CASA deposits and higher share of bulk deposits, cost of deposits rose by 64bp qoq to 6.3%. Overall NIM held up well at 3.8%.

Exhibit 7: Better yield on advances...

(%) 11.50 11.00 10.55 10.50 10.00 9.50 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 10.28 10.59 10.83 11.38

Exhibit 8: ...largely offsets pressures on NIM

(%) 4.20 4.00 3.80 3.60 3.40 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 3.94 4.06 4.13 3.91

3.84

Source: Company, Angel Research

Source: Company, Angel Research

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Healthy fee income growth; Recoveries also pick up

Fee income growth was healthy at 28.6% yoy at `598cr. Even on a sequential basis, fee income grew by robust 27.2%, as the bank collects processing charges in the first quarter of the financial year. Growth in fee income was broad-based with LC/BG income (25.9% yoy), bills and remittance (27.7% yoy) and income from ATM operations (up 97.9% yoy) showing healthy traction. Management is targeting to grow its fee income in-line with advances growth. Recoveries from written-off accounts witnessed healthy pick-up, registering yoy growth of 43.4%.

Exhibit 9: Fee income witnesses healthy traction

Particulars (` cr) CEB Treasury incl. MF Dividend Forex Recoveries Others Other income Other income excl. treasury
Source: Company, Angel Research

1QFY12 4QFY11 598 174 131 109 72 1,084 910 470 173 109 221 172 1,145 972

% chg (qoq) 1QFY11 27.2 0.6 20.2 (50.7) (58.1) (5.3) (6.4) 465 179 114 76 58 892 713

% chg (yoy) 28.6 (2.8) 14.9 43.4 24.1 21.5 27.6

Asset-quality pressures moderate

On the asset-quality front, the bank surprised positively with slippages rate declining to sub-2% levels (at 1.9%) in spite of the switchover to system-based NPA recognition system for accounts above `10lakhs (the bank had migrated accounts above `50lakhs in 4QFY2011 itself). However, credit costs were stable sequentially at 60bp. Gross NPAs increased by 11.7% qoq as the bank wrote off only `11cr of NPAs as compared to `173cr in 1QFY2011. Recoveries from gross NPAs showed healthy traction, rising by 79.4% qoq to `418cr. Net NPAs rose by a lower 2.6% qoq. Provision coverage ratio (including technical write-offs) improved by ~100bp qoq to healthy 74.3%.

Exhibit 10: Slippages decline

3.0 2.5 2.0 1.5 1.0 0.4 0.7 Slippages (%) 0.6 Credit cost (%, RHS) 0.8 0.6 0.6 0.6 0.4 0.2

Exhibit 11: Largely stable asset quality

2.5 2.0 1.5 1.0 74.3 73.2 Gross NPAs (%) 77.6 77.1 Net NPAs (%) 77.2 PCR (%, RHS) 78.0 76.0 74.0 72.0

2.6

2.0

2.1

2.7

1.9

1.8 0.7

1.9 0.7

2.0 0.7

1.8 0.9

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

2.0 0.9
70.0

0.5

0.5

Source: Company, Angel Research

Source: Company, Angel Research; Note: PCR including tech. write-offs

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Staff expenses rise due to employee benefit-related liabilities

Staff expenses rose by 21.8% yoy to `1,213cr. Even on a sequential basis, as opposed to other banks witnessing a decline, the banks staff expenses increased by 7.4%. The bank provided `504cr towards various employee benefit-related provisions (including the amortisation of second pension option, gratuity liability and current years accruals) as compared to `347cr provided in 1QFY2011. Management has guided for a ballpark quarterly run-rate of `1,200cr for staff expenses for the remaining quarters of FY2012. Accordingly, we have increased our overall opex estimates by 57% for FY2012 and FY2013.

Exhibit 12: Opex rises 23.9% yoy

Staff expenses (` cr) 2,000 1,500 1,000 500 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 1,392 1,595 1,711 Other opex (` cr) 1,667 1,725

Exhibit 13: Cost ratios rise on higher opex burden

Cost-to-income ratio (%) 44.0 42.0 40.0 1.8 2.0 1.9 1.8 1.8 Opex to average assets (%, RHS) 2.1 1.9 1.7

487

397

482

538

512

1,113

1,224

1,129

1,213

39.9

43.2

42.1

39.9

995

41.1

38.0 36.0

1.5 1.3

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Source: Company, Angel Research

Source: Company, Angel Research

Comfortable capital adequacy

Post the recent capital infusion in the bank by the central government, the governments shareholding in the bank has increased to 58%, which provides headroom of 7% for equity capital raising without any support from the government. The bank is not immediately looking to raise tier-I capital as it is adequately capitalised for now with tier-I CAR of 9.0% (including profits of 1QFY2012). The banks total CAR stood at 12.4% at the end of 1QFY2012, with tier-I ratio of 8.4%.

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Investment arguments
Strong CASA legacy, but losing market share
PNB has a structural advantage of having a high CASA ratio of 38.1%, which is driven by strong rural and semi-urban presence, especially in North India (total of 5,264 branches and 5,375 ATMs). This should act as a strong cushion in the current higher interest rate environment, and we have accordingly factored in a relatively lower decline (~40bp) in calculated NIM in FY2012E to 3.2% from 3.6% in FY2011. That said, the bank is losing its market share like most other public sector banks on account of slow branch expansion and competition from private banks savings market share declined by 50bp to 7.4% during FY200811.

Investment concerns
Persistent asset-quality pressures
During FY2011, slippage ratio for the bank was the highest in the last four years at 2.3%. Provisions for NPAs had also more than doubled to `2,004cr (from `994cr in FY2010) to compensate for high slippages witnessed in FY2011. Even in the latest quarter, though the slippage rate moderated, it was relatively higher than its peers at 1.9%. The switchover to system-based NPA recognition platform for accounts below `10lakhs, which is proposed to be carried out in 2QFY2012, could result in considerably higher slippages as the bank has a larger rural presence and a relatively bigger portfolio of agricultural loans (15.1% of domestic non-food credit as of 1QFY2012). Management is expecting better recoveries and upgradation in the coming quarters, which could compensate the recent increase in slippages.

Outlook and valuation

We have tweaked our estimates for factoring in higher staff expenses (as guided by the management) and the traction witnessed in fee income growth. At the CMP, the stock is trading at 1.3x FY2013E ABV vs. its five-year range of 1.11.6x and median of 1.4x. We maintain our Accumulate recommendation on the stock with a target price of `1,217 (`1,235), valuing it at a multiple at 1.4x FY2013E ABV.

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Exhibit 14: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Source: Angel Research

Earlier estimates FY2012 18.0 20.0 36.9 3.3 7.9 15.0 2.3 0.1 FY2013 18.0 19.0 35.7 3.1 13.8 15.0 15.0 2.3 0.1

Revised estimates FY2012 17.0 20.0 36.9 3.2 11.7 10.0 15.0 2.2 0.2 FY2013 18.0 19.0 35.7 3.0 11.5 13.0 15.0 2.2 0.2

Exhibit 15: Change in estimates

FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 14,879 4,434 19,313 7,647 11,666 3,477 8,189 2,657 5,532 Revised Var. (%) estimates 14,533 4,501 19,034 8,062 10,972 3,402 7,569 2,456 5,113 (2.3) 1.5 (1.4) 5.4 (6.0) (2.2) (7.6) (7.6) (7.6)

Earlier estimates 13,148 3,897 17,044 6,650 10,395 3,269 7,125 2,312 4,813

Revised Var. (%) estimates 12,895 4,035 16,930 7,096 9,835 3,265 6,569 2,131 4,438 (1.9) 3.6 (0.7) 6.7 (5.4) (0.1) (7.8) (7.8) (7.8)

Exhibit 16: P/ABV band

Price (`) 2,000 1,600 1,200 800 400 0
Oct-09 Nov-06 May-10 Dec-10 Aug-08 Mar-09 Feb-12 Jun-07 Jan-08 Apr-06 Jul-11

0.5x

0.9x

1.3x

1.7x

2.1x

Source: Company, Angel Research

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Exhibit 17: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Accumulate Accumulate Buy Accumulate Accumulate Neutral Accumulate Buy Accumulate Accumulate Neutral Buy Accumulate Accumulate Accumulate Accumulate Neutral Accumulate Accumulate Buy Buy Neutral Accumulate Accumulate Neutral CMP (`) 1,338 425 487 1,038 24 311 202 136 878 386 461 116 502 85 129 226 138 872 351 1,124 2,342 120 85 289 94 63 Tgt. price (`) 1,648 483 519 1,355 26 353 145 1,018 434 516 608 96 136 255 155 383 1,217 2,845 139 327 107 Upside (%) 23.1 13.7 6.5 30.6 11.2 13.5 6.8 15.9 12.2 12.1 21.2 13.7 5.4 13.0 12.0 9.0 8.3 21.5 16.0 13.0 14.7 FY2013E P/ABV (x) 2.2 1.1 3.3 1.9 1.2 2.0 1.0 0.9 1.2 1.1 0.9 0.8 0.8 0.6 0.8 0.9 0.8 0.9 0.8 1.3 1.8 0.8 1.0 1.1 0.8 0.8 FY2013E Tgt P/ABV (x) 2.7 1.3 3.5 2.5 1.4 2.3 1.0 1.4 1.2 1.0 1.0 0.7 0.9 1.0 1.0 0.9 1.4 2.1 0.9 1.2 0.9 FY2013E P/E (x) 11.1 8.6 17.0 15.0 7.3 10.5 5.7 5.6 6.6 6.0 5.3 5.3 4.7 4.2 5.9 4.8 5.3 5.8 5.9 7.0 8.7 5.0 5.0 6.1 6.3 6.2
#

FY2011-13E EPS CAGR (%) 20.9 20.2 30.5 24.5 11.6 19.1 9.2 3.1 10.8 18.7 (2.4) (10.9) 6.1 5.1 14.3 10.4 22.4 8.8 7.5 7.4 44.2 14.6 16.5 20.0 6.1 8.6

FY2013E RoA (%) 1.5 1.3 1.7 1.5 0.9 1.2 0.9 1.0 1.1 0.8 0.9 0.5 0.9 0.8 0.7 1.4 0.7 1.2 0.9 1.0 1.1 0.7 0.6 0.8 0.5 0.5

FY2013E RoE (%) 21.0 14.1 20.9 15.6 17.2 20.6 17.8 16.8 19.6 18.0 17.2 15.1 17.9 15.7 14.5 20.4 16.4 17.0 14.4 20.0 22.6 17.0 17.1 17.9 12.5 12.8

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), Without adjusting for SASF

July 29, 2011

Punjab National Bank | 1QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 5,534 0.4 1,998 15.4 7,532 4.0 3,525 6.0 4,006 2.2 710 (59.4) 3,296 52.0 1,247 37.8 2,049 33.0 FY09 7,031 27.0 2,920 46.2 9,951 32.1 4,206 19.3 5,744 43.4 981 38.1 4,763 44.5 1,673 35.1 3,091 50.9 FY10 8,478 20.6 3,610 23.6 12,088 21.5 4,762 13.2 7,326 27.5 1,422 44.9 5,905 24.0 1,999 33.9 3,905 26.4 FY11 11,807 39.3 3,613 0.1 15,420 27.6 6,364 33.6 9,056 23.6 2,492 75.3 6,564 11.2 2,130 32.5 4,434 13.5 FY12E 12,895 9.2 4,035 11.7 16,930 9.8 7,096 11.5 9,835 8.6 3,265 31.0 6,569 0.1 2,131 32.4 4,438 0.1 FY13E 14,533 12.7 4,501 11.5 19,034 12.4 8,062 13.6 10,972 11.6 3,402 4.2 7,569 15.2 2,456 32.4 5,113 15.2

Balance sheet
Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 315 12,003 166,457 19.0 5,447 6,165 8,633 199,020 15,258 3,573 53,992 119,502 23.7 2,316 4,381 199,020 22.5 FY09 315 14,338 209,761 26.0 4,374 8,085 10,045 246,919 17,058 4,355 63,385 154,703 29.5 2,397 5,020 246,919 24.1 FY10 315 17,408 249,330 18.9 8,572 10,690 10,318 296,633 18,328 5,146 77,724 186,601 20.6 2,513 6,320 296,633 20.1 FY11 317 21,192 312,899 25.5 20,399 11,190 12,328 378,325 23,777 5,914 95,162 242,107 29.7 3,106 8,259 378,325 27.5 FY12E 317 24,691 375,478 20.0 24,391 13,093 14,380 452,349 24,406 11,309 119,893 283,265 17.0 3,602 9,875 452,349 19.6 FY13E 317 28,700 446,819 19.0 29,025 15,449 17,986 538,296 29,043 13,457 145,633 334,252 18.0 4,158 11,752 538,296 19.0

July 29, 2011

10

Punjab National Bank | 1QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 3.1 0.4 2.7 0.2 2.9 0.9 3.8 2.0 1.8 0.7 1.1 17.3 19.6 3.2 0.4 2.7 0.3 3.0 1.0 4.0 1.9 2.1 0.8 1.4 18.6 25.8 3.1 0.5 2.6 0.3 2.9 1.0 3.9 1.8 2.2 0.7 1.4 18.5 26.6 3.5 0.7 2.8 0.1 2.8 1.0 3.8 1.9 1.9 0.6 1.3 18.6 24.4 3.1 0.8 2.3 0.1 2.4 0.9 3.3 1.7 1.6 0.5 1.1 19.1 20.4 2.9 0.7 2.2 0.0 2.3 0.9 3.2 1.6 1.5 0.5 1.0 19.4 20.0 17.3 3.3 1.2 11.5 2.7 1.8 9.1 2.2 2.0 8.0 1.9 2.0 8.0 1.5 2.3 7.0 1.3 2.7 65.0 342.0 13.0 98.0 416.7 20.0 123.9 509.1 22.0 139.9 602.7 22.0 140.1 739.3 25.5 161.4 869.5 30.0 2.7 0.6 2.0 0.2 77.3 1.6 0.2 1.4 0.4 89.5 1.7 0.5 1.8 0.4 81.2 1.8 0.8 2.3 0.6 73.2 2.9 1.0 2.2 0.7 74.0 3.6 1.1 2.2 0.6 75.0 43.0 71.8 13.0 8.5 38.8 73.8 11.7 7.5 40.8 74.8 13.0 8.4 38.5 77.4 11.5 7.8 36.9 75.4 12.3 8.3 35.7 74.8 12.2 8.1 3.2 46.8 1.1 19.6 3.3 42.3 1.4 25.8 3.2 39.4 1.4 26.6 3.6 41.3 1.3 24.4 3.2 41.9 1.1 20.4 3.0 42.4 1.0 20.0 FY08 FY09 FY10 FY11 FY12E FY13E

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Punjab National Bank | 1QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Punjab National Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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