Punjab National Bank Q2 Review - Weak Operating Performance; Stable Asset Quality: Motilal Oswal
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Motilal Oswal Report
Punjab National Bank delivered a weak operating performance in Q2 FY22 as the bank was impacted by a decline in net interest income with domestic margins contracting sharply by 36 basis points QoQ, while net earnings grew 78% YoY, aided mainly by tax reversals.
The total recovery from the Dewan Housing Finance Corporation Ltd. resolution was Rs 12.7 billion and was predominantly utilised for making provisions for one large corporate account (SREI Infra).
On the business front, loans/deposits grew 2% sequentially. On the asset quality front, slippages were elevated due to two large corporate accounts which included slippage of Rs 28 billion from SREI Infra.
However, higher recoveries and upgradations supported the Punjab National Bank’s asset quality with its gross/net non-performing asset ratio declining by 70 basis point/35 bps sequentially.
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