Punjab National Bank Q4 expectation: Muted loan growth, improvement in NII?

Highlights:

• PNB's loan growth to be mostly muted registering lower single-digit growth. 
• Net interest income (NII) is expected to be strong  this Q4 
• Asset quality likely to remain stable

Punjab National Bank (PNB) will  be announcing its financial results for the fourth quarter ended March 31, 2017 on May 16, 2017. 

Banking sector especially public sector banks (PSBs) throughout its FY17 have been mainly muted as they suffered from single-digit loan growth, excess liquidity, weak NII and lack of resolution to its non-performing assets (NPAs) problem.

Analysts at Edelweiss Financial Services expect Punjab National Bank's (PNB) loan growth to be mostly muted registering lower single-digit growth. 

Motilal Oswal, in its report, said, "In line with industry trend, we expect muted loan growth somewhere below 2.5% on year-on-year (YoY) but above 4% on quarter-on-quarter (QoQ) basis. Deposits should grow 10% YoY, reflecting large CASA inflows in 3Q post demonetisation. However, 4Q might see some CASA outflow."

Net interest income (NII) is expected to be strong  this Q4. 

Motilal Oswal said, "NII is likely to show strong growth more than 44% YoY at Rs  3,986.7 crore owing to 10 basis point QoQ and 65 basis point YoY improvement in NIMs (net interest margins) – 3QFY17 and 4QFY16 were affected by interest income reversals."

Systematix Institutional Equities too expects NII of PNB to be at Rs 3,724.6 crore, growing by 34.6% yoy but down 0.2% qoq basis this Q4. 

On asset quality of PNB for this period, Edelweiss believes it will likely be stable; while slippages may continue to be elevated, however, sustained recovery trends may spring some positive surprise.

Net profit is seen positive on year-on-year basis. 

Motilal Oswal expects PNB's bottom-line to be at Rs 60.7 crore against net loss of Rs 5,367.1 crore a year ago same period. However down by 70.70% on quarterly basis. 

Edelweiss sees net profit of Rs 617 crore against the net loss of Q4FY16, and also rising by 197.8% qoq. While Systematix said net profit will be at Rs 365.1 crore above 76.2% qoq.