Punjab National Bank's Q3 net seen up 23% on year

Punjab National Bank is likely to post a net profit growth of over 23 per cent on year at Rs 320 crore for the October-December quarter of 2004-05, according to the average of estimates of five brokerages polled by CRISIL MarketWire Tuesday. Net interest income is likely to go up by 15 per cent to Rs 1,013 crore.

Net interest income estimates vary from Rs 988 crore to Rs 1,062 crore, while net profit projections range from Rs 300 crore to Rs 334 crore. Punjab National Bank is expected to announce its December quarter results on January 28.

In line with industry trends, PNB's performance will be underscored by robust core business growth coupled with lower provisioning requirements, said Rajesh Malhani, banking sector analyst with brokerage house Prabhudas Lilladher.

Since the bank has already brought down its non-performing assets to 0.3%, it is not expected to make any incremental provisioning for the third quarter, Prabudas Lilladher said in an earnings preview note to its clients.

"Net interest income growth will largely be due to the bank's strong low cost deposits," said a banking sector analyst with an institution-backed brokerage.

Analysts expect PNB's retail loan book to grow by over 30 per cent, while fee income is likely to rise by over 20 per cent.

"Punjab National Bank transferred bonds to the held-to-maturity category during July-September quarter, and insulated itself against interest rate volatility," said Motilal Oswal's earnings preview.

The bank could very well show some treasury profits also, similar to UTI Bank, said Prabhudas's Malhani.

Analysts said the country's third largest bank is well poised as it shows all the key parameters of healthy growth-strong advances' growth, low level of net performing assets and the latest technology.

PNB has lined up a secondary equity offering of 80 million shares, which will hit the market by March.

The bank will return 30 million shares to the government after the public issue, at the public issue price, reducing the government's stake in the bank to 57 per cent from the current 80 per cent.

"The public issue will dilute the earnings per share, but book value wise it will be a positive," said Sejal Doshi, banking sector analyst with Angel Stock Broking.

The price direction for the PNB stock will be determined by the issue price, which analysts are pegging at Rs 370.