NSE Symbol: PNB | BSE Code: 532461
Punjab National Bank or PNB, is a state-owned, Indian multinational banking and financial enterprise. It serves more than eighty million customers and it has a presence in several countries like Kazakhstan, United Arab Emirates, China, and Australia.
Company Wealth and Latest Performances
PNB Q1 Financial Year 2018-19 Results
State-owned Punjab National Bank claimed that the results of the financial year had progressed greatly in the last quarter with the lender's net loss coming in at about 940 crores against 343.4 crores in the same period for the previous fiscal year. The total income earned through interest has also increased for the company. The company made a provision of around 321 crores with 27 borrower accounts under the provisions of the insolvency and bankruptcy code. The total came to around 10,670 crores.
The NPA percentage also grew since the last fiscal year
PNB Annual Report 2017-18
The net loss of the bank for the year ending March 2018 stood at 12,130 crores compared to the net profit of 1,187 crores in FY17.
The total assets of the bank in 2018 fiscal year rose by 6.32% from 7,20,331 crores from March 2017 to 7,65,830 crore in March 2018. The bank’s portfolio of loans also increased by 3.39%, while the net investment raised by 7.27%.
In the financial year 2017-18, the net interest income reached around 14,992 crores, while the overall operating profit in FY18 stood at 10,294 crores.
Notwithstanding charges of fraud against the bank, the lender achieved breakthroughs which include the landmark for domestic business crossing ten crores.
The bank raised 5000 crores through Qualified Institutional Placement (QIP) to give a capital boost to the company. The Government of India infused 5473 crores in March 2018.
PNB Q3 FY 2017-18 Results
In its, the report for the third quarter of Financial Year 2017-18 PNB asserted that the value of its global business had crossed 11 lakh crore. Equating these numbers with the same period last year will reveal that there's been an escalation in the year-on-year growth of 10.2% and 5.2% respectively.
Similarly, the gross advances have also raised by 17% in December 2017 to 4,74,952 crores, in the same quarter last year. In the loans sector, the retail loans registered a growth of 22% whereas the housing loans grew by 19%.
PNB’s CASA or current and savings account to total deposits ratio, raised to 45.5% in the third quarter, which made it one of the highest ratios amongst all the nationalized banks.
Looking at the profitability of the company, its profit margin had grown to 10,742 crores - which is a 28.9% rise over the same period last year. However, the net profit had slumped to 230 crores from 561 crores in the second quarter of FY18. One of the chief factors which drove this decline in profit was an increment in provision from 2,718 crores in the second quarter of FY18 to 4,016 crores in Q3 FY18.
Acknowledging the asset quality of the bank, there has been a little improvement in the gross NPAs (Non-Performing Assets) and net NPAs. PNB’s gross NPA, at the end of the third quarter, attained 12.11% of its total assets whereas its net NPAs was 7.55%. In contrast to the previous quarter, this works as a minor improvement.
PNB Stock Trends in 2018
When trading began on the 1st January 2018, the PNB share price stood at Rs.169.75. It raised to touch Rs.194.65 before dropping more than 25 points to end the month at Rs.171.35.
The stock of PNB slipped by 4 points on 1st of February to end at Rs.167.55 with the stock declining significantly over the next month due to a scam to amount of approximately Rs.14,000 crore. The bank’s scrip price escalated to 10.40 rupees at the month end.
On 1st March, the scrip price of the bank stood at Rs.101.05 and decreased considerably to end the month at Rs.95.30.
The scrip increased slightly on the 2nd of April to end the day’s trading at Rs.96.30 and continued to remain stable for the rest of the month with the share price of bank standing at Rs.95.40 on the last day of that month.
The stock dipped further on the 2nd of May when it attained Rs.92.80 and sank to an all-time low of Rs.74.75 on the 18th; however, it improved toward's the month end at Rs.83.65.
The stock lost almost a point to end at Rs.82.95 on the 1st of June before dropping more than 10 points to end at Rs.72.80 on the 28th and closed the month at Rs.76.15.
The scrip gained 2 points on the 1st July till the end of the day at Rs.78.15 and by the end of the month, the stock raised to 85.10 at the month end.
The bank’s stock price on 1st July stood at Rs.87.40 and continued to be stable over the month, even as the bank posted an unexpected net loss of the first quarter of the financial year in 2019 to end at Rs.88.15 on the month end.
PNB Stock History in 2016 and 2017
PNB share price at the beginning of 2016 was close to Rs.100 on NSE and BSE. By the month end, the PNB stock price had fallen below Rs.100. When Q3 FY16 results were declared in early February, the share price took added hit owing to a torpid performance. Things became worse when the financial entity declared its plan to sell bad loans worth Rs.3,000 crore to some asset reconstruction companies in the fourth quarter of FY-2016. This led to PNB stocks drop down close to Rs.70.
At the beginning of March, the bank announced a change in directorate which didn't help much in boosting investors confidence. Over the month, the share price remained close to Rs.85. In April, the lender transited to the marginal cost of fund based lending system, and the stock price was slowly moving towards Rs.90 after multiple updates and revision in ratings.
However, NSE and BSE failed to make up for this rise which was driven by a poor performance in March quarter, as stated in the Q4 FY16 results and the annual financial report for the company for the financial year. In the late May, the stocks were being purchased at less than Rs.75.
The share prices of the company saw a steady recovery in May. This was led by a correction in the marginal cost of fund based lending rates (MCLR) and the shift in the directorate. By late June, Dilip Kumar Saha discontinued being director of the bank. On the possibility that things will change owing to new leadership, PNB stock price crossed Rs.100 in June end for FY 2016-17
In July, the share price had recovered well and the PNB stocks were being traded at approximately Rs.120-130. This trend followed through August as well.
In September, the Government of India announced its strategy to infuse capital into the bank, which was followed by the appointment of a new director for the bank and change in the MCLR. These developments maintained the stock price close to Rs.140.
In October, there weren't any major developments in stock price. In November 2016, the share price attained Rs.160 for a short time owing to demonetization. However, this was accompanied by a substantial decline in price. The closing price at the year-end was Rs.115 on NSE and BSE.
January started well for the prospective borrowers since PNB announced a reduction in MCLR by 70 basis points. In mid-Jan, the share price on NSE and BSE was wavering around Rs.130, owing to the MoU signed by the bank with Indian Post Payments Bank to provide them a technology platform.
At the beginning of February, PNB posted the results of Q3 FY17 where it reported excellent numbers. This resulted in the share price to cross Rs.150, but it was followed by a short dip due to a strike conducted by the United Forum of Bank Unions. The month of March went by flatly without any major nosedives. PNB share price, in that month, kept moving up to Rs.150 steadily. This rise was sustained when the bank proclaimed that it had raised Rs.250 crore through debentures.
The share price in April had crossed Rs.150 and the investors pumped in more money to the bank. In early May, PNB stocks were sold at close to Rs.180 - an increase which surprised many investors. After a decent performance in Q4, the share price stabilized close to Rs.150.
The share prices remained stable in June as well when the shares were being traded for approximately Rs.140-150. For a short period, the stock price went below Rs.140, but it managed to overcome by early July.
Throughout July, the shares were being valued at Rs.150. But in August, the stock price of PNB reached a low point on NSE and BSE and went down to Rs.140. In the same month, there was another revision in the MCLR by PNB, which was a cut by 25 basis points (or, a reduction of 0.25%).
Things did not vary radically through September. This was roughly the case in October as well, when the share price was close to Rs.140.
However, in late October, PNB signed an agreement with Engineering Export Promotion Council of India (EEPC) to give access to merchant exporters and small-medium sized businesses. This development resulted in the stock price to cross Rs.200 in two days. The closing price in October end was Rs.197.
For a short time in November, PNB shares traded at close to Rs.200, but as the month went by, the share prices were stabilized at around Rs.180. By the year end, the share price had dropped slightly, only to close at Rs.171.
Should you invest in PNB?
Punjab National Bank or PNB is one of the largest public-sector banks in the country, which was recently hit by the news of a loan scam worth 11,000 crores. Considering that it is implausible that the bank will be able to recover this amount of money anytime soon, investors went into a panic mode and dumped their shares as soon as they can. As a result, the PNB stock price took a massive nosedive and in a matter of days, PNB lost more than one-third of its market capitalization.
This resulted in the PNB shares to be traded at about Rs.100 which is the same value as in early 2016. Furthermore, the bank is disturbed with issues of non-performing assets, with its gross net NPAs amounting to one of the largest number of NPAs in the sector. To deal with such bad loans, PNB has raised its allocation towards a provision which, in turn, will radically affect the total profits as observed in the Q3 FY18. Additionally, the RBI has eliminated the previously existing debt restructuring methods like SDR or Strategic Debt Restructuring and CDR or Corporate Debt Restructuring and has asked the nationalized banks to implement resolutions to manage bad loans. Failure to manage NPAs will result in the NPA accounts to be traded under the Insolvency and Bankruptcy Code.
While it may appear harsh, it is essential to remember that these actions act as a safeguard to avoid any such financial disasters in the future. For several investors, it might seem like the right time to repurchase the shares, especially if the primary intention is to keep them for a long term. It is also crucial to remember that PNB share value will be tremendously affected by the news over the next couple of days. The bank will overcome from this, but it won’t be quick and easy.
In the long run, the fundamentals of the stock market will come into play. If you look at the historical numbers, the bank is competent in generating profit. However, patience is the key here. If you want a risk free investment in the banking sector as a part of your diverse portfolio, you can try investing with the private banks where the NPA count is lower and the management is way superior. It is desirable to carry out your research before investing I any shares.
Punjab National Bank or PNB is a banking and financial institution that deals in selling several financial products like home loans, car loans, personal loans, credit cards, mutual funds, etc. The bank is one of the oldest public-sector banks in the country. PNB is also rapidly extending its foothold in the field of digital banking. Since its inception, the bank has served millions of customers and it has also acquired seven banks in the process. In September 2017, PNB has more than 6,900 domestic branches and 9,700 ATMs throughout the country. The bank’s objective is to be the most preferred bank for its clients and to be the best workplace for its employees.
History of the Company
PNB was founded back in 1894 in Lahore, which is in present-day Pakistan, with the purpose of building a nationalized bank which will work towards the betterment of Indian economy. It was inspired by the Swadeshi movement, which is the founding board comprised of people from diverse backgrounds, all of whom had the same object - to start a national bank which has Indian capital and management. Some of the founders of PNB were: Lala Dholan Dass, Lala Harkishen Lal, Lala Lalchand, and Dyal Singh Majithia. Lala Lajpat Rai was also linked with the bank in its early days and he was considered to be a founding person of the company.
The bank started its business in April 1895, in Lahore, and in the past, it had a moving capital of just Rs.20,000. Over the years, the bank opened up and established branches outside Lahore. Though, following the partition, PNB lost its anchor in Pakistan and was forced to shift its head office to India. During this process, it lost one-third of the total branches which accounted for 40% of its total deposits. Starting from the 1950s, the bank collected several other institutions like Indo-Commercial Bank, Bharat Bank Limited and Universal Bank of India.
The Government of India nationalized PNB in July 1969. The bank had the honor of maintaining the accounts of several prominent figures like Mahatma Gandhi, Indira Gandhi, and Jawaharlal Nehru in the past.
Punjab National Bank Listings and Stock Indices
PNB is listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange (BSE) where the shares can be bought and sold.
Even though PNB is not a part of the major benchmark indices like NIFTY 50 and S&P BSE SENSEX, it does comprise other indices like NIFTY 100, NIFTY 200, S&P BSE 200, S&P BSE All Cap, NIFTY 500, etcetera.