STILL A SELL

Punjab National Bank: 3QFY16 Results; PBT loss; GNPA +38% QoQ; PCR down 600bps QoQ

Punjab National Bank (PNB IN, Mkt. Cap USD2.5b, CMP INR90, Under Review)

** Net profits declined 93% YoY to INR510m v/s est. of INR8.4b (94% miss). Bank reported PBT loss of INR8.6b.

** NII de-grew 3% YoY and 5% QoQ to INR41.2b (3% miss v/s est. of INR42.5b). NIM calculated declined 22bp QoQ to 2.76%.

** Other income grew 29% YoY to INR16.7b (14% beat v/s est. of INR14.6b).

** Opex above est. Opex grew 4% YoY to INR28.7b vs est. of INR27.3b.

** Provisions at INR37.8b above est. of INR16.2b.

** Bank reported a tax write-back of INR9.1b.

** Absolute gross NPA increased 38% QoQ. PCR calculated declined to 33% as compared to 39% a quarter ago.

ALL NEGATIVES IN Q3 RESULTS. Q4 SHOULD BE ON SIMILAR LINES We reiterate our TP as mentioned in our 1st note on PNB

PNB's management comments : Fresh slippages were Rs17665 crs vs Rs3126 crs QoQ. The management said that clean up process will continue in 4QFY16. The bank will need more capital to support balance sheet.

Above statement from mgtmnt indicates that Q4 will be equally bad. HUGE HUGE slippage which will ensure slippage in stock price Also. Again CNBC claims that stock good st Camp. But we are optimistic that CNBC again ( as in Maruti B Auto) will prove wrong on PNB and our forecast may turn out be more accurate. SELL