3QFY2012 Result Update | Banking

February 1, 2012

Punjab National Bank

Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT

Source: Company, Angel Research

ACCUMULATE
CMP Target Price
% chg (qoq) 2.4 5.9 (4.6) 3QFY11 3,203 2,350 1,090 % chg (yoy) 10.4 13.9 5.5

`956 `1,036
12 Months

3QFY12 3,537 2,676 1,150

2QFY12 3,453 2,528 1,205

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Banking 30,273 0.8 1,234/751 38,103 10 17,301 5,199 PNBK.BO PNB@IN

For 3QFY2012, PNB registered a moderate set of results with net profit growing by 5.5% yoy to `1,150cr, which was below our estimates on account of higher provisioning expenses than estimated by us. We recommend an Accumulate rating on the stock.
Chunky slippages and restructuring lead to deterioration in asset quality: The banks business growth momentum picked up during 3QFY2012. Advances for the bank increased by 5.5% qoq (18.7% yoy). On a yoy basis, advances growth was driven by loans to MSMEs and retail which grew by 18.5% and 19.7%, respectively. Deposits growth on a qoq basis stood at 4.3% qoq (up 23.4% yoy), however CASA deposits growth was muted at 1.6% qoq (up 11.7% yoy). Saving account deposit growth was slightly better at 2.2% qoq (up 14.3% yoy). Consequently, reported CASA ratio declined by 90bp qoq and 350bp yoy to 36.2%. The banks reported NIMs slipped by 7bp to 3.9% during 3QFY2012 on back of 22bp qoq rise in the cost of deposits to 6.7%. The yield on advances was nearly flat sequentially at 12.0%. Fee income picked up sequentially, driven by higher forex income (up 15.8% qoq) and recoveries (up 35.3% qoq). On the asset-quality front, the bank surprised negatively with slippages rate jumping to 2.8% (1.6% in 2QFY2012). However, the management attributed this sharp jump in slippages to primarily an aviation account which slipped during the quarter. Consequently, the NPA levels rose sharply qoq with gross NPAs rising by 25.1% qoq and net NPA rising by 38.9% qoq. The bank restructured `1,989cr worth of accounts during 3QFY2012, of which `978cr was to a telecom account. The bank also took a hit of `150cr for NPV loss on this telecom account during the quarter. The total outstanding restructured book as of 3QFY2012 stands at `16,687cr. Outlook and valuation: The banks valuations are currently at low 1.1x FY2013 ABV compared to its five year range of 1.11.6x and median of 1.4x, due to the asset quality concerns facing the sector. Taking into account the banks relatively lower cost of deposits than peers and valuations at the lower end of its historical trading range, we currently have a positive stance on the bank. Hence, we recommend an Accumulate on the stock with a target price of `1,036.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 58.0 17.9 18.6 5.5

Abs. (%) Sensex PNB

3m (1.0) (5.7)

1yr (4.0) (13.1)

3yr 90.8 144.5

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

FY2010 8,478 20.6 3,905 26.4 3.2 123.9 7.7 1.9 1.4 26.6

FY2011 11,807 39.3 4,434 13.5 3.6 139.9 6.8 1.5 1.3 24.4

FY2012E 13,813 17.0 4,819 8.7 3.5 152.1 6.3 1.3 1.2 22.0

FY2013E 16,153 16.9 5,015 4.1 3.4 158.3 6.0 1.1 1.0 19.4

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Please refer to important disclosures at the end of this report

Punjab National Bank | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income incl. MF Div. - Recov. from written off a/cs - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & contingencies - Provisions for NPAs - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 9,481 7,331 2,027 81 42 5,944 3,537 954 859 510 95 92 257 4,491 1,814 1,264 551 2,676 946 579 367 1,730 580 1,150 33.5 8,952 7,045 1,852 48 7 5,499 3,453 889 784 477 105 68 239 4,341 1,814 1,240 573 2,528 710 319 391 1,817 612 1,205 33.7 5.9 4.1 9.4 67.1 538.7 8.1 2.4 7.3 9.6 6.9 (9.5) 35.3 7.6 3.4 0.0 1.9 (3.9) 5.9 33.2 81.5 (6.2) (4.8) (5.2) (4.6) (16)bp 7,119 5,489 1,493 26 112 3,916 3,203 857 753 413 104 123 217 4,061 1,711 1,224 487 2,350 714 555 159 1,636 546 1,090 33.4 33.2 33.6 35.8 216.6 (62.6) 51.8 10.4 11.3 14.1 23.5 (8.7) (25.2) 18.3 10.6 6.1 3.3 13.1 13.9 32.5 4.3 131.0 5.8 6.2 5.5 15bp

Exhibit 2: 3QFY2012 Actual vs. Angel estimates

Particulars (` cr) Net interest income Other income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 3,537 954 4,491 1,814 2,676 946 1,730 580 1,150

Estimates 3,607 960 4,568 1,839 2,729 843 1,886 612 1,274

Var. (%) (2.0) (0.6) (1.7) (1.3) (1.9) 12.3 (8.2) (5.2) (9.7)

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Exhibit 3: 3QFY2012 performance analysis

Particulars Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) Reported CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Yield on funds Cost of funds Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) Credit cost (%)
Source: Company, Angel Research

3QFY12

2QFY12

% chg (qoq)

3QFY11 % chg (yoy) 18.7 23.4 (293)bp 1.4 14.3 11.7 (350)bp (42)bp 27bp 154bp 138bp 786bp 93bp 122bp (25)bp (173)bp 41.9 39bp 84.2 39bp (717)bp 69bp (7)bp

262,605 249,020 356,517 341,783 73.7 23,260 72.9 23,531

5.5 221,252 4.3 288,873 80bp (1.2) 2.2 (90)bp (75)bp (52)bp 22bp 5bp 8bp 17bp 22bp (7)bp (137)bp 25.1 37bp 38.9 27bp (507)bp 114bp 24bp 76.6 22,945 89,860 39.7 11.9 7.6 5.2 10.6 8.3 4.5 4.1 42.1 4,541 2.0 1,575 0.7 77.2 2.1 0.6

102,705 100,491 125,965 124,022 36.2 11.5 7.9 6.7 12.0 7.9 9.2 5.8 3.9 40.4 6,442 2.4 2,901 1.1 70.0 2.8 0.6 37.1 12.2 8.4 6.5 11.9 7.8 9.0 5.5 4.0 41.8 5,150 2.1 2,089 0.8 75.1 1.6 0.3

1.6 112,805

Business growth picks up

The banks business growth momentum picked up during 3QFY2012. Advances for the bank increased by 5.5% qoq (18.7% yoy). On a yoy basis, advances growth was driven by loans to MSMEs and retail which grew by 18.5% and 19.7%, respectively. Overseas advances were up by 82.8% yoy; however the robust growth can be mostly attributed to the rupee depreciation witnessed over the last 6 months. On a sequential basis, advances growth was primarily on the back of lending to agri (growth of 9.2% qoq) and services sector (growth of 12.4% qoq). The retail segments advances growth was also healthy at 5.2% qoq. Among industrial advances, infrastructure credit continued to drive growth apart from loans to chemical products based segment. Infra loans grew by 21.4% yoy to `41,031cr, in which the power sectors loans increased by 46.4% yoy to `19,757cr. As of 3QFY2012, loans to infra account for 15.6% of the total loan portfolio. Loans to metal sector grew by 46.3% yoy to `14,751cr, of which most of the lending is to the iron and steel sector (up 36.8% yoy)

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Deposits growth on a qoq basis stood at 4.3% qoq (up 23.4% yoy), however CASA deposits growth was muted at 1.6% qoq (up 11.7% yoy). Saving account deposit growth was slightly better at 2.2% qoq (up 14.3% yoy). Consequently, reported CASA ratio declined by 90bp qoq and 350bp yoy to 36.2%.

Exhibit 4: MSME and agri loans show healthy traction qoq

Particulars (` cr) Agri Retail MSME Medium & Large Corporates Comm. Real Estate Services & Others Domestic non-food credit Food credit Domestic credit Overseas advances Global gross credit
Source: Company, Angel Research

3QFY12 38,306 26,009 29,912 88,412 10,382 47,660 5,424 19,778

2QFY12 % chg (qoq) 35,076 24,732 27,643 90,760 10,353 42,415 4,214 16,511 9.2 5.2 8.2 (2.6) 0.3 12.4 28.7 19.8

3QFY11 % chg (yoy) 33,909 21,730 25,249 76,545 9,729 41,280 4,485 10,817 13.0 19.7 18.5 15.5 6.7 15.5 15.5 20.9 15.6 82.8 18.7

240,681 230,979 246,105 235,193 265,883 251,704

4.2 208,442 4.6 212,927 5.6 223,744

Exhibit 5: Business growth stronger in 3QFY2012

10.0 8.0 6.0 4.0 72.9 Adv. qoq chg (%) 77.4 76.6 Dep. qoq chg (%) CDR (%, RHS) 78.0 74.9 73.7 76.0 74.0

Exhibit 6: Moderation in CASA deposits growth continues

Calculated CASA ratio (%) 42.0 22.0 39.0 18.1 16.2 11.7 36.0 11.7 10.0 20.0 CASA yoy growth (%, RHS) 30.0

39.1

38.5

37.4

36.3

6.0 5.7

9.4 8.3

0.3 3.6

2.5 5.5

5.5 4.3

2.0 -

70.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

33.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

35.3

72.0

Source: Company, Angel Research

Source: Company, Angel Research

NIMs slip marginally during 3QFY2012

The banks NIMs have been under pressure lately as moderating CASA growth over the last one year has led to higher cost of deposits for the bank. The banks reported NIMs slipped by 7bp to 3.9% during 3QFY2012 on back of 22bp qoq rise in the cost of deposits to 6.7%. The yield on advances was nearly flat sequentially at 12.0%.

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Exhibit 7: Yield on advances nearly flat sequentially

(%) 12.00 11.50 11.00 10.50 10.00 9.50 9.00 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 10.59 10.83 11.38 11.92 11.97

Exhibit 8: Reported NIM sees a marginal fall

(%) 4.20 4.00 3.80 3.60 3.40 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4.13 3.91 3.95 3.84

3.88

Source: Company, Angel Research

Source: Company, Angel Research

Fee income picks up sequentially

CEB income grew by a strong 23.5% yoy (6.9% qoq), driven by robust traction from fees generated by bills and remittances (up 43.5% yoy) and income from ATM operations (up 46.7% yoy). The processing fees picked up during 3QFY2012; growing by 8.1% qoq, while income from Commission on letters of credit and bank guarantees was also healthy growing by a healthy 11.3% qoq. The banks forex income grew by a strong 15.8% qoq, while recoveries also registered a strong performance, growing by 35.3% qoq (down 25.2% yoy). The bank has started selling life policies of MetLife from November and management expects good amount of incremental fee income from the sale of these products.

Exhibit 9: Fee income witnesses healthy sequential traction

Particulars (` cr) CEB Treasury incl. MF Dividend Forex Recoveries Others Other income Other income excl. treasury
Source: Company, Angel Research

3QFY12 2QFY12 510 95 154 92 103 954 859 477 105 133 68 107 890 785

% chg (qoq) 3QFY11 6.9 (9.5) 15.8 35.3 (3.7) 7.2 9.4 413 104 125 123 92 857 753

% chg (yoy) 23.5 (8.7) 23.2 (25.2) 12.0 11.3 14.1

Chunky slippages and restructuring lead to deterioration in asset quality

On the asset-quality front, the bank surprised negatively with slippages rate jumping to 2.8% (1.6% in 2QFY2012). However, the management attributed this sharp jump in slippages to primarily an aviation account which slipped during the quarter. Consequently, the NPA levels rose sharply qoq with gross NPAs rising by 25.1% qoq and net NPA rising by 38.9% qoq. As of 3QFY2012 gross NPA ratio

stands at 2.4% (2.1% in 2QFY2012), while net NPA ratio stands at 1.1% (0.8% in 2QFY2012). Provision coverage ratio (including technical write-offs) declined
by ~500bp to 70.0% (75.1% in 2QFY2011). The bank restructured `1,989cr worth of accounts during 3QFY2012, of which `978cr was to a telecom account. The bank also took a hit of `150cr for NPV loss
February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

on this telecom account during the quarter. The total outstanding restructured book as of 3QFY2012stands at `16,687cr. According to the management, Rajasthan SEB has been restructured recently by the bank, the effect of which is expected to show in 4QFY2012. The bank is also expecting further restructuring on loans pertaining to Haryana and UP electricity boards to happen over the next two quarters.

Exhibit 10: Slippages rate up again for 3QFY2012

Slippages (%) 3.0 2.5 2.0 1.5 1.0 0.3 0.6 0.6 0.6 Credit cost (%, RHS) 0.8 0.6 0.6 0.4 0.2

Exhibit 11: NPA ratios rise sequentially

2.5 2.0 1.5 1.0 74.3 73.2 Gross NPAs (%) 77.6 77.1 Net NPAs (%) 77.2 PCR (%, RHS) 78.0 76.0 74.0 72.0

2.1

2.7

1.9

1.6

2.8

1.8 0.7

1.9 0.7

2.0 0.7

1.8 0.9

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

2.0 0.9
70.0

0.5

0.5

Source: Company, Angel Research

Source: Company, Angel Research; Note: PCR including tech. write-offs

Exhibit 12: Network expansion at steady pace

Branches 5,400 5,200 5,000 4,400 5,050 5,375 5,619 ATMs (RHS) 7,500 6,000 4,500 3,000

Exhibit 13: Cost ratios remain stable sequentially

44.0 42.0 40.0 Cost-to-income ratio (%) 1.9 1.8 1.8 Opex to average assets (%, RHS) 2.0 1.8 1.8 1.9 1.8 1.7 1.6 1.5 1.4 1.3 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12
Source: Company, Angel Research

5,793

4,987

5,161

5,264

5,315

42.1

39.9

41.1

41.8

1,500 -

4,600 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company, Angel Research

36.0

February 1, 2012

40.4

4,800

5,393

38.0

Punjab National Bank | 3QFY2012 Result Update

Investment arguments
Strong CASA legacy, but losing market share
PNB has a structural advantage of having relatively better CASA ratio of 37.1%, which is driven by strong rural and semi-urban presence, especially in North India (total of 5,393 branches and 5,793 ATMs). This should act as a strong cushion in the current higher interest rate environment, and we have accordingly factored in a relatively lower decline (~20bp) in calculated NIM in FY2012E to 3.4% from 3.6% in FY2011. That said, the bank is losing its market share like most other public sector banks on account of slow branch expansion and competition from private banks savings market share declined by 50bp to 7.4% during FY200811.

Investment concerns
Persistent asset-quality pressures
During FY2011, slippage ratio for the bank was the highest in the last four years at 2.3%. Provisions for NPAs had also more than doubled to `2,004cr (from `994cr in FY2010) to compensate for high slippages witnessed in FY2011. Even in 1HFY2012, though the slippage rate moderated, it was relatively higher than its peers at 1.8%. Going forward, the completion of migration to the system-based NPA recognition platform is likely to reduce incremental slippages. Management expects the strong performance on the recoveries and up-gradations front seen in 1HFY2012 to continue in 2HFY2012 as well. However taking into account the aggressive restructuring carried out in 9MY2012, the banks relatively higher exposure to risky sectors and the overall weak macroeconomic environment, we remain cautious on the incremental asset quality pressures.

Outlook and valuation

The banks valuations are currently at low 1.1x FY2013 ABV compared to its five year range of 1.11.6x and median of 1.4x, due to the asset quality concerns facing the sector. Taking into account the banks relatively lower cost of deposits than peers and valuations at the lower end of its historical trading range, we currently have a positive stance on the bank. Hence, we recommend an Accumulate on the stock with a target price of `1,036.

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Exhibit 14: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage
Source: Angel Research

Earlier estimates FY2012 15.0 21.0 36.6 3.5 10.8 12.0 19.0 2.2 75.0 FY2013 16.0 17.0 36.0 3.4 5.8 15.0 15.0 2.8 75.0

Revised estimates FY2012 15.0 21.0 36.6 3.5 10.6 12.0 18.0 2.6 70.0 FY2013 16.0 17.0 36.0 3.4 5.1 15.0 15.0 2.8 72.5

Exhibit 15: Change in estimates

FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 16,474 4,231 20,705 8,350 12,355 4,795 7,560 2,453 5,107 Revised Var. (%) estimates 16,153 4,199 20,352 8,328 12,024 4,601 7,423 2,408 5,015 (1.9) (0.8) (1.7) (0.3) (2.7) (4.0) (1.8) (1.8) (1.8)

Earlier estimates 13,976 4,001 17,977 7,261 10,715 3,371 7,345 2,383 4,962

Revised Var. (%) estimates 13,813 3,996 17,809 7,242 10,566 3,432 7,134 2,315 4,819 (1.2) (0.1) (0.9) (0.3) (1.4) 1.8 (2.9) (2.9) (2.9)

Exhibit 16: P/ABV band

Price (`) 2,000 1,600 1,200 800 400 0
Dec-10 Apr-06 Aug-08 Mar-09 Oct-09 Jul-11 Nov-06 May-10 Feb-12 Jun-07 Jan-08

0.5x

0.9x

1.3x

1.7x

2.1x

Source: Company, Angel Research

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Exhibit 17: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Neutral Buy Neutral Accumulate Neutral Neutral Buy Neutral Accumulate Accumulate Reduce Accumulate Neutral Accumulate Neutral Neutral Accumulate Neutral Accumulate Accumulate Accumulate Neutral Reduce Accumulate Reduce CMP (`) 1,088 401 497 888 23 335 164 102 755 341 48 472 85 416 69 100 227 88 811 269 956 2,077 98 71 234 70 56 Tgt. price (`) 1,361 1,061 367 907 53 528 79 450 107 877 1,036 2,359 106 217 75 52 Upside (%) 25.2 19.5 9.3 20.1 11.4 11.9 (7.4) 8.1 7.2 8.1 8.4 13.6 8.5 (7.3) 7.7 (8.2) FY2013E P/ABV (x) 1.8 1.1 3.4 1.6 1.1 2.1 0.7 0.8 1.0 1.1 0.7 0.9 0.8 0.7 0.5 0.7 0.9 0.6 0.8 0.7 1.1 1.7 0.6 0.9 1.0 0.7 0.8 FY2013E Tgt P/ABV (x) 2.2 3.5 2.0 2.3 1.3 0.8 1.1 0.8 0.8 0.7 0.9 1.2 1.9 0.7 0.9 0.7 0.7 FY2013E P/E (x) 9.4 8.7 17.3 13.9 6.9 11.1 4.6 5.0 5.8 7.2 4.9 6.0 5.5 4.5 3.6 4.9 5.4 4.6 4.7 5.9 6.0 10.1 4.1 4.6 5.9 4.8 6.4 FY2011-13E EPS CAGR (%) 18.2 16.2 30.4 19.5 13.5 20.1 9.1 (4.8) 9.8 2.3 26.3 (7.4) (25.1) (1.8) 2.4 9.9 3.8 5.3 16.7 (5.9) 6.4 26.0 13.7 10.9 0.1 4.3 0.7 FY2013E RoA (%) 1.5 1.2 1.8 1.4 0.9 1.4 0.9 0.8 1.1 0.6 0.7 0.8 0.4 0.8 0.8 0.7 1.2 0.5 1.4 0.7 1.0 0.8 0.7 0.6 0.7 0.6 0.4 FY2013E RoE (%) 20.2 13.2 21.0 14.5 17.5 20.6 17.3 14.6 19.3 13.7 16.9 15.8 11.4 15.5 14.9 13.4 18.4 12.8 19.0 11.3 19.4 17.9 16.5 15.4 15.8 12.1 11.1

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

February 1, 2012

Punjab National Bank | 3QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 5,534 0.4 1,998 15.4 7,532 4.0 3,525 6.0 4,006 2.2 710 (59.4) 3,296 52.0 1,247 37.8 2,049 33.0 FY09 7,031 27.0 2,920 46.2 9,951 32.1 4,206 19.3 5,744 43.4 981 38.1 4,763 44.5 1,673 35.1 3,091 50.9 FY10 8,478 20.6 3,610 23.6 12,088 21.5 4,762 13.2 7,326 27.5 1,422 44.9 5,905 24.0 1,999 33.9 3,905 26.4 FY11 11,807 39.3 3,613 0.1 15,420 27.6 6,364 33.6 9,056 23.6 2,492 75.3 6,564 11.2 2,130 32.5 4,434 13.5 FY12E 13,813 17.0 3,996 10.6 17,809 15.5 7,242 13.8 10,566 16.7 3,432 37.7 7,134 8.7 2,315 32.4 4,819 8.7 FY13E 16,153 16.9 4,199 5.1 20,352 14.3 8,328 15.0 12,024 13.8 4,601 34.0 7,423 4.1 2,408 32.4 5,015 4.1

Balance sheet
Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 315 12,003 166,457 19.0 5,447 6,165 8,633 199,020 15,258 3,573 53,992 119,502 23.7 2,316 4,381 199,020 22.5 FY09 315 14,338 209,761 26.0 4,374 8,085 10,045 246,919 17,058 4,355 63,385 154,703 29.5 2,397 5,020 246,919 24.1 FY10 315 17,408 249,330 18.9 8,572 10,690 10,318 296,633 18,328 5,146 77,724 186,601 20.6 2,513 6,320 296,633 20.1 FY11 317 21,192 312,899 25.5 20,399 11,190 12,328 378,325 23,777 5,914 95,162 242,107 29.7 3,106 8,259 378,325 27.5 FY12E 317 24,999 378,607 21.0 16,861 12,869 15,967 449,619 24,609 8,992 121,650 278,423 15.0 3,580 12,365 449,619 18.8 FY13E 317 28,927 442,971 17.0 19,715 14,928 18,884 525,742 28,793 10,515 144,945 322,970 16.0 4,061 14,458 525,742 16.9

February 1, 2012

10

Punjab National Bank | 3QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 3.1 0.4 2.7 0.2 2.9 0.9 3.8 2.0 1.8 0.7 1.1 17.3 19.6 3.2 0.4 2.7 0.3 3.0 1.0 4.0 1.9 2.1 0.8 1.4 18.6 25.8 3.1 0.5 2.6 0.3 2.9 1.0 3.9 1.8 2.2 0.7 1.4 18.5 26.6 3.5 0.7 2.8 0.1 2.8 1.0 3.8 1.9 1.9 0.6 1.3 18.6 24.4 3.3 0.8 2.5 0.1 2.6 0.9 3.5 1.7 1.7 0.6 1.2 18.9 22.0 3.3 0.9 2.4 0.1 2.4 0.8 3.2 1.7 1.5 0.5 1.0 18.9 19.4 14.7 2.8 1.4 9.7 2.3 2.1 7.7 1.9 2.3 6.8 1.5 2.3 6.3 1.3 2.9 6.0 1.1 3.1 65.0 342.0 13.0 98.0 416.7 20.0 123.9 514.8 22.0 139.9 628.1 22.0 152.1 734.1 27.5 158.3 863.1 29.5 2.7 0.6 2.0 0.2 77.3 1.6 0.2 1.4 0.4 89.5 1.7 0.5 1.8 0.4 81.2 1.8 0.8 2.3 0.6 73.2 3.0 1.3 2.6 0.6 70.0 4.3 1.5 2.8 0.9 72.5 43.0 71.8 13.0 8.5 38.8 73.8 12.6 8.1 40.8 74.8 14.2 9.1 38.5 77.4 12.4 8.4 36.6 73.5 12.5 8.5 36.0 72.9 12.5 8.4 3.2 46.8 1.1 19.6 3.3 42.3 1.4 25.8 3.2 39.4 1.4 26.6 3.6 41.3 1.3 24.4 3.45 40.7 1.2 22.0 3.43 40.9 1.0 19.4 FY08 FY09 FY10 FY11 FY12E FY13E

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Punjab National Bank | 3QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Punjab National Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 1, 2012

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