CLSA in a Report Writes that PNB has been aggressively focusing on Asset Quality.
PNB has faced stronger headwinds on asset quality with stressed loan ratio at 17%, among the highest in the sector. Management is taking steps to control slippages with slower growth in riskier exposures and focus on recoveries. While we expect slippages to remain high in FY16, a 25bps lower NPL can push-up adjusted BVPS by 5%; 5% lower credit costs can drive 7% upgrade to earnings estimate. PNB continues to enjoy a strong deposit franchise (Casa ratio of37%) and is better capitalised than most other PSU banks. Maintain Outperform rating on the Stock.
