Punjab National Bank

govind_1985 · #1 31st July 2009, 01:00 AM

Hi Guys,

PNB's result was excellent. Any idea why the stock went down today and didn't go up much yesterday also? Really worried that it isnt moving up even after the result. Has it reached the maximum point already at 751?

Your insights would be of great help. Thanks!!

Alchemist · #2 31st July 2009, 09:36 AM

Are you an investor or a trader?

Yesterday, Punjab National Bank was at a 52-week high (all time high) and saw some profit-booking.

A large part of its profits came from "treasury income".

Sale of investments (equity shares) brought profits of about Rs 70 crore and around Rs 280 crore came from trading gains on government securities.

These may not be there in the long-term - especially if interest rates start moving up again.

I would say the results are good, but not as spectacular as they seem.

vasa1 · #3 31st July 2009, 09:52 AM

Quote:

Originally Posted by Alchemist

....

Yesterday, Punjab National Bank was at a 52-week high (all time high) and saw some profit-booking.

A large part of its profits came from "treasury income".

Sale of investments (equity shares) brought profits of about Rs 70 crore and around Rs 280 crore came from trading gains on government securities.

These may not be there in the long-term - especially if interest rates start moving up again.

I would say the results are good, but not as spectacular as they seem.

Alchemist, would you agree that your comments apply to many of the banks showing "spectacular" results? It appears that their net interest margins, a key factor before banks became multifaceted, have not improved significantly. In other words, their original function of earning by borrowing and lending isn't that profitable.

govind_1985 · #4 31st July 2009, 10:23 AM

I am a trader but not intraday. I only lost in Intra day so stopped doing it. Happy to hold stocks for 6 to 12 months.

Do you think any upward swing left in PNB? Or is it going down due to long term concerns that you had referred to?

Alchemist · #5 31st July 2009, 11:03 AM

Quote:

Originally Posted by vasa1

Alchemist, would you agree that your comments apply to many of the banks showing "spectacular" results? It appears that their net interest margins, a key factor before banks became multifaceted, have not improved significantly. In other words, their original function of earning by borrowing and lending isn't that profitable.

There has been significant improvement in PNB's NII.

I think it is over 20%. I will check later and post about it.

My point is that don't take earnings of banks (especially public sector banks) on face value.

Many of them have reported strong treasury gains because of fall in interest rates.

If the interest rate cycle reverses, these profits may get reduced or even turn into losses.

That is one reason why banks like PNB are trading at single digit PE ratios.

I reiterate, PNB is doing better than many other banks and should give good returns to long-term investors.

magnet · #6 30th January 2012, 08:56 AM

If the report on this page is true, how worst can this stock be hit?

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