PUBLIC SECTOR BANKS
LARGE BANKS
A REVIEW OF Q2 RESULTS DT 26.11.2010
Most of the Banks in Private and Public sectors fared well in Q2 FY2011. But, how did they fare on a comparative basis within their respective groups?
We will start with public sector Banks having Gross (total) Income of Rs.5000 cr and above in Q2 FY2011, which translates into a total annual income of Rs.20,000 Cr and above. We will exclude State Bank of India (and its subsidiaries) from the review – as they stand on a different footing from other commercial Banks in Public sector.
We are comparing Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, IDBI Bank – which are all large Banks and we have arranged them in descending order of their quarterly incomes in the table below to facilitate easy comparison :
Total Income: Rs.7174 Cr for PNB; Rs.6077 Cr for CB (18% less from PNB); Rs.5840 Cr for BOB (23% less from PNB); Rs.5740 Cr for BOI (25% less from PNB); and Rs.5069 Cr for IDBI Bank (42% less from PNB);
Net Interest Income (interest income – interest expended) : Rs.2977 Cr for PNB; Rs.2003 Cr for CB (49% less from PNB); Rs.2038 Cr for BOB (46% less from PNB); Rs.1776 Cr for BOI (68% less from PNB); and Rs.1168 Cr for IDBI Bank (155% less from PNB).
Operating Profit: Rs.2100 Cr for PNB; Rs.1416 Cr for CB (48% less from PNB); Rs.1657 Cr for BOB (27% less from PNB); Rs.1380 Cr for BOI (52% less from PNB); Rs.1026 for IDBI Bk (105% less from PNB).
Provisions: Rs.516 Cr for PNB; Rs.158 Cr for CB (227% less from PNB); Rs.185 Cr for BOB (179% less from PNB); Rs.527 Cr for BOI (2% more from PNB); Rs.442 Cr for IDBI Bk (17% less from PNB);
Net Profit: Rs.1075 Cr for PNB; Rs.1008 Cr for CB (7% less from PNB); Rs.1019 Cr for BOB (5.5% less from PNB); Rs.617 Cr for BOI (74% less from PNB); Rs.429 Cr for IDBI Bk (151% less from PNB);
Paid-up Equity: Rs.315 Cr for PNB; Rs.410 Cr for CB (30% more than PNB); Rs.366 Cr for BOB(16% more than PNB); Rs.526 Cr for BOI(67% more than PNB); Rs.984 Cr for IDBI Bk (212% more than PNB).
% of Gross/Net NPA: 0.69 for PNB; 1.06 for CB; 0.38 for BOB; 1.14 for BOI; and 1.19 for IDBI Bank. This percentage is very comfortable for PNB and Bank of Baroda. But, not so comfortable for the other three.
Return on Assets : EXCELLENT for PNB at 1.36; for CB at 1.52; and 1.34 for BOB; Just moderate for BOI at 0.87; and at 0.77 for IDBI Bank.
Capital Adequacy Ratio is very good for all. It is 11.65 (lowest) for PNB; 13.88 for CB; 12.34 for BOB; 12.27 for BOI; and 14.17 (highest) for IDBI Bank.
Basic EPS: EXCELLENT for PNB at Rs.34.08; very good for CB at Rs.24.58; very good for BOB at Rs.27.98; Good for BOI at Rs.11.74; and just satisfactory at Rs.4.77 for IDBI Bank.
ANNUALIZED EPS : This, if annualized by multiplying by 4 Qtrs, comes to Rs.136.32 for PNB; 98.32 for CB; Rs.111.92 for BOB; Rs.46.96 for BOI; and Rs.19.08 for IDBI Bank.
Assuming future performance will be just on the same lines – how do they compare in terms of performance?
LAST MARKET PRICES : PNB : Rs.1152 ; Canara bank : Rs.694 ; BOB : Rs. 894 ; BOI : Rs.429 ; IDBI Bank : Rs.158 ;
CURRENT PE RATIOS :8.45 for PNB; 7.06 for Canara Bank; 7.99 for Bank Of Baroda; 9.14 for Bank of India; and 8.28 for IDBI Bank.
BANK-WISE PERFORMANCE REVIEW
IDBI BANK :
It already has the highest paid up equity base of Rs.984 cr which is 212% more than PNB; Compared to PNB - Its total income less by 42 %; NII is less by 155%; OPT is less by 105%; Provisions are less by 17% ; NPT is less by 155 %;
Its % of Gross/Net NPA is very high at 1.19; Return on Assets is the lowest at 0.77. Capital Adequacy Ratio is highest at 14.17; But, PE Ratio is almost equal at 8.28 compared to 8.45 of PNB.
BANK OF INDIA :
It also already has a huge paid up equity capital base of Rs.526 Cr (67% more than PNB); Compared to PNB - Its total income is less by 25%; NII is less by 68 %; OPT is less by 52%; NPT is less by 74%; Provisions are 2% more ;
% of Gross/Net NPA is very high at 1.14; Return on Assets is lower at 0.87. Capital Adequacy Ratio is high at 12.27 ; But, PE Ratio is HIGHER at 9.14 compared to 8.45 of PNB.
BANK OF BARODA :
It has a reasonably low paid up equity capital base of Rs. 366 Cr (16% more than PNB); Compared to PNB - Its total income less by 23%; NII is less by 46%; OPT is less by 27%; Provisions are 179% less; NPT is less by a marginal 5.5%;
% of Gross/Net NPA is 0.38, the lowest in this group; Return on Assets is 1.34 which is quite high. Capital Adequacy Ratio is high at 12.34 ; PE Ratio is 7.99 compared to 8.45 of PNB. It is closing its gap with PNB in recent qtrs.
CANARA BANK :
It has a paid up equity capital base of Rs. 410 Cr for CB (30% more than PNB); Compared to PNB - Its total income less by 18%; NII is less by 49%; OPT is less by 48%; Provisions are 227% less from PNB; NPT is less by a marginal 7 %;
% of Gross/Net NPA is very high at 1.06; Return on Assets is 1.52, the highest in the group. Capital Adequacy Ratio is EXCELLENT at 13.88; But, PE Ratio is 7.06, the LOWEST IN THE GROUP compared to 8.45 of PNB. Canara Bank has been catching up quite well with PNB and BOB in recent Qtrs. Its performance is no less than that of BOB as of now.
PUNJAB NATIONAL BANK :
It is evidently the Best Bank in the Group. It has THE LOWEST paid up equity capital base of Rs. 315 Cr in the Group. Its total income is Rs.7174 Cr, the HIGHEST in the group; NII is Rs.2977 Cr, again the HIGHEST in the Group; OPT is Rs.2100 Cr , the HIGHEST in the Group; Provisions are Rs.516 Cr, which is quite HIGH – second only to BOI’s rs.526 cr and a serious point of note for PNB. NPT is Rs.1075 Cr, HIGHEST in the Group, but it must be said that Canara Bank and Bank of Baroda also have crossed Rs.1000 Cr NPT comfortably and are likely to run neck to neck with PNB in future. % of Gross/Net NPA is quite LOW at 0.69; Return on Assets is excellent at 1.36. Capital Adequacy Ratio is high at 11.65, but is still the lowest in the group and needs improvement ; But, PE Ratio is 8.45 of PNB – compared to 7.06 for Canara Bank; 7.99 for Bank Of Baroda; 9.14 for Bank of India; and 8.28 for IDBI Bank.
SUMMARY :
Considering their EXCELLENT PERFORMANCES, and promising future – PNB, Canara Bank and Bank of Baroda seem to be excellent investments for the medium / long term.
BOI and IDBI Bank are also good investments – though not on par with the other three.
Table of Q2 FY 2011 results :
| PSBS Q2 FY 11 | CAN BNK | ||||
| Interest on Advances | 503520 | 410956 | 383828 | 365979 | 338696 |
| Income on Investments | 139718 | 141652 | 115654 | 130715 | 118362 |
| Interest Earned | 645544 | 557744 | 515866 | 515555 | 457728 |
| Other Income | 71825 | 49962 | 68130 | 58450 | 49211 |
| Total Income | 717369 | 607706 | 583996 | 574005 | 506939 |
| Interest Expended | 347874 | 357414 | 312052 | 337950 | 340924 |
| NII | 297670 | 200330 | 203814 | 177605 | 116804 |
| Employees cost | 111309 | 72744 | 65616 | 60308 | 34232 |
| Other Operating Expenses | 48177 | 35971 | 40654 | 37787 | 29220 |
| Operating Expenses | 159486 | 108715 | 106270 | 98095 | 63452 |
| Total Exp E P A C | 507360 | 466129 | 418322 | 436045 | 404376 |
| Operating Profit | 210009 | 141577 | 165674 | 137960 | 102563 |
| Provisions | 51603 | 15789 | 18549 | 52736 | 44153 |
| P B T | 158406 | 125788 | 147125 | 85224 | 58410 |
| Tax Expense | 50952 | 25000 | 45195 | 23546 | 15500 |
| P A T | 107454 | 100788 | 101930 | 61678 | 42910 |
| Net Profit | 107454 | 100788 | 101930 | 61678 | 42910 |
| F.V(Rs.) | 10 | 10 | 10 | 10 | 10 |
| Paid-up Eq. | 31530 | 41000 | 36553 | 52591 | 98442 |
| %age Held by GOI | 57.8 | 73.17 | 53.81 | 64.47 | 65.14 |
| Capital Adequacy Ratio | 11.65 | 13.88 | 12.34 | 12.27 | 14.17 |
| Basic EPS | 34.08 | 24.58 | 27.98 | 11.74 | 4.77 |
| % of Gross/Net NPA | 0.69 | 1.06 | 0.38 | 1.14 | 1.19 |
| Return on Assets | 1.36 | 1.52 | 1.34 | 0.87 | 0.77 |
| Public holding (%) | 42.2 | 26.83 | 46.19 | 35.53 | 34.86 |
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