Is It The Correct Time To Invest In PNB Stock

Punjab National Bank or PNB is one of the oldest banks in India. In order to know whether to invest in it now or later, we need to first study the company with respect to its history and recent performance. All things considered, it could be possible that now is the right time to invest in PNB stocks. Reasons for this line of thought will be provided here. First, we will look at the history of PNB.

History of PNB

Punjab National Bank was initially established in the year 1894. It began operating in the year 1895. It is notable that the bank was established in present-day Lahore, located in Pakistan. The stated aim of the bank was to provide a truly national bank that contained people representing all corners of the country. The bank aimed to be a vehicle for furthering India’s economic interests. The bank held the accounts of a number of notable people including Mahatma Gandhi, Jawahar Lal Nehru, Indira Gandhi among others. Until 1900, the Lahore branch of the bank was the only one in existence. Later, the bank opened a few more branches in other locations, beginning with Karachi and Peshawar.

In 1940, the bank took over BhagwanDass Bank that was headquartered in Dehra Dun. Since all of this happened before Partition in India, the bank continued to operate out of Lahore. Later, after Partition, the bank elected to move to India. The bank was headquartered in New Delhi, India.

After moving to India, the bank embarked on a series of acquisitions of other banks in India. This spree began with Bharat Bank. The next bank to be acquired was the Universal Bank of India which was established in the state of Bihar. Next in line was Commercial Bank. But this acquisition was deemed a rescue for Commercial Bank. In the year 1969, along with a few other banks, PNB was also nationalized by the Government of India, meaning ownership of the bank now rested in the hands of the government. Two more banks were acquired by Punjab National Bank. These were Hindustan Commercial Bank and New Bank of India. Finally, in 2003, the bank took over Nedungadi Bank.

International presence

Punjab National Bank has a presence in a number of countries around the world. It has offices in London, Southall, Leicester, Birmingham, Ilford, Wembley, Wolverhampton, Kabul, Shanghai, Dubai, Oslo, Hong Kong, Almaty, and Sydney. In addition to these, the bank has allied with other banks in various countries. One such alliance is with Everest Bank Limited in Nepal. Through this, the bank has access to 12 branches in Nepal. The bank also established a subsidiary in Bhutan, with offices in three locations in the country. The bank has also acquired a stake in JSC Danabank that is based out of Kazakhstan. Through this, the bank has access to six branches in different locations in Kazakhstan.

Recent financial performance

From the reviewed financial results for the first quarter of the financial year spanning 2018-2019, the following was observed:

  • The total interest earned by the bank over the course of the quarter was Rs.13,113.17 crore. This was an increase from the total interest earned in the previous quarter which was Rs.11,384.63 crore.
  • The total income of the bank for the quarter was Rs.15,072.41 crore. This was a solid increase from the total income in the previous quarter which was Rs.12,945.68 crore.
  • Operating expenses of the bank reduced from Rs.5,071.82 crore in the previous quarter to Rs.2,456.40 crore in the current quarter.
  • In the previous quarter, there was a negative value for operating profit, meaning there was a loss of Rs.447.38 crore. Whereas, in the current quarter, operating profit was Rs.4,194.70 crore.
  • The net loss for the previous quarter was Rs.13,416.91 crore while the net loss for the first quarter of FY19 was Rs.940.01 crore.

Thus, from financial performance, we can see that the bank has shown some strong growth with respect to total income earned. Coming to operating expenses and the losses, the bank has reduced both. This means that the bank is preparing itself in a way to make it profitable. Therefore this means that the bank is in good hands. This is potentially good news for investors.

The share price of Punjab National Bank

The price of a single share of Punjab National Bank was about Rs.105 around the second week of April 2018. From then, till the close of September 2018, the stock price has been falling. While the fall has not been steep or sudden, the fall was not consistent either. There were periods when it appeared as if the stock had recovered but the stock never went over Rs.100 in the mentioned time period.

From about the last week of September 2018, the stock has been falling and the price levels are below Rs.80. Since the share price is low and we have signs of recovery coming from the financial reports of the bank, now might be a good time to buy stocks of PNB. It can be said that the stock price might recover in some period of time. While the increase may not be quick, it is quite probably in the making soon.

Conclusion

Punjab National Bank is one of the oldest banks in India and it has inspired a lot of trust in Indians. In addition to this, the bank has traditionally been a strong performer. This is evinced by the fact that this bank bailed out a number of other banks in a series of rescue acquisitions. Therefore, the bank has a solid history to back it up. Right now the bank is facing some difficulties with the gross NPA percentage in the first quarter of FY19 being over 18%.

While this is quite high a value, it can be seen that there has been a decrease in the gross NPA percentage from the previous quarter. Also, considering that the bank has a stake in some foreign banks and a number of branches all around the world, it all appears to herald a positive outlook for the bank. Thus, it can be said that the bank is slowly but surely recovering. Therefore now may be a good time to invest in PNB stock. Know more about PNB historical share price and the company’s wealth and recent performance on Bankbazaar.com. Going through will help investors a great deal.

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