The market cap league tables in the banking industry have changed dramatically in the last six months with public sector banks under severe stress and private sector banks too beginning to feel the strain of non-performing assets. The market value of listed banks has eroded by R1.8 lakh crore in just 40 days. Punjab National Bank, whose Q3 profit plunged 93%, reported fresh slippages of R13,500 crore in the quarter, taking slippages for nine months to R17,500 crore, higher than its market cap of R15,699 crore.
Macquarie analysts wrote on Wednesday, “Technically, we believe PNB could be facing bankruptcy, with net NPLs at 54% of its net worth and a provision coverage ratio of just 33%. Including SDRs, 5:25 and standard restructured assets, total stressed assets are at 17.7% of loans, vs a Tier 1 ratio of 8.52%.” In its results presentation, PNB listed a “robust and agile risk management system” as one of it key strengths.