How Non Performing Assets Impacts Bank Valuation | Banking Analysis Chapter 2 скачать в хорошем качестве

How Non Performing Assets Impacts Bank Valuation | Banking Analysis Chapter 2

Non-Performing Assets (NPA) are one of the most important drivers of bank valuation. In this video, I explain how NPAs affect banking stocks, using Punjab National Bank (PNB) investor presentation as a real-life example. 🔹 What is NPA? We begin by understanding what an NPA is and how loans turn from standard assets into stressed and non-performing assets. 🔹 How NPAs are created Using insights from the PNB investor presentation, I explain key reasons behind NPA formation—economic cycles, sectoral stress, credit appraisal issues, and recovery challenges. 🔹 Gross NPA (GNPA) Learn how Gross NPA reflects a bank’s overall asset quality and why high GNPA negatively impacts market confidence and valuation. 🔹 Provisioning Coverage Ratio (PCR) PCR shows how much loss protection a bank has created. With reference to PNB’s provisioning strategy, we analyze why a higher PCR indicates balance-sheet strength and management prudence. 🔹 Net NPA (NNPA) Understand why Net NPA is more relevant for investors than Gross NPA and how PNB’s improving NNPA trend impacts risk perception and valuation. 🔹 Industry Benchmarks We compare PNB’s GNPA, NNPA, and PCR with industry benchmarks to understand where the bank stands versus peers (PSU vs private banks). 🔹 Impact on Bank Valuation Using PNB data, we explain how NPAs influence: Return on Assets (ROA) & Return on Equity (ROE) Credit growth potential Capital adequacy & cost of capital Price-to-Book (P/B) valuation and re-rating 🔹 Investment Guidance for Banking Stocks Based on NPA trends and investor presentation analysis: ✔ What NPA levels are acceptable for investors ✔ How to identify improving vs deteriorating banks ✔ When NPA cleanup can trigger valuation re-rating 📌 This video is especially useful for banking stock investors, equity research beginners, and long-term investors who want to analyze banks using actual investor presentations, not just headlines.