PNB - Punjab National Bank Share Price

Management's outlook for Punjab National Bank (PNB) reflects confidence in growth, profitability, and asset quality for the upcoming quarters. As of September 30, 2025, PNB reported a global gross business of INR 27.87 trillion, marking a year-on-year growth of 10.6%. Global deposits reached INR 16.17 trillion with a growth rate of 10.9%, and global advances totaled INR 11.7 trillion, growing by 10.1%. Key forward-looking points include:

1. Credit Growth: PNB aims for 11-12% credit growth for FY '26 and has sanctioned credit lines worth INR 1.78 lakh crore, awaiting disbursement. The Management indicated substantial expected growth in the corporate loan book, which grew 3% quarter-on-quarter.

2. Net Interest Margin (NIM): Domestic NIM for Q2 FY '26 stood at 2.72%, with expectations of improvement in Q3 and Q4 driven by deposit repricing and the impact of CRR cuts. Management projects a cumulative improvement of 10-15 basis points in NIM over the next two quarters.

3. Profitability: Operating profit for Q2 was INR 7,227 crores, up from INR 6,853 crores a year prior, with net profit soaring to INR 4,904 crores, reflecting a 14% year-on-year increase. ROA improved to 1.05% with expectations of reaching 1.10% in the ongoing financial year.

4. Asset Quality: Gross NPA fell to 3.45% from 4.48% YoY, with net NPA at 0.36%. PNB is targeting a slippage ratio below 1% for FY '26 and reported total recoveries of INR 3,920 crores in Q2.

5. Digital Initiatives: The bank's digital transformation is focused on enhancing retail and customer service, with a substantial increase in digital transactions noted.

6. Resilience: PNB emphasized the strength of its lending standards, with net NPA in recently disbursed loans at 0.41%, reflecting robust underwriting standards.

Overall, PNB is positioned for sustainable growth, aimed at strengthening its market share across segments and improving profitability while ensuring asset quality stability.

Major Questions and Answers from the Earnings Call Transcript

1. Question by Ashok Ajmera: "Are we on target for credit growth of 12% as the current six months of FY '26 only have 5.5 months left? What is our sanction book pipeline?"

   Answer Ashok Chandra: We're confident in achieving 11-12% credit growth. Our retail advances grew by 18%, agriculture by 13%, and MSME by 18.6%. Our corporate loan book grew by 7.9%, showing improvement. We have a sanction book totaling INR 178,000 crores awaiting disbursement. This includes project loans of about 40%, which will support our growth in Q3 and Q4.

2. Question by Mahrukh Adajania: "What is your outlook on margins? They fell about 10 basis points on a global level Q-o-Q."

   Answer Ashok Chandra: Q1 and Q2 were challenging due to a 100 basis point repo rate cut. However, our cost of deposits is decreasing. I expect NIM improvement of at least 5 basis points in Q3 and more than 10 basis points in Q4 as the deposit repricing benefits materialize.

3. Question by Piran Engineer: "Can we see a 5-10 bps per quarter NIM improvement for the next two quarters?"

   Answer Ashok Chandra: I anticipate at least 5 basis points improvement in Q3 and over 10 basis points in Q4, due to the full repricing of one-year deposits, which will yield significant benefits.

4. Question by Harsh Modi: "What are the ROA and ROE targets for FY '26 and FY '27?"

   Answer Ashok Chandra: We're targeting an ROA of around 1.10% for this financial year, with expectations for improvement beyond that in the next years as profitability enhances due to improved margins.

5. Question by Ankit: "What reasons can you provide for the increase in slippages this quarter?"

   Answer Ashok Chandra: Our slippages were INR 1,955 crores, down from INR 2,181 crores last year. We remain within our guidance of below 1%. There's no cause for concern; slippages are still manageable compared to our total loan book.

6. Question by Zhixuan Gao: "Was the INR 1,500 crore other provision due to the IL&FS provision?"

   Answer Ashok Chandra: Yes, the provision moved from NPA to standard asset classification. The adjustment was necessary for that particular account, but we haven't factored it as a write-back yet.

7. Question by Yash Agarwal: "What is the proportion of deposits yet to be repriced?"

   Answer Ashok Chandra: About 60% of our term deposits will be repriced soon. We're expecting significant NIM and NII improvements in Q3 and Q4, with the remaining 30%-40% repriced in this period.

8. Question by Shreejit Nair: "Did you mention that INR 1,200 crores of NPA provision moved to standard asset provision?"

   Answer Ashok Chandra: Correct, that is due to an upgrade in a legacy account. These movements typically reflect the functioning of our provisioning strategy and overall asset quality management.

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