PNB - Punjab National Bank Share Price

During the Q4 FY '26 earnings conference call, management of Punjab National Bank highlighted their robust performance and future strategies. Key metrics included a gross global business reaching INR 29.7 lakh crores, reflecting a 10.7% year-on-year growth. Advances grew by 12.7% year-over-year to INR 12.59 lakh crores, with strong growth in retail (18.2%), MSME (19.9%), and agri sectors (16.2%). Global deposits increased by 9.2% to INR 17.11 lakh crores.

Management anticipates continued growth in credit, projecting a NIM of 2.6% to 2.7% for FY '26-'27. They aim for significant expansion in their network, with plans to open 250 new branches, focusing on the southern and western regions. The Casa ratio stabilized at 37%, and the bank sanctioned over INR 4 lakh crores in corporate credit lines during FY '26.

On asset quality, the GNPA ratio declined sharply from 3.95% in FY '25 to 2.95% in FY '26, with a net NPA at 0.29%. Total recovery in FY '26 stood at INR 15,501 crores, significantly surpassing slippages of INR 2,758 crores. Management highlighted a strong capital adequacy ratio of 17.74% as of March 2026, with CET1 at 13.62%.

Forward-looking points emphasized include:

• Focus on retail, agriculture, and MSME segments.
• Continued enhancement of digital banking capabilities, with over INR 20,873 crores disbursed digitally.
• A commitment to maintaining asset quality and improving efficiency ratios, targeting a cost-to-income ratio of 51.79%.
• Anticipation of maintaining a conservative approach to NII growth, estimating 7% growth despite credit growth expectations of 12%-13%.

Overall, management conveyed confidence in sustaining growth and improving margins through strategic initiatives and robust recovery plans.

Question: "In this quarter, the slippages have gone up by almost about INR800 crores and SMA-2 numbers have come down from INR1,800 crores to INR450 crores. Does this mean many of these accounts have slipped? What is the overall color on the SMA book?"

Answer: I appreciate your question. In FY '26, slippages were INR2,758 crores compared to INR3,001 crores in FY '25, remaining within our 0.60% guidance. There's often a seasonal increase in Q4, primarily due to renewals. For SMA-0,1,2 combined, we are at 3.30%, reflecting strong control across segments. Retail slippages are down to INR439 crores, while agriculture and MSME have seen decreases too. Overall, asset quality is well managed and under control.

Question: "What is the bank's preparedness regarding the ECL provisions now that the RBI guidelines have been finalized?"

Answer: We're well-prepared for the ECL provisions with a CRAR of 17.74% and CET1 at 13.62%. The floating provisions of INR2,045 crores we have set aside will help absorb any ECL requirements that could arise. Our underwriting standards are robust, and we see no significant challenges as we move toward the ECL implementation in April 2027.

Question: "The employee cost has reduced significantly from INR5,089 to INR3,747 crores. What accounts for this reduction?"

Answer: The decrease in employee costs can be attributed to earlier provisions in Q1, Q2, and Q3 for AS-15 adjustments. In Q4, yields hardened, offsetting earlier provisions, leading to a positive adjustment. We maintained consistent operating profits across all quarters, ensuring sustainable performance despite the fluctuations in employee expenses.

Question: "Regarding taxation, why did we see an increase in tax expense in this quarter despite an increase in profit before tax of only INR745 crores?"

Answer: The tax rate rose to 26.16% this quarter compared to 25.168% previously due to disallowances, leading to an increased tax expense. Prior quarters had seen reversals of provisions, which affected earlier rates. We expect our tax situations to stabilize as we move forward.

Question: "You previously had a target for net interest margin (NIM) of 2.8-2.9%, but now you are guiding for 2.6-2.7%. Why the reduction?"

Answer: The adjustment to our NIM guidance reflects current market conditions, especially regarding deposit rates, which remain elevated. We chose a conservative approach instead of overestimating future performance. We'll reassess the situation in Q1 and Q2 before making any adjustments to our outlook for NIM.

Question: "Can you confirm if we accounted for the write-backs from sterling and ILFS in this quarter's numbers?"

Answer: Yes, we included the Sterling write-back in our operating profit. However, the ILFS account remains in standard provision and has not been recognized in operating profits yet. We'll consider this for future quarters based on the evolving situation.

Question: "What was the average LCR during the quarter, and what level do you plan to maintain?"

Answer: We maintained an average LCR of around 125% during the quarter and aim to keep it at this level moving forward. It ensures sufficient liquidity while supporting our growth objectives.

Question: "How do you project credit cost after ECL transition, given your current guidance for FY27 being below 0.4%?"

Answer: We expect to remain aligned with regulatory requirements and maintain a healthy asset quality. We estimate that our provisions for ECL, based on current calculations, will not dramatically increase credit costs. We will periodically reassess as we approach the transitional period for ECL implementation.

Question: "Can you share the average yields on your corporate and RAM books to assess the benefits from loan mix shifts?"

Answer: Corporate yields stand at 7.55%, while MSME yields hold at 9%. The overall domestic yield is 8.23%. A shift towards RAM segments is crucial for enhancing our yield on advances in the coming period.