Punjab National Bank’s fiscal second-quarter net profit rose 12.8% to Rs 5,532 crore from Rs 4,904 crore a year ago as core income grew in double-digit and asset quality improved.

PNB managing director and CEO Ashok Chandra said the bank will raise $1 billion under its medium-term note (MTN) programme and is waiting for the right time to do it. 

The state-run lender’s net interest income (NII), or the difference between interest and interest paid, rose 10.8% year-on-year to Rs 11,601 crore.

Domestic net interest margin (NIM) at the end of the quarter stood at 2.74% from 2.72% a year ago, while cost of funds dropped to 4.34% from 4.57% last year and 4.36% in the June quarter.

Operating profit for the September quarter rose 4.2% YoY to Rs 7,532 crore.

A 17% drop in other income to Rs 3,601 crore from Rs 4,342 crore in the same quarter last year  was offset by a sharp drop in provisions to Rs 97.27 crore from Rs 643 crore in the earlier year and Rs 541 crore in the June quarter.

Asset quality

PNB's asset quality improved, with gross non-performing assets (NPA) contracting to 2.55% from 2.78% in the preceding quarter, while net NPA improved to 0.25% from 0.28% last quarter. 

Fresh slippages, however, rose to Rs 2,395 crore in the quarter ended September, compared with Rs 2,080 crore in the preceding three months.

The Provision Coverage Ratio (PCR) rose to 97.32% as of 30 September from 96.91% a year ago. 

Global business

The state-run bank’s global business grew 11.9% to Rs 31.18 lakh crore.

Loan book

PNB's loan book at the end of the September quarter grew 14.7% YoY to Rs 13.41 lakh crore. Out of this, domestic loans grew 12.5% to Rs 12.57 lakh crore while global advances rose 62.7% to Rs 84,110 crore.

Retail credit grew 16.3% to Rs 2.72 lakh crore, with home loans rising 14.3% YoY to Rs 1.42 lakh crore.

Agriculture loans grew 14.4% YoY to Rs 2.10 lakh crore in the September quarter.

The bank’s MSME (micro, small and medium enterprises)loan segment grew 19.8% YoY to Rs 2.15 lakh crore.

The RAM (retail, agri and MSME) segment grew 13.6% to Rs 7.22 lakh crore in the September quarter.

The RAM share in total advances rose to 57.4% as on 30 September from 56.8% a year ago. 

Deposits

Global deposits grew at 9.9% YoY to Rs 17.77 lakh crore. Out of this, domestic deposits grew 9.5% to Rs 17.12 lakh crore while global deposits rose 23.2% to Rs 65,400 crore.

CASA (current account savings account) share in the bank's total domestic deposits stood at 36.6% as of 30 September, down from 37.3% a year ago and 36.7% in the preceding quarter.

Guidance 

Metric                 Guidance               As of H1 FY27

Credit Growth     12-13%             14.7%

Deposit Growth    9-10%                     9.9%

Operating Profit     9-10%                     5.2%

NII Growth             7%                     6.4%

Total Recoveries    > Rs 13,000 cr         Rs 5,594 Crore

Credit Cost            Below 0.4%      0.25%

Gross NPA            < 2.5%                       2.55%

Net NPA                    < 0.3%                       0.25%

Source: Investor Presentation

PNB’s loan growth during the first half of FY27 stood at 14.7% YoY, higher than their guidance of 12% to 13% growth for the full-fiscal.

Deposit growth at 9.9% has remained within the fiscal guidance of 9-10%.

On NII and operating profit the lender has fallen short of the fiscal guidance. NII has grown 6.4% during the first half as against the bank’s guidance of 7%, while operating profit growth at 5.2% is also lower than the guided range of 9-10%.

The bad-loan recovery amount target for FY27 is Rs 13,000 crore and the bank has achieved a total of Rs 5,594 in the first half, with Rs 2,805 crore coming in Q2.