PNB Hits All-Time High: Q2 Profit Jumps 12.8% to Rs 5,532 Crore
Punjab National Bank reports an all-time high Q2 profit of Rs 5,532 crore but remains cautious about raising deposit rates after RBI's hike.
Punjab National Bank (PNB) has announced a stellar performance for the September quarter of FY27, posting a record-breaking net profit of Rs 5,532 crore. This represents a 12.8 per cent increase compared to the same period last year, driven primarily by a surge in interest income and a marked improvement in the bank's asset quality.
Financial Highlights: Growth Across the Board
The bank's financial health showed strong momentum across several key metrics. According to Managing Director and CEO Ashok Chandra, the bank has reached an all-time high in its quarterly net profit. Other significant figures include:
- Net Interest Income (NII): Rose by 10.8 per cent, climbing to Rs 11,601 crore from Rs 10,468 crore in the previous year's corresponding quarter.
- Operating Profit: Saw a 4.2 per cent increase, reaching Rs 7,532 crore.
- Global Advances: Grew by 14.7 per cent year-on-year, totaling Rs 13.41 lakh crore.
- Deposits: Increased by 9.9 per cent to stand at Rs 17.77 lakh crore.
Deposit Rates: Why PNB is Staying Put
Despite the Reserve Bank of India's (RBI) recent 25-basis-point repo rate hike, PNB has indicated that it is in no rush to increase its deposit rates. CEO Ashok Chandra explained that the bank is currently "quite comfortable" with its position.
The bank's credit-deposit ratio is currently around 75 per cent, which provides enough flexibility to sustain lending growth even if deposit growth remains in the 8–9 per cent range. Furthermore, Chandra noted that the RBI's rate hike is expected to boost the bank's net interest margin (NIM) by approximately 6–7 basis points in the October–December quarter. The global NIM already improved to 2.58 per cent in the September quarter, up from 2.50 per cent in the preceding quarter.
Improving Asset Quality and Credit Outlook
PNB has made significant strides in cleaning up its balance sheet. The gross non-performing assets (NPA) ratio improved to 2.55 per cent, down from 2.78 per cent in the previous quarter. Even more impressive is the net NPA ratio, which dipped to 0.25 per cent from 0.28 per cent.
Looking ahead, the bank has revised its credit growth guidance upward. While it previously expected growth of 12-13 per cent for FY27, it now anticipates achieving around 13-14 per cent, fueled by strong demand in the MSME, agriculture, and retail segments.
Analyzing the Operating Profit and Global Reach
While the overall operating profit grew modestly, the bank highlighted a deeper success in its core operations. Treasury income saw a decline, dropping to approximately Rs 750 crore from Rs 1,716 crore a year ago, which weighed down the total operating earnings. However, when excluding treasury income and recoveries from written-off accounts, the core operating profit surged by 29.4 per cent year-on-year.
On the international front, PNB successfully executed its foreign-currency non-resident deposit campaign. The bank mobilized USD 2.7 billion, surpassing its initial target of USD 2.5 billion. These funds have been strategically used to replace higher-cost certificates of deposit and other expensive deposits, further optimizing the bank's cost of funds.