Festive Spark: PNB Eyes 18% Retail Loan Growth, 21% MSME Surge
PNB MD & CEO Ashok Chandra expects festive demand to push retail loan growth to 18% and MSME credit to 21% this quarter.
Punjab National Bank (PNB) is gearing up for a significant surge in credit demand, driven largely by the festive season. According to MD & CEO Ashok Chandra, the bank anticipates that core PNB retail loan growth will climb to between 17% and 18% in the current quarter, while lending to micro, small, and medium enterprises (MSME) is expected to grow by approximately 21%.
Festive Demand Fueling Retail and MSME Sectors
The bank is seeing strong momentum across several key credit segments. Ashok Chandra highlighted that core retail activities—including housing, mortgage, education, and vacation loans—are already growing at a rate exceeding 16%. With the festive period underway, the bank expects these activities to accelerate further.
The MSME sector is also showing robust performance. Currently growing at 20%, the bank predicts this will edge up to 21% this quarter. Additionally, agriculture priority-sector lending, which has already recorded an 18% growth rate, is expected to maintain its steady momentum.
Strategic Shift in Corporate Lending
While retail and MSME sectors are surging, PNB is adopting a calculated approach to its corporate loan book. In the first two quarters of the current financial year, the bank sanctioned corporate loans worth Rs 2.5 lakh crore, a significant figure compared to the Rs 4 lakh crore sanctioned throughout the entire previous financial year.
Despite the high volume of sanctions, the bank is keeping corporate loan-book growth controlled at around 10-11%. The strategy here is quality over quantity: PNB is actively replacing lower-yielding advances with higher-yielding loans to optimize returns.
Profitability and Asset Quality
This strategic shift has already begun to pay off in the bank's margins. The domestic net interest margin (NIM) rose by more than 10 basis points, while the global NIM increased by 8 basis points during the quarter.
Reflecting on the bank's overall trajectory, Chandra noted that PNB has maintained strong growth, profitability, and asset quality for every quarter over the last two years. He expressed full confidence that this trend will persist, with further reductions expected in both gross and net Non-Performing Assets (NPAs).
The Impact of Interest Rates
Addressing the monetary environment, the MD & CEO mentioned that the recent 25-basis-point repo rate hike could potentially provide a positive boost of around 7 basis points to the NIM.
Looking ahead, the bank's Asset Liability Committee (ALCO) will review lending and deposit rates in the coming months. Meanwhile, further rate actions will depend on the Reserve Bank of India's (RBI) assessment of inflation and national growth trends.