Punjab National Bank (PNB) expects to sustain quarterly net profit of above Rs 5,000 crore despite near-term pressure on margins and higher credit costs, Executive Director Bibhu Prasad Mahapatra told FE in an interview. The state-owned lender expects the operating profit to remain above Rs 7,000 crore.
Despite reporting a net profit of Rs 5,100 crore for the December quarter, the stock fell 5.14% in the previous two sessions. Mahapatra attributed the decline to compression in net interest margins (NIMs) and higher credit costs due to additional provisions.
“Once the market understands these internal factors and the rationale behind our provisioning and margin movement, the performance should improve,” he said.
Prudent Provisioning Strategy
During Q3, the bank created floating provisions of Rs 955 crore, taking the cumulative floating provision buffer to Rs 1,775 crore. “These elevated provisions are part of prudent financial management and will help us transition smoothly to the ECL regime from April 2027,” Mahapatra said.
For the current quarter (January-March), PNB has guided for a domestic NIM of around 2.7% and an overall NIM of about 2.6%, assuming that there is no more rate cut. Mahapatra said margin improvement is expected from the second quarter of FY27 onwards as high-cost deposits mature and are repriced.
Deposit Repricing Schedule
Over the last 1.5 years, PNB had mobilised deposits at higher rates. Around 70% of these were repriced by December 31, another 21% will be repriced in the coming quarter, and the remaining 9% by May 2026, he said. As this process plays out, pressure on margins is expected to ease.
Mahapatra said retail lending would continue to be the key growth driver. Excluding inter-bank participation certificates, the retail book is growing at over 18%. Vehicle loans are expanding by over 30%, housing loans by around 14–15%, and personal loans are also seeing traction.
The bank is also focusing on scaling up the credit card business. “We have a credit card base of around 600,000 and we are expecting to reach 1 million credit cards by March 2026 and 2 million by March 2027,” he said.
Corporate Credit Growth
The corporate credit growth, currently at 8–9%, is expected to move into double digits, supported by diversified exposure across infrastructure, solar and hybrid annuity model-based projects.
Mahapatra did mention that PNB is seeing higher delinquencies in loans below Rs 10 lakh. “We are addressing this through increased outreach, which is helping improve recovery rates.”
The ED said the bank does not foresee any need for fundraising, citing comfortable capital adequacy and a credit-deposit ratio of around 74%, which provides ample headroom for future growth.