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Informist, Wednesday, May 7, 2025

By Aaryan Khanna
 

NEW DELHI – Punjab National Bank's net profit for the March quarter surged on year, beating already rosy Street estimates. As analysts expected, lower provisions bolstered the bank's bottom line, even as net interest income grew at a sluggish pace and missed estimates.

The state-owned lender posted a net profit of INR 45.67 billion in Jan-Mar, up over 50% on year and marginally higher than the December quarter. An average of seven analyst estimates compiled by Informist had seen net profit at INR 41.43 billion.

The bank's provisions fell to INR 3.60 billion in the reporting quarter, from INR 15.88 billion a year ago. However, the net interest income--the difference between interest earned and expended--grew less than 4% on year to INR 107.57 billion, against the average analyst estimate of INR 113.14 billion.

The bank declared its earnings during the market hours. On Wednesday, shares of Punjab National Bank ended off lows, down 0.2% to INR 94.25 on the National Stock Exchange.

The bank's asset quality improved sharply, with credit costs falling 60 basis points on year to 0.21% in the March quarter. The gross non-performing asset ratio fell to 3.95% on Mar. 31 from 4.09% at the end of December, and 5.73% in the year ago period. The net NPA ratio was nearly unchanged sequentially at 0.40% at the end of March, but improved 33 bps from a year ago.

Punjab National Bank's recovery in written off accounts rose 11.6% on year to INR 18.29 billion, and write-offs reduced by nearly 40% to INR 21.29 billion in the reporting quarter. Cash recoveries remained strong at around INR 15 billion in the March quarter, though they were lower than INR 18.00 billion in the year-ago period. However, upgrades totalled INR 7.04 billion, down from nearly INR 10 billion a year ago. Fresh slippages rose around 40% on year to INR 29.04 billion.

The lender said it held a floating provision of INR 7.50 billion as of Mar. 31. This was more than offset by the fall in provisions linked to NPAs, which shrank to INR 5.88 billion in the March quarter from INR 19.58 billion a year ago. The provision coverage ratio, including technical write-offs, rose 96.82% as of Mar. 31 from 95.39% a year ago.

In the March quarter, Punjab National Bank's total income rose to INR 367.05 billion from INR 323.61 billion a year ago. Even as interest expended rose nearly 20% on year, the bank's operating expenses were up only 6.1% from a year ago. The bank's operating profit rose 5.6% on year to INR 67.76 billion in the March quarter.

In the financial year ended March, the New Delhi-based lender's net profit more than doubled to INR 166.30 billion, on a total income growth of 14.8% to INR 1.38 trillion. Net interest income growth was more subdued, at 6.7% on year to INR 427.82 billion.

Global advances rose 13.6% on year to INR 11.17 trillion as of Mar. 31, of which INR 10.66 trillion were domestic advances. Corporate and other advances grew a little less than 10% to INR 4.63 trillion, while retail advances were up 16.5% on year at INR 2.59 trillion on Mar. 31. Global deposits outpaced loan growth, rising 14.4% on year to 15.67 trillion at the end of March, of which INR 15.11 trillion were domestic. In an investor presentation, the bank said its global cost of deposits had risen to 5.36% in Jan-Mar from 5.24% in Oct-Dec.

The low-cost domestic current account savings account ratio was 37.95%, lower than 38.12% a quarter ago and 41.44% a year ago. The bank's global net interest margin also contracted sequentially by 12 bps to 2.81% in the March quarter, with the domestic NIM shrinking similarly to 2.96%. Analysts had expected this to happen, largely as a result of the repricing of externally benchmarked loans after the Reserve Bank of India's Monetary Policy Committee cut the policy repo rate by 25 bps in February. On other hand, this helped the bank's treasury income and led to other income rising 11% on year to INR 47.16 billion in Jan-Mar.

The board also agreed to give a final dividend of INR 2.90 per share to shareholders. It also approved a fundraising plan of INR 80 billion through bonds in FY26.  End

Edited by Akul Nishant Akhoury

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