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Informist, Wednesday, May 7, 2025

MUMBAI – The management of Punjab National Bank expects credit growth in the current financial year to surpass its earlier guidance of 11-12%, if the loans sanctioned in the previous year are disbursed this year.

In a post-earnings analyst call on Wednesday, the management said the public sector bank has sanctioned loans worth INR 280 billion in the corporate sector and another INR 210 billion for new proposals by companies. "Once these proposals are accepted and the loans are given, that would increase credit growth to more than 10%. Additionally, we are going to push for growth in the retail, agriculture and MSME (micro, small and medium enterprises) segment to 16-17%, which will help in taking our credit growth to more than 12%," the management said.

As on Mar. 31, the bank's global advances grew nearly 14% on year to INR 11.16 trillion and retail, agriculture, and MSME advances rose nearly 16% on year to INR 6.02 trillion.

According to the management, cost of deposits have peaked, but are expected to fall from the Oct-Dec quarter of FY26. The bank had guided for a 9-10% deposit growth for the current financial year. In case of further rate cuts by the Reserve Bank of India, PNB's management said it will cut deposit rates and the impact of it will be seen from the Oct-Dec quarter.

"Net interest income and net interest margin will remain under pressure for some time but will improve from the third quarter of 2025-26 (Apr-Mar)," management said. For FY26, the bank has guided for 7% growth in its net interest income and 2.8-2.9% growth in its net interest margin.

The management said it expects a robust recovery in loans going ahead and has set a target of recovering INR 160 billion in FY26. PNB recovered INR 143.36 billion in the previous financial year. "We are projecting a recovery of INR 15 billion via technical write-offs every quarter," the management said.

Along with an improvement in recovery, the management said the bank's treasury income has strengthened and will play an important role in improving the annualised return on assets.

"We have good statutory and non-statutory liquidity ratio books and we've made a good profit from the recent open market operations by RBI. We expect a good return on assets due to a strong recovery and growth in treasury income," the management said. In the March quarter, PNB's annualised return on assets stood at 1.02%, down from 1.03% from the quarter ago.

As for slippages, the public sector bank aims to keep the ratio below 1.00% from the current 1.14%. The management had said in the previous quarter that most of its slippages had come from the MSME and agriculture segments. PNB reported fresh slippages worth INR 29.04 billion in the Jan-Mar quarter, sharply higher than INR 16 billion in the Oct-Dec quarter.

PNB posted a net profit of INR 45.67 billion for the March quarter, more than 50% higher from the previous year and marginally higher than the December quarter. An average of seven analyst estimates compiled by Informist had pegged the net profit at INR 41.43 billion. Shares of PNB on Wednesday closed at INR 94.25 on the National Stock Exchange, down 0.2% from the previous close.  End

Reported by Kshipra Petkar and Christina Titus

Edited by Nishant Maher

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