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Informist, Monday, Jan. 19, 2026

 

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--PNB: Net profit would have been over INR 60 bln without floating provision 
--CONTEXT: Comments by PNB management at post-earnings concall with analysts 
--PNB: Need INR 90 bln-INR 100 bln total capital for ECL implementation 
--PNB: Expect to exceed credit growth guidance of 11-12% for FY26 
--PNB: Gained INR 9.12 bln from stake sale in Canara HSBC Life 

 

By Shubham Rana and Vaishali Tyagi

 

NEW DELHI – Punjab National Bank would have reported a net profit of over INR 60 billion for the December quarter had it not made a floating provision of INR 9.55 billion during the quarter, the bank's Managing Director and Chief Executive Officer Ashok Chandra said Monday. 

 

The Delhi-based lender reported a net profit of INR 51 billion for Oct-Dec, up 13% on year. During the December quarter, the bank made a floating provision of INR 9.55 billion "keeping in mind that ECL (expected credit loss) implementation is going to happen from Apr. 1, 2027," Chandra said in a post-earnings call with analysts.

 

This floating provision will keep the pressure off Punjab National Bank's balance sheet going forward, Chandra said. "Since we had a good profitability, good operating profit and net profit, we have made this provision. If we would not have made this provision, our profit would have been more than 6,000 crore (INR 60 billion)."

 

The RBI's draft norms on the expected credit loss framework mandate that banks set aside more funds for potential bad loans on implementation. It also mandates that banks classify non-performing financial assets into three categories based on the period for which the asset has remained non-performing and the "realisability of the dues", while continuing to apply existing rules for classifying non-performing assets. The norms are proposed to come into effect from Apr. 1, 2027.

 

The public sector bank sees a capital requirement of around INR 90 billion to INR 100 billion for the full implementation of the expected credit loss norms over five years, Chandra said. Of this, the bank has already made provisions worth INR 17.75 billion, including of INR 9.55 billion in the December quarter. 

 

Punjab National Bank does not see a major impact of the proposed expected credit loss norms on its balance sheet. Chandra said the bank will see profits of INR 50 billion and above every quarter, which will allow it to add to the floating provision. "And when the ECL gets implemented, we will adjust this floating provision against that ECL as per the RBI guidelines," Chandra said. 

 

The bank's net profit in the December quarter was supported by the sale of 10% stake in Canara HSBC Life Insurance Co. Ltd. in October during the insurer's initial public offer. Chandra said the bank gained INR 9.12 billion from the stake sale in Canara HSBC Life. After the stake sale, the Delhi-based lender now holds 13% stake in the insurance company. 

Chandra expects the bank's credit growth to exceed the 11-12% guidance for end March. The bank's credit growth was at 10.9% as of Dec. 31. The lender has sanctioned loans worth INR 3.12 trillion during Apr–Dec, of which around INR 1.02 trillion are yet to be disbursed, which will help credit growth.  

 

Shares of Punjab National Bank Monday ended 3.3% lower at INR 128.05 on the National Stock Exchange.  End

 

Edited by Vandana Hingorani

 

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