Punjab National Bank — Q3 FY26 earnings call

Call held 19 Jan 2026

Management summary

Punjab National Bank delivered a strong Q3 FY26 performance, with net profit and operating profit growing over 13% YoY, driven by improved asset quality and efficiency. The bank successfully reduced both GNPA and NNPA, while strengthening its capital base. However, NIM faced pressure due to rate cuts and strategic decisions on deposit rates, and credit cost was elevated due to prudential floating provisions for future ECL implementation.

Highlights

  • Net Profit for Q3 FY26 stood at INR5,100 crores, a 13.13% YoY growth from INR4,508 crores in Q3 FY25.

  • Operating Profit for Q3 FY26 was INR7,481 crores, a 13% YoY growth from INR6,621 crores in Q3 FY25.

  • Gross NPA reduced to 3.19% as of December 2025 from 4.09% in December 2024.

  • Net NPA reduced to 0.32% as of December 2025 from 0.41% in December 2024.

  • Capital Adequacy Ratio (CAR) improved to 16.77% as of December 2025, up from 15.41% in December 2024.

  • Cost-to-Income Ratio improved to 51.91% in Q3 FY26 from 54.16% in Q3 FY25.

Concerns

  • Global Net Interest Margin (NIM) dipped to 2.52% in Q3 FY26, impacted by rate cuts and strategic deposit rate decisions.

  • Credit cost was elevated to 0.46% in Q3 FY26 due to additional floating provisions of INR955 crores made for future ECL implementation.

Key financials

  1. Net Interest Income ₹10,533 Cr +0.61%QoQ
  2. Global NIM 2.5%
  3. Net Profit ₹5,100 Cr +13.1%YoY
  4. Gross NPA 3.2% -22%YoY
  5. Net NPA 0.32% -21.9%YoY
  6. Capital Adequacy Ratio 16.8% +8.8%YoY
  7. Return on Assets 1.1% +2.9%YoY
  8. CASA Ratio 37.1%

What they filed

Q1 FY27: revenue up 3.1%, net profit up 169.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue30,447 31,895 32,523 32,572 32,513 +7%32,889 +3%32,798 +1%33,589 +3%
Net profit4,739 4,811 5,011 2,167 5,121 +8%5,577 +16%5,602 +12%5,835 +169%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed The bank's Liquidity Coverage Ratio (LCR) stood at 130% as of December 2025. Total floating provisions amounted to INR1,775 crores, with INR955 crores added in Q3 FY26, strategically made to minimize the impact of ECL implementation.
    CD ratio of the bank has increased to 74.2% as on December '25, from 72.6% as on December '24, and 72.3% as on September '25. We are witnessing sustained growth in our low-cost deposit base and CASA ratio has remained at 37.1% as on December '25. ... Our capital adequacy is 16.77% as on 31st December 2025 compared to 15.41% as on 31st December 2024, which is 136 basis points above December 2024. Our CET1 capital stands at 12.52% against the regulatory requirement of 8%. Tier 1 capital stands at 14.13% against the regulatory requirement of 9.5% and Tier 2 capital stands at 2.64% as at 31st December 2025. ... Now total floating provision is INR1,775 crores, which will help us in moving towards ECL transition. This is mindfully we have done to minimize the impact of ECL, which is likely to be implemented from 1st April 2027. ... LCR for this quarter? ... 125% -- yes, 127%. At September, it was more than 125% -- 130%. It is 130%. 130%.

Guidance & targets

Credit Growth

  • Overall Credit Growth Credit Growth · FY26 · High confidence 11-12%
    I am still holding that 11% to 12% growth will be there, overall credit growth.

    — Ashok Chandra

  • Overall Credit Growth Credit Growth · after 1-2 quarters · Medium confidence 12-13%
    And afterwards, definitely, bank will grow at more than 12% to 13%.

    — Ashok Chandra

Deposit Growth

  • Deposit Growth Deposit Growth · FY26 · High confidence 9%
    100%, we are going to touch around 9% of the deposit growth.

    — Ashok Chandra

Margin

  • Domestic NIM Margin · full FY26 · High confidence 2.70%
    For full financial year, our domestic NIM will remain at about 2.70%

    — Ashok Chandra

Asset Quality

  • Slippages Ratio Asset Quality · FY26 · High confidence below 1%
    Our guidance for slippages ratio was to remain below 1% in FY 2026

    — Ashok Chandra

  • Provision Coverage Ratio (PCR) Asset Quality · FY26 · High confidence above 96%
    well above our guidance of more than 96% for entire financial year.

    — Ashok Chandra

  • Gross NPA Asset Quality · FY26 · High confidence below 3%
    Gross NPA, it will be below 3%, which we have already given the guidance in the beginning of this financial year.

    — Ashok Chandra

  • Net NPA Asset Quality · FY26 · High confidence below 0.35%
    Net NPA below 0.35%.

    — Ashok Chandra

  • Net NPA Asset Quality · FY26 · Medium confidence below 0.30%
    We'll try to bring it below 0.30.

    — Ashok Chandra

Credit Cost

  • Credit Cost Credit Cost · FY26 · High confidence below 0.5%
    our guidance was below 0.5% in the entire year.

    — Ashok Chandra

Profitability

  • Return on Assets (RoA) Profitability · FY26 · High confidence above 1%
    We have given a guidance of above 1%.

    — Ashok Chandra

Operating Profit

  • Operating Profit Growth Operating Profit · FY26 · High confidence 8-9%
    well above the guidance of 8% to 9%.

    — Ashok Chandra

Recovery

  • Total Recovery Recovery · Q4 FY26 · High confidence more than INR4,000 crores
    For the Q4 also, we are likely to grow more than INR4,000 crores of total recovery

    — Ashok Chandra

  • TWO Recovery Recovery · Q4 FY26 · High confidence INR1,500-1,600 crores
    and around INR1,500 crores to INR1,600 crores, TWO recovery we are expecting

    — Ashok Chandra

  • Total Recovery Recovery · next 2 years (FY27-FY28) · High confidence INR13,000-15,000 crores
    between INR13,000 crores to INR15,000 crores. So definitely between INR13,000 crores to INR15,000 crores, we will be aiming for another 2 years.

    — Ashok Chandra

ECL Implementation

  • Total Capital Required ECL Implementation · 5 years · High confidence INR9,000-10,000 crores
    it comes to around INR9,000 crores to INR10,000 crores. That is the total capital that is required for the full implementation to happen in the 5 years' time.

    — Ashok Chandra

  • Quarterly Provisioning ECL Implementation · per quarter · High confidence INR500 crores
    So, 20 quarters means every quarter, if I am able to do INR500 crores, I am able to meet that requirement.

    — Ashok Chandra

Compliance

  • PSLC Requirement Reduction Compliance · next year · High confidence 50-60 basis points
    I'm expecting that at least around 50 to 60 basis point cut should be happening in the next year.

    — Ashok Chandra

Retail Business

  • Credit Card Target (PNB LUXURA) Retail Business · by 31st March 2026 · High confidence more than 10,000
    we have set a target of more than 10,000 credit cards this year by 31st March 2026.

    — Ashok Chandra

Fee-based Income

  • Fee-based Income Growth Fee-based Income · FY26, FY27 · Medium confidence improvement
    there has to be improvement in the fee-based income in the '26, '27 financial year.

    — Ashok Chandra

Market context

  • Global NIM Margin · full FY26 · High confidence 2.60%
    and global NIM will close at 2.60%, subject to no further rate cuts in current financial year.

    — Ashok Chandra

What to watch in Q4 FY26

Global Net Interest Margin (NIM)

Next 3-4 months (deposit repricing complete by May 15), visible by Q2 FY27
Current 2.52% (Q3 FY26)
Target Improvement from Q1/Q2 FY27 onwards

Why it matters

NIM is a key profitability driver, and its recovery depends on the completion of deposit repricing.

I'm expecting that somewhere from the Q1 and Q2 onwards, definitely, the NIM will improve, and we will be back to the original scenario.

Risks & concerns

  • NIM compression due to interest rate environment and deposit strategy

    medium

    Global NIM dipped to 2.52% in Q3 FY26. Management noted that while repo rate cuts were passed on immediately to borrowers, deposit rates were kept intact to retain customer faith, impacting NIM. Expects improvement after deposit repricing.

    Management acknowledged

  • Elevated credit cost due to prudential floating provisions

    low

    Credit cost was 0.46% in Q3 FY26, elevated due to INR955 crores in additional floating provisions made to minimize the impact of ECL implementation from April 1, 2027.

    Management acknowledged

Q&A highlights

7 direct
Release of provisions for a standard account Direct
That account, you are right, that account was became a standard in the last quarter, but the provision which we are holding in the standard account is still we are holding it. We have not yet released that amount.

Clarifies that a previously discussed provision write-back was not executed, impacting current quarter's profitability.

Asked by Mahrukh Adajania

Credit cost run rate under ECL implementation Direct
Now if I distribute this INR10,000 crores for 5 years, 5 years, multiply by 4 quarters, it comes to 20 quarters. So, 20 quarters means every quarter, if I am able to do INR500 crores, I am able to meet that requirement. And that INR500 crores every quarter, hardly it comes to around 10 to 15 basis points.

Provides a clear numerical expectation for future credit costs under the upcoming ECL regime, indicating a manageable impact.

Asked by Mahrukh Adajania

Floating provisions and their impact on Net NPA Direct
No, no, no. They are not part of net NPA.

Clarifies that the substantial floating provisions are not netted off from Net NPA, indicating a stronger balance sheet position than if they were.

Asked by Jai Mundhra

RBI compliance on PC Agri crop loan PSL requirement Direct
No, no, no. We don't have any such challenge. And the bank, which you are quoting, their RBI supervisory review had happened. In our bank also, every bank, RBI supervisory review happens every year. And we are totally compliant in that. We don't have any such challenge.

Reassures investors about the bank's compliance with RBI's PSL norms, addressing a potential sector-wide concern.

Asked by Jai Mundhra

Impact of repo rate cut on NIM and deposit repricing Direct
it is only because of the 125-basis point repo cut. And second thing related with this is the deposit rate pricing. Because 125 basis point rate cut has happened in the credit side and that you are very rightly mentioned that more than 50%, we have the Repo Linked... So since 50% and above the Repo Linked rates were there so that we have passed on immediately. In fact, in our bank, immediately on the next working day, we pass on those benefits. But to that extent, we have not gone for the deposit repricing.

Explains the reason for NIM compression, attributing it to immediate pass-through of repo rate cuts on the asset side while strategically holding deposit rates.

Asked by Kunal Shah

LCR change in guidelines and its impact Direct
I think around 5.25% impact will be there, yes. ... Positive impact.

Provides a specific quantitative impact of upcoming regulatory changes on LCR, indicating a positive effect for the bank.

Asked by Bhavik Shah

Loan growth guidance vs. LDR Partial
But at the same time, there are some low-yielding advances are there, including this IBPC. We want to come out of those things so that going forward, we will have the good quality high-yielding advances, and that will be sustainable for a longer period. So that is the reason we are not revising this 11% to 12%.

Management explains why they are not increasing loan growth guidance despite a good LDR, focusing on quality and yield over aggressive volume.

Asked by Bhavik Shah

Consistency of performance for investors Direct
I will tell you, you should have full confidence in the performance. First of all, you see none of the parameters, the guidance which we have given in the beginning of the financial year, despite the strain in the system, despite 125 basis point cut in the system, we have not revised any of my guidance.

Management directly addresses investor concerns about quarter-to-quarter volatility, reiterating commitment to guidance and consistent performance across key metrics.

Asked by Ankit Bansal

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Punjab National Bank reported a robust Q3 FY26, with Net Profit growing 13.13% YoY to INR5,100 crores and Operating Profit increasing 13% YoY to INR7,481 crores. Return on Assets improved to 1.06% from 1.03% in Q3 FY25, and Earnings Per Share (not annualized) reached INR4.44. The bank maintained its guidance across key metrics despite market challenges, demonstrating consistent performance.

Business Growth & Deposit Franchise

The bank's global gross business stood at INR28.92 trillion as of December 2025, marking a 9.5% YoY growth. Global deposits grew 8.5% YoY to INR16.60 trillion, and global advances increased 10.9% YoY to INR12.31 trillion. The CD ratio rose to 74.2% from 72.6% YoY, and the CASA ratio remained stable at 37.1%. The bank opened 82 new branches in Q3 and plans to open another 100 in the next six months to expand its presence.

Asset Quality Improvement & Provisioning Strategy

Asset quality showed significant improvement, with Gross NPA reducing to 3.19% as of December 2025 from 4.09% YoY, and Net NPA decreasing to 0.32% from 0.41% YoY. The Provision Coverage Ratio (PCR) stood strong at 96.99%. Fresh slippages for Q3 FY26 were INR1,901 crores, while recoveries totaled INR4,090 crores. The bank made additional floating provisions of INR955 crores in Q3, bringing total floating provisions to INR1,775 crores, in preparation for ECL implementation from April 2027.

Profitability & Efficiency Ratios

Net Interest Income (NII) for Q3 FY26 was INR10,533 crores, a slight increase from INR10,469 crores in Q2 FY26. However, Global NIM dipped to 2.52% due to immediate pass-through of repo rate cuts on the asset side and a strategic decision to maintain deposit rates. The Cost-to-Income Ratio improved to 51.91% in Q3 FY26 from 54.16% in Q3 FY25, reflecting enhanced operational efficiency and contributing to profitability.

Digital Transformation & New Initiatives

PNB launched its revamped mobile banking app, PNB One 2.0, with over 2.50 crore activated users and 350+ features. Digital journeys for almost all credit products in the RAM segment have been launched, with INR12,672 crores in digital loans disbursed to 3.18 lakh customers. The bank also introduced its first metal credit card, PNB LUXURA, targeting high-net-worth individuals, with a goal of more than 10,000 cards by March 2026, and is developing new fee-based income verticals.

Capital Adequacy

The Capital Adequacy Ratio (CAR) significantly improved to 16.77% as of December 2025, up from 15.41% in December 2024. CET1 capital stood at 12.52% against a regulatory requirement of 8%, and Tier 1 capital was 14.13% against 9.5%. This strong capital position, well above regulatory requirements, supports future growth initiatives and provides resilience against potential shocks.

NIM Outlook and Deposit Repricing Strategy

Management expects domestic NIM to be around 2.70% and global NIM to be 2.60% for the full FY26, subject to no further rate cuts. The bank strategically maintained deposit rates in Q3, but a special deposit scheme that matured in March 2025 is undergoing repricing, with 70% already completed by December 2025. The full impact of this repricing, expected by May 2026, is anticipated to reduce the cost of deposits and contribute to NIM improvement from Q1/Q2 FY27 onwards.

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