Punjab National Bank — Q4 FY26 earnings call

Call held 5 May 2026

Management summary

Punjab National Bank reported a strong Q4 FY26 with robust growth in business, advances, and deposits, alongside significant improvements in asset quality and capital adequacy. Net profit and operating profit saw double-digit YoY growth. However, NIM faced pressure from sticky deposit rates, leading to a revised guidance. The bank is actively rebalancing its portfolio towards RAM segments and expanding its digital footprint while preparing for ECL implementation.

Highlights

  • Gross Global Business grew 10.7% YoY to INR29,70,000 crores, driven by 12.7% growth in advances and 9.2% growth in deposits.

  • Net Profit for Q4 FY26 increased 14.4% YoY to INR5,225 crores, while operating profit grew 10.7% YoY to INR7,500 crores.

  • Asset quality significantly improved with GNPA reducing to 2.95% and NNPA to 0.29% by March 2026, coupled with a high PCR of 97.14%.

  • Capital Adequacy Ratio (CRAR) strengthened to 17.74% and CET1 to 13.62% by March 2026, providing ample cushion for future growth and regulatory changes.

  • Digital transactions now account for over 95% of all transactions, with digital sanctions reaching INR1,00,000 crores and WhatsApp banking users growing 77% YoY to 1.09 crores.

Concerns

  • Global NIM for Q4 FY26 was 2.47%, impacted by sticky deposit rates and compression in yield on advances, leading to a revised lower NIM guidance of 2.6-2.7% for FY27.

  • MSME slippages in Q4 FY26 increased to INR1,106 crores from INR995 crores in Q4 FY25, despite overall slippages being lower YoY.

  • The positive impact on employee cost in Q4 FY26 (INR2,121 crores from AS-15 adjustments) is largely a one-time adjustment, which may not recur in the same magnitude.

Key financials

3 periods

Headline

  • Gross Global Business
    ₹29.70L Cr
    YoY +10.7%
  • Advances
    ₹12.59L Cr
    YoY +12.7%
  • Global Deposits
    ₹17.11L Cr
    YoY +9.2%
  • GNPA
    3%
  • NNPA
    0.29%
  • PCR
    97.1%
  • Capital Adequacy Ratio
    17.7%
  • SMA-0,1,2 (Total)
    3.3%
  • SMA-0
    ₹24,643 Cr
  • SMA-1
    ₹13,970 Cr
  • SMA-2
    ₹2,922 Cr
  • IBPC Exposure
    ₹34,049 Cr

Q4

  • Operating Profit
    ₹7,500 Cr
    YoY +10.7%
  • Net Profit
    ₹5,225 Cr
    YoY +14.4%
  • Global NIM
    2.5%
  • Fresh Slippages
    ₹2,674 Cr

FY26

  • Cost-to-Income Ratio
    51.8%
  • Total Recovery
    ₹15,501 Cr

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
  • Dividend ₹3/share (final)
    We have also announced the tentative dividend. I think we need to wait for the AGM approval, but the Board has approved INR3 for every INR2 of the face value the shareholding almost it comes to 150% of the face value.
  • Liquidity Liquidity disclosed LCR is around 125% as of March 2026, which the bank aims to maintain.
    Around 125% we would like to keep it. And we are at almost at the same level as on March '26, 125%.

Guidance & targets

Credit Growth

  • Credit Growth Credit Growth · FY27 · Medium confidence 12% to 13%
    I can see that you are building in NII growth of 7% despite the fact that you expect NIMs to be slightly better and credit growth of 12% to 13%

    — Jayant Kharote

Profitability

  • NII Growth Profitability · FY27 · Low confidence 7%
    I can see that you are building in NII growth of 7% despite the fact that you expect NIMs to be slightly better and credit growth of 12% to 13%

    — Jayant Kharote

  • Return on Assets (RoA) Profitability · High confidence over 1%
    Will you be able to deliver over 1% ROA... Yes, yes, absolutely.

    — Ashok Chandra

Asset Quality

  • Slippage Ratio Asset Quality · FY26 · High confidence below 1%
    Our guidance for slippage ratio was to remain below 1% in FY 2026, and we are well within our guidance level as slippage ratio for the full year is 0.60%.

    — Ashok Chandra

  • PCR Asset Quality · FY26 · High confidence above 96%
    Our PCR stands at 97.14% as of March '26, which is well above our guidance of more than 96% for financial year '25- '26.

    — Ashok Chandra

Operations

  • Branch Expansion Operations · current financial year · High confidence 250 branches
    We added 144 branches in FY '26 and plan to open 250 more in current financial year.

    — Ashok Chandra

Portfolio Mix

  • RAM Portfolio Share Portfolio Mix · current financial year · Medium confidence 58%
    in the RAM we want to bring it to 60% in the long run and around 58% in this financial year.

    — Ashok Chandra

  • Corporate Loan Book Share Portfolio Mix · short term · Medium confidence 42%
    we want to bring that share down to, in the long term it is 40%, short term it is 42%

    — Ashok Chandra

Liquidity

  • LCR Liquidity · next year · High confidence around 125%
    Around 125% we would like to keep it. And we are at almost at the same level as on March '26, 125%.

    — Ashok Chandra

Market context

  • Global NIM Profitability · FY27 · Medium confidence 2.6% to 2.7%

    Previously 2.8% to 2.9% → 2.6% to 2.7%

    We expect our global NIM to remain in the range of 2.6% to 2.7% for financial year '26-'27.

    — Ashok Chandra

What to watch in Q1 FY27

Global NIM Trajectory

Q3 FY27 (review in October)
Current 2.47% (Q4 FY26)
Target 2.6-2.7% (FY27 guidance, subject to review)

Why it matters

NIM is a key profitability driver for banks, and its trajectory will determine future earnings, especially given the current interest rate environment.

We will watch the situation for Q1 and Q2. And then if it is any required to be modified, we will do -- we'll take a call in the third quarter of this financial year.

Risks & concerns

  • NIM Compression due to Sticky Deposit Rates

    medium

    Global NIM for Q4 FY26 was 2.47%, impacted by deposit rates remaining elevated and sticky, which did not fully compensate for the compression in yield on advances.

    Management acknowledged

  • Increased MSME Slippages

    low

    MSME slippages in Q4 FY26 increased to INR1,106 crores compared to INR995 crores in Q4 FY25, though overall slippages were lower.

    Analyst acknowledged

  • One-time nature of AS-15 positive impact

    low

    The INR2,121 crores positive impact on employee cost from AS-15 adjustments is a one-time event and may not recur in the same magnitude, potentially affecting future operating profit.

    Analyst acknowledged

  • Impact of West Asian Crisis on MSMEs

    low

    Management stated they have not seen any challenge in their book from the West Asian crisis and have engaged with affected exporters and importers, offering support.

    Analyst downplayed

Q&A highlights

6 direct
Slippages and SMA-0,1,2 Trends Direct
See in this financial year, the slippages is INR2,758 crores and if you compare it with the last financial year '24-'25, that time the slippages was INR3,001 crores... SMA-0 is INR24,643 crores. SMA-1 is INR13,970 crores and SMA-2 is INR2,922 crores. All put together it is INR41,534 crores which is 3.30% of the total advances.

Clarified that overall slippages were lower YoY, but provided a detailed breakdown of SMA categories, indicating specific areas like MSME saw increased slippages.

Asked by Ashok Ajmera

ECL Preparedness and Provisions Direct
if you see our capital position, the CRAR and the CET1, both the parameter, the capital is 17.74% in the CRAR, the CET1 is also 13.62%. So we have enough cushion to take care of any requirement which will come on account of implementation of ECL from 1st of April 2027. ...we have already kept more than INR2,000 crores, which already you have also mentioned, INR2,045 crores in precise.

Management expressed high confidence in the bank's capital adequacy and existing floating provisions to handle the upcoming ECL implementation without significant challenges.

Asked by Ashok Ajmera

Employee Cost Reduction and AS-15 Impact Partial
One is the some additional provision which was kept during the Q1, Q2, and Q3. Definitely some plow back has happened because of the additional thing. AS-15 also, what has happened, bond yield has gone up. ...Total impact of, positive impact is INR2,121 crores.

Explained the significant Q-o-Q reduction in employee cost was partly due to a one-time positive impact from AS-15 adjustments and bond yield movements, suggesting it may not be a recurring operational efficiency gain.

Asked by Ashok Ajmera

NIM Guidance Revision Direct
But considering the prevailing situation which is there and the deposit rate which is still at a very elevated level even in the first month and first quarter of this financial year also, we do not see much change happening in the deposit front as far as the rate is concerned. ...So we thought that instead of giving 2.8%, 2.9% and showing a very rosy picture and coming down, we thought let us keep that 2.6% to 2.7%.

Management clarified the rationale behind lowering the NIM guidance for FY27, attributing it to the persistent high cost of deposits and current market conditions, indicating a more conservative outlook.

Asked by Ashok Ajmera

NII Growth vs. NIM and Credit Growth Partial
If NIM is expanding, then NII growth should be higher than credit growth. So that is the question, sir. Or are the NIM number is exit quarter, though it does not look like that, but, just wanted a clarity there. ...So, there is a uncertainty in the corporate loan book, and that is the reason we can't forecast that my NII can grow at 12% to 13% since our credit growth is happening at 12% to 13%. That doesn't happen. So, we need to rebalance and redesign our portfolio in such a way that there has to be sustainable growth in the interest side, it should be there.

Analyst questioned the conservative NII growth guidance despite higher credit growth and NIM targets. Management explained it's due to portfolio rebalancing efforts and uncertainty in the corporate loan book, aiming for sustainable interest income.

Asked by Jai Mundhra

IBPC Portfolio Status Direct
it has come down to INR34,049 crores now. ...we are going to replenish all those IBPC at whatever is there at the lower range, and around INR18,000 crores to INR20,000 crores further it will be reduced. We want to totally come out of this IBPC business.

Provided an updated, significantly lower figure for the IBPC portfolio and reiterated the bank's strategic intent to completely exit this low-yielding business.

Asked by Jai Mundhra

Cost of Deposit Trajectory Direct
I think, we are seeing and we are very closely watching our incremental cost of deposit. And I have compared the January, February, March and April, 30th of April also. There has been some decline happening in the incremental cost of deposit, and that is one part. ...So maybe around five basis point I am expecting that definitely some improvement it will happen in the cost of deposit side.

Management indicated an expectation of a 5 basis point improvement (decline) in the cost of deposits in Q1 and Q2 FY27, which is crucial for NIM expansion.

Asked by Jai Mundhra

Average Yield on Corporate vs. RAM Book Direct
Corporate yield on standard advance is 7.55%. And MSME standard advance yield is 9%. And if you see our domestic yield on standard advances, that is 8.23%. So corporate loan book gives us lower than the domestic yield of all the sectors.

Quantified the yield differential between corporate and RAM segments, reinforcing the bank's strategy to shift towards RAM for better profitability.

Asked by Ashlesh Sonje

2 min read 6 chapters

Detailed narrative

Strong Business Growth & Portfolio Rebalancing

Punjab National Bank achieved a gross global business of INR29,70,000 crores in FY26, marking a healthy 10.7% Y-o-Y growth. Advances grew by 12.7% Y-o-Y to INR12,59,000 crores, with retail (excl. IBPC), MSME, and agri segments showing robust growth of 18.2%, 19.9%, and 16.2% respectively. The bank is strategically rebalancing its portfolio towards RAM (Retail, Agri, MSME) segments, targeting a 58% share in the current financial year and 60% in the long run, while aiming to reduce the corporate loan book share to 42% short-term and 40% long-term to improve yield on advances.

Improved Asset Quality & Robust Provisions

The bank demonstrated significant improvement in asset quality, with GNPA reducing to 2.95% and NNPA to 0.29% by March 2026, from 3.95% and 0.40% respectively in March 2025. The Provision Coverage Ratio (PCR) stood strong at 97.14%, exceeding the 96% guidance. Full-year slippages were controlled at 0.60%, well below the 1% guidance, and total recoveries for FY26 were INR15,501 crores. The bank also made an additional floating provision of INR270 crores in Q4 FY26 on a prudential basis.

Profitability Growth Amidst NIM Pressure

Net Profit for Q4 FY26 increased 14.4% Y-o-Y to INR5,225 crores, and operating profit grew 10.7% Y-o-Y to INR7,500 crores. However, global NIM for Q4 FY26 was 2.47%, impacted by sticky deposit rates and compression in yield on advances. Management has set a global NIM target of 2.6-2.7% for FY27, acknowledging the current interest rate environment and plans to revisit this guidance after Q1/Q2 FY27 based on deposit rate movements.

Enhanced Capital Position & ECL Preparedness

PNB's Capital Adequacy Ratio (CRAR) improved to 17.74% by March 2026, with CET1 at 13.62% and Tier 1 Capital at 15.15%, significantly above regulatory requirements. The bank has maintained INR2,045 crores in floating provisions, providing a strong cushion for the upcoming implementation of ECL guidelines from April 2027. Management expressed high confidence in their preparedness, stating they do not foresee any significant challenges to their balance sheet.

Digital Transformation & Customer Focus

The bank is rapidly advancing its digital capabilities, with over 95% of all transactions now digital. Digital sanctions reached INR1,00,000 crores, demonstrating commitment to technology-enabled credit solutions. The flagship PNB ONE 2.0 mobile app offers 350+ features, and WhatsApp banking users grew 77% Y-o-Y to 1.09 crores by March 2026, highlighting strong digital adoption and focus on customer-centric solutions.

Strategic Network Expansion & Regional Focus

PNB expanded its physical presence by adding 144 branches in FY26 and plans to open 250 more in the current financial year, primarily focusing on Southern and Western regions. A new zonal office in Bengaluru has been operationalized to strengthen the bank's presence and execution in the Southern region. This calibrated network expansion complements the bank's digital initiatives to drive growth.

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