Punjab & Sind Bank — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

Punjab & Sind Bank delivered a strong YoY performance in Q1 FY26, characterized by significant profit growth and improving asset quality metrics. While sequential growth was muted due to seasonal factors and a high base in Q4, the bank maintained its full-year guidance for credit and deposit growth. Management is aggressively pivoting toward high-yield RAM (Retail, Agriculture, MSME) segments and digital transformation to defend margins in a potential rate-cut environment.

Highlights

  • Operating profit surged 70.35% YoY to ₹540 crore, driven by robust treasury performance and core fee income.

  • Net profit increased by 47.80% YoY to ₹269 crore, despite sequential pressure from a high base in Q4.

  • Asset quality improved with Gross NPA reducing to 3.34% and Net NPA to 0.91% sequentially.

  • Total advances grew 13.92% YoY to ~₹1,00,000 crore, led by a 29% growth in retail credit.

  • CASA ratio dropped to 30.6%, reflecting systemic challenges in low-cost deposit mobilization.

  • Slippage ratio remained exceptionally low at 0.21% for the quarter.

  • Capital Adequacy Ratio (CAR) stood healthy at 17.90% with CET 1 at 16.02% post-capital raising.

  • Treasury profit contributed significantly with ₹208 crore for the quarter.

Key financials

  1. Operating Profit ₹540 Cr +70.3%YoY
  2. Net Profit ₹269 Cr +47.8%YoY
  3. GNPA 3.3%
  4. NNPA 0.91%
  5. CASA Ratio 30.6%
  6. NIM 2.5%

What they filed

Q1 FY27: revenue up 10.4%, net profit up 23.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,739 2,931 3,159 2,911 2,999 +9%3,042 +4%3,030 −4%3,213 +10%
Net profit240 282 313 269 295 +23%336 +19%422 +35%332 +23%
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.

Segment breakdown

  • RAM (Retail, Agri, MSME)
    17.2% Growth29% Retail Credit Growth
  • Corporate
    10.3% Growth

Guidance & targets

Volume

  • Credit Growth Volume · FY26 · High confidence 15% to 16%
    achieving this 15% to 16 % credit growth is still, I mean the target is still intact.

    — Swarup Kumar Saha, MD & CEO

  • Deposit Growth Volume · FY26 · High confidence 8% to 10%
    deposit growth of 8% to 10 %... the target is still intact.

    — Swarup Kumar Saha, MD & CEO

Other

  • Recovery & Upgradation Other · FY26 · High confidence ₹1,000 crore
    for the recovery & upgradation, the guidance of Rs.1,000 crore... it all remains intact and we are very confident we will achieve them.

    — Swarup Kumar Saha, MD & CEO

  • Slippage Ratio Other · FY26 · High confidence below 1.25%
    is the bank on track to maintain full year's slippages below 1.25%? ... we expect that we will be achieve the guidance on the slippage ratio.

    — Nikhil Thakur (Analyst) / Swarup Kumar Saha (MD & CEO)

Market Share

  • RAM Share of Advances Market Share · FY26 · Medium confidence 56% to 57%
    we will be in line with the overall guidance of having 56% to 57 % RAM by the end of the financial year.

    — Swarup Kumar Saha, MD & CEO

Risks & concerns

  • CASA Ratio Decline

    medium

    CASA ratio dropped to 30.6% as the banking system faces challenges in mobilizing low-cost deposits.

    Both acknowledged

  • NIM Compression

    medium

    Yields on advances declined from 8.63% to 8.47% sequentially, putting pressure on margins.

    Analyst acknowledged

  • SMA 2 Concentration

    low

    SMA 2 increased significantly to ₹558 crore, though management attributes this to a state-guaranteed account.

    Analyst downplayed

Areas of evasion (1)

  • Specific NIM quantification for FY26 was deferred to Q2.

Q&A highlights

3 direct
Sequential decline in profitability and muted credit growth Direct
Q1 has its own share of challenges and is normally a quarter where we show a slowdown... we should appreciate that the bank has shown, in spite of the slowdown that is happening, 70 % growth in operating profit.

Management defended the sequential dip by highlighting YoY strength and seasonal factors, while maintaining full-year targets.

Asked by Ashok Ajmera

NIM sustainability and deposit pricing strategy Direct
We have moved early in terms of reduction of the rate of interest... we reduced the rate on savings then we reduced our rate on retail term deposits... this has positively impacted the reduction in the cost.

Explains the bank's proactive approach to protecting margins by cutting deposit rates ahead of expected repo rate cuts.

Asked by MB Mahesh

Spike in SMA 2 numbers Direct
One of the basic reason was one of the state government guaranteed account, which of and on comes to the SMA category... As of now we don't feel any big threat from that account.

Clarifies that the sharp increase in SMA 2 (from ₹120cr to ₹558cr) is due to a low-risk government-backed account rather than systemic stress.

Asked by Bhavik Shah

2 min read 5 chapters

Detailed narrative

Asset Quality Resilience and Slippage Control

The bank demonstrated strong asset quality control with a slippage ratio of just 0.21% for the quarter, continuing a downward trend from 0.47% in March 2024. Gross NPA and Net NPA improved sequentially to 3.34% and 0.91%, respectively. Management is confident in maintaining full-year slippages below 1.25%, supported by a robust Provision Coverage Ratio (PCR) of 91.77%.

Strategic Pivot to High-Yield RAM Segments

PSB is aggressively shifting its portfolio toward RAM (Retail, Agriculture, MSME) advances, which grew 17.18% YoY. Retail credit was a standout performer, growing 29% YoY. The bank aims to increase the RAM share of its total book to 56-57% by the end of FY26 to improve yields and mitigate the impact of potential interest rate cuts on corporate margins.

Margin Defense through Proactive Repricing

To combat NIM compression, the bank proactively reduced interest rates on savings and retail term deposits, bringing flagship product rates down from 7.45% to 6.90%. While yields on advances declined to 8.47%, management expects an uptick as the share of high-yielding RAM assets and MCLR-linked loans grows. The current NIM of 2.52% is viewed as an optimum level for the current environment.

Digital Transformation and Network Expansion

Digital transactions now exceed 90% of total volume, with the PSB UNiC app reaching over 10 lakh active users. The bank is expanding its physical footprint with plans to open over 200 branches in FY26, primarily in southern, central, and eastern India. Additionally, the BC network is targeted to nearly double from 2,282 to 4,000 by year-end.

Treasury and Fee Income Performance

Treasury operations performed significantly well, contributing ₹208 crore to the quarter's profit. Core fee income also showed healthy traction, growing 18.03% YoY. The bank is focusing on third-party income and commission-based products to diversify revenue streams away from pure interest income.

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