PNB Q4 net profit jumps 14% to ₹5,225 crore as provisions plunge, but NII declines 3.5%

Key facts

• Net profit rose 14% YoY to ₹5,225 crore in Q4 FY26.
• Net Interest Income fell 3.5% to ₹10,380 crore from ₹10,757 crore.
• Gross NPAs improved to 2.95% from 3.95% a year ago.
• Provisions dropped sharply to ₹424 crore from ₹1,150 crore.
• Total global business grew 10.79% to ₹29.72 lakh crore.
• CASA ratio improved to 73.7% from 71.28%.
• Bank recommended a dividend of ₹3 per share, record date June 13.
• Credit growth guidance for FY27 set at 12-13%.

Profit surge masks core income weakness

a net profit of ₹5,225 crore for the quarter ended March 31, 2026, a 14% increase from ₹4,567 crore in the same period last year. The result, announced on Tuesday, exceeded market expectations, driven largely by a dramatic reduction in provisions rather than operational strength. Net Interest Income, the difference between interest earned and paid, declined 3.5% to ₹10,380 crore from ₹10,757 crore, reflecting persistent pressure on lending margins. The bank's Net Interest Margin also slipped, though management did not provide a specific figure for the quarter.

Provisions and asset quality drive bottom line

Provisions for bad loans and contingencies fell to ₹424 crore from ₹1,150 crore in the previous quarter, a 63% drop that directly boosted net profit. This improvement was underpinned by a sharp reduction in non-performing assets: gross NPAs stood at 2.95% of gross advances, down from 3.95% a year earlier, while net NPAs improved to 0.29% from 0.4%. The bank's asset quality metrics have now reached their best levels in years, allowing it to release provisions that had been set aside during earlier stress periods. The provision coverage ratio stood at a robust level, though the bank did not disclose the exact figure.

Business growth remains robust across segments

PNB's total global business increased 10.79% year-on-year to ₹29.72 lakh crore. Global deposits rose 9.25% to ₹17.1 lakh crore, while gross advances grew 12.97% to ₹12.61 lakh crore. On the domestic front, total business expanded 10.39% to ₹28.45 lakh crore, with deposits up 9.14% and advances up 12.17%. The bank's CASA ratio, a measure of low-cost deposits, improved to 73.7% from 71.28% a year ago, signalling a stronger funding base. However, Managing Director and CEO Ashok Chandra acknowledged that the bank fell short of its CASA and NIM guidance for the fiscal year.

Management sets FY27 targets and expansion plans

Addressing a virtual press conference, Chandra said the bank achieved most of its FY26 guidance, with credit growth of 12.7% (guidance: 11-12%) and deposit growth of 9.2% (guidance: 9-10%). For FY27, the bank has guided for advances growth of 12-13%, while deposit growth guidance remains unchanged at 9-10%. Chandra ruled out any immediate fund-raising plans, citing a strong capital position. He noted that the bank had approval to raise ₹4,000 crore each through Tier I and Tier II bonds during FY26 but did not need to tap the market. The bank plans to open 250 new branches in the current fiscal, primarily in southern and western India. As of March 31, 2026, PNB operated 10,324 domestic branches and two international branches, with 63.4% located in rural and semi-urban areas.

Digital push gains traction

The bank is making significant strides in digital lending, with one in three loans now sanctioned digitally. Digital sanctions crossed the ₹1 lakh crore mark during the quarter, and digital transactions accounted for over 95% of total transactions. This shift is part of a broader strategy to improve efficiency and reduce costs. Chandra highlighted that the bank's focus on technology would continue, though he did not provide specific targets for digital growth in the current fiscal year. The expansion into southern and western India is expected to further accelerate digital adoption.

Market reaction and dividend announcement

Shares of Punjab National Bank closed at ₹107.90 on Tuesday, down nearly 1% from the previous close, as investors weighed the decline in NII against the profit beat. The bank's board recommended a dividend of ₹3 per equity share, representing 150% of the face value of ₹2 each for FY26. The record date for the dividend has been set for June 13. Analysts noted that while the profit growth was encouraging, the sustained compression in NII and NIM remains a concern, especially in a rising interest rate environment. The bank's ability to maintain credit growth while protecting margins will be closely watched in coming quarters.

The bottom line

• PNB's Q4 net profit rose 14% YoY to ₹5,225 crore, driven by a 63% drop in provisions.
• Net Interest Income fell 3.5% to ₹10,380 crore, indicating margin pressure.
• Asset quality improved sharply: gross NPAs fell to 2.95% and net NPAs to 0.29%.
• Global business grew 10.79%, with advances up 12.97% and deposits up 9.25%.
• Management guided for 12-13% credit growth in FY27 and plans 250 new branches.
• Digital lending crossed ₹1 lakh crore, with 95% of transactions now digital.