Punjab National Bank Reports 137 Percent Profit Surge Plans Wealth Management Services for High-Net-Worth Clients

Punjab National Bank Reports 137 Percent Profit Surge Plans Wealth Management Services for High-Net-Worth Clients

Punjab National Bank (PNB) has reported a substantial 137% growth in net profits for Q2 FY25, reaching Rs 4,714 crore. The bank’s Managing Director and CEO, Atul Kumar Goel, highlighted upcoming plans and performance insights during a recent discussion with Financial Express. Goel disclosed PNB’s intention to enter the wealth management sector to cater to high-net-worth individuals (HNIs), expanding the bank’s suite of financial services.

Impact of Rate Changes on Bank Margins

Addressing the potential impacts of interest rate reductions on margins, Goel explained that approximately 48% of PNB’s loan portfolio is linked to either the repo rate or T-bill, which could lead to swift repricing if rates are lowered. He noted that while this could exert margin pressure, PNB’s substantial savings deposits grant it flexibility to sustain favorable margins by adjusting rates on the deposit side.

Strong MSME Underwriting and Minimal NPAs

Over the past 51 months, PNB has sanctioned Rs 9 lakh crore in credit, disbursing Rs 8.19 lakh crore with an outstanding loan book of Rs 6.31 lakh crore. Despite a small NPA rate of 0.29% (Rs 2,374 crore) in the MSME sector, Goel credits PNB’s selective underwriting process. The bank has intentionally “cherry-picked” MSME clients to maintain high collection efficiency and minimize credit risk, focusing its MSME exposure on clients with AAA ratings.

Reducing Delinquencies in Agri and MSME Sectors

To address slippages in the agricultural and MSME sectors, PNB has set a 1% tolerance threshold for NPAs, which Goel considers reasonable for these higher-risk categories. He affirmed that PNB’s exposure in these sectors remains tightly managed, with most loans to corporate clients categorized as non-NPA, while NPA risk is largely isolated to smaller loan accounts.

Wealth Management Expansion for HNIs

As private and foreign banks continue to target affluent clients with specialized financial products, PNB intends to launch a dedicated wealth management arm for HNIs. Currently, PNB offers select services via its mobile app and provides corporate clients with targeted services, but a standalone wealth management division is underway to tap into this high-potential market.