Punjab National Bank Surpasses Profit Expectations with 137 Percent Growth in Q2 Driven by Lower Provisions and Asset Quality Gains

Punjab National Bank Surpasses Profit Expectations with 137 Percent Growth in Q2 Driven by Lower Provisions and Asset Quality Gains

Punjab National Bank (PNB) has reported a significant 137% increase in its net profit for Q2 of FY25, reaching Rs 4,714 crore, well above analyst predictions of Rs 3,382 crore as polled by Bloomberg. The impressive growth was primarily driven by a notable reduction in provisions and contingencies, improved asset quality, and an uptick in net interest income.

Financial Performance Highlights

The second quarter saw PNB’s net interest income rise by 6% to Rs 10,517 crore, compared to Rs 9,923 crore in the same period last year, while non-interest income increased by 22% to Rs 796 crore. Despite a slight dip in the net interest margin (NIM), which came in at 3.06% from 3.24% a year prior, the bank's robust profitability reflects broader improvements in operational metrics.

Provisions and contingencies saw a sharp decline, falling to Rs 288 crore from Rs 3,444.2 crore in the same quarter last year, marking a significant cost saving that boosted PNB’s bottom line. This quarter also featured a considerable improvement in PNB’s asset quality. The bank’s gross non-performing asset (NPA) ratio improved to 4.48% at the end of September from 4.98% in June, and the net NPA ratio decreased to 0.48% from 0.6%.

Strategic Highlights and Recovery Efforts

PNB’s CEO and Managing Director Atul Kumar Goel commented on the bank’s success, stating, “This is the best quarter in terms of profitability, with recoveries surpassing slippages.” In line with its ongoing recovery strategy, PNB transferred 14 accounts with distressed loans to the National Asset Reconstruction Company during the quarter.

The bank's provisioning coverage ratio (PCR), inclusive of technical write-offs, rose substantially to 96.67% by September 30, 2024, up from 91.91% a year ago. PNB also made a floating provision of Rs 350 crore this quarter, adhering to board-approved policies.

Deposits and Loan Performance

Global deposits grew by 11.33% year-on-year to Rs 14,58,342 crore, while the global yield on advances held steady at 8.31%, showcasing steady portfolio growth.