PNB Q2 Profit Rises 12.8% to Record Rs 5,532 Crore; Bank Holds Off on Deposit Rate Hikes

Punjab National Bank on Friday reported its highest-ever quarterly profit, with net profit for the September quarter of FY27 rising 12.8% year on year to Rs 5,532 crore. But the more consequential message for customers came from the post-results press conference: the state-run lender said it is not planning to raise deposit rates any time soon, even after the Reserve Bank of India's recent 25 basis point repo rate hike.

The numbers

Net interest income, the difference between what the bank earns on loans and pays on deposits, grew 10.8% to Rs 11,601 crore from Rs 10,468 crore a year earlier. Operating profit rose a more modest 4.2% to Rs 7,532 crore.

That gap is explained largely by treasury income. Gains from bond trading fell to about Rs 750 crore from Rs 1,716 crore in the same quarter last year. Stripping out treasury gains and recoveries from written-off loans, the bank said its core operating profit grew 29.4%, a better gauge of how the underlying lending business is performing.

Asset quality continued to improve. The gross NPA ratio eased to 2.55% from 2.78% in the June quarter, and the net NPA ratio slipped to 0.25% from 0.28%.

Loans outrunning deposits

Global advances grew 14.7% year on year to Rs 13.41 lakh crore, while deposits rose 9.9% to Rs 17.77 lakh crore. Managing Director and CEO Ashok Chandra said the bank's credit-deposit ratio of around 75% gives it room to keep lending even if deposits grow at only 8-9%. That cushion is why PNB feels comfortable leaving deposit rates where they are for now.

The bank also raised US$2.7 billion through a foreign-currency non-resident deposit campaign, ahead of its US$2.5 billion target, and used the money to replace costlier deposits and certificates of deposit.

What the rate hike means for PNB

Chandra said the RBI's rate increase could lift the bank's net interest margin by about 6-7 basis points in the October-December quarter, as loans linked to the repo rate reprice faster than deposits. Global NIM already improved to 2.58% in the September quarter from 2.50% in the previous one.

The lender also raised its FY27 credit growth guidance to 13-14% from 12-13%, citing demand in retail, agriculture and MSME lending.

Our take

For borrowers, the combination is not ideal. Repo-linked loans tend to get costlier quickly after a rate hike, while PNB is signalling that savers should not expect higher fixed-deposit rates in the near term. If you hold a floating-rate home or personal loan, it is worth checking how much your instalment could rise using our EMI calculator.

For investors, the quarter shows a bank whose core earnings are strengthening even as treasury gains fade, with clean asset quality and margins set to benefit from higher rates. The key risk is the widening gap between loan and deposit growth: if credit demand stays strong, PNB may eventually have to compete harder for deposits, which would squeeze those margin gains.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.