PNB’s asset quality has improved over the last two years, after a debilitating corporate bad loan cycle between 2011 and 2019, followed by the hit from the COVID-19 pandemic. It recovered bad loans worth 201.64 billion rupees in 2023-24.
The bank has been setting aside more funds than needed to cushion its balance sheet. Recoveries from written-off and bad loans allow it to reverse those provisions, boosting profitability.
PNB’s net profit more than doubled in the December quarter, it reported during market hours on Friday, helped by an improvement in asset quality.
Its shares were down 0.2% during a special market session for the federal budget on Saturday. They have fallen 1.6% so far in 2025 against a 3.1% fall in the state-bank index. Punjab National Bank’s gross non-performing asset ratio, a key metric of asset quality, improved to 4.09% at December-end, from 4.48% three months earlier. While bad loan recoveries were “muted” at 34 billion rupees in the December quarter, they should rise to 50 billion rupees to 60 billion rupees in the current quarter, helped by inflows from insolvency proceedings and one-time settlements, the CEO said.
The state-run bank has an outstanding corporate loan book pipeline of 1.15 trillion rupees, but continues to see challenges on loan pricing, he said.
It aims to maintain the net interest margin in a band of 2.9%-3.0% in this fiscal year compared with 3.09% in the December quarter.
India’s fiscal year runs April through March.
PNB has raised its loan growth target for this fiscal year to 13%-14% from its earlier expectation of 11%-12%, and that for deposit growth to 12%-13% from 9%-10%, the CEO said.
The bank’s loans and deposits grew 14% and 14.4% on-year in the December quarter, higher than most of its peers, largely due to its vast outreach and “aggressive” network, Chandra said.
PNB has more than 10,000 branches across India.
