Punjab National BankRecord Profit Amid NIM Pressure

Punjab National Bank delivered a record quarterly net profit of ₹5,100 crore in Q3 FY26, reflecting a robust 13.13% year-on-year growth, while operating profit surged 13% against guidance of 8-9%.

Asset quality strengthened significantly with gross NPA declining to 3.19% and net NPA at 0.32%, well within guidance, supported by recoveries at 2.2 times fresh slippages. However, net interest margin compressed to 2.65% due to 125 basis points of repo rate cuts impacting EBLR-linked loans, while deposit repricing lagged. Management expects NIM recovery from Q2 FY27 as ₹2.48 lakh crore special deposits undergo repricing, potentially reducing deposit costs by 60-70 basis points.

The bank strategically repositioned its portfolio, shedding ₹13,000 crore of low-yielding IBPC advances while growing RAM segments at 18%, now constituting 56.7% of domestic advances. PNB proactively added ₹955 crore to floating provisions for ECL transition starting April 2027, elevating credit cost to 0.46%. Return on assets improved to 1.06% with capital adequacy strengthening to 16.77%, while digital transformation accelerated with 95% digital transaction share.