Q2 25/26

Oct 18, 2025

Ladies and gentlemen, good day and welcome to Punjab National Bank Q2 FY26 earnings conference call hosted by Elara Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Palak Shah. Thank you and over to Ms. Hello everyone and welcome to Q2 FY26 earnings conference call of Punjab National Bank. Today we have with us the management of the bank, headed by Mr. Ashok Chandra, MD and CEO, Mr. M. Paramasivam, Executive Director, Mr. Bibhu Prasad Mahapatra, Executive Director, and Mr. D. Surendran, Executive Director. With this introduction, I would like to hand over the call to Mr. Ajay Singh, General Manager, Strategic Management and Economic Advisory, to read out the disclaimer statement, post which MD sir will address the conference. Thank you and over to you, sir. Good afternoon. I'll be reading the disclaimer. This representation contains certain forward-looking statements apart from historical information. These forward-looking statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Punjab National Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the present date. I now request MD sir for the opening remarks. Good afternoon to all the participants. I will just give the brief about the performance of our bank. The global gross business of the bank stood at INR 27.8 trillion as on September 2025, with a year-on-year growth rate of 10.6%. Global deposits stood at INR 16.17 trillion, with a yearly growth rate of 10.9%, and global advances stood at INR 11.7 trillion, with a yearly growth rate of 10.1%. We have sanctioned credit lines to the tune of INR 1.7 lakh crore, which are aimed to be disbursed and that will favor the credit growth of the bank in the future. The CD ratio of the bank is comfortably placed at 72.33%. The bank has started to witness the impact of various initiatives taken to garner low-cost deposits, and the CASA ratio of the bank has improved to 37.29% as of September 2025, from 36.99% as of June 2025. We expect the ratio to improve further gradually. The bank opened 2.76 million CASA accounts in the revamped schemes with CASA balances to the tune of INR 18,200 crore during H1 of FY2026. Our RAM advances stand at INR 6.35 trillion, which is around 56.8% of the domestic advances. The share of RAM advances was at 55.8% as of September 2024. We are strategically enhancing our RAM share within the overall advances to improve our yield on advances while managing risks. Coming to the profitability, our domestic NIM percentage is at 2.72% for Q2 of FY2026, whereas global NIM percentage stood at 2.60%. With the yield on advances having largely stabilized at the lower end, we anticipate an improvement in the NIM from Q3 onwards. This outlook is supported by the ongoing repricing of deposits and the favorable impact of the CRAR, which will be fully materialized in Q3 and Q4. The operating profit for Q2 is INR 7,227 crore, which has improved from INR 6,853 crore for Q2 of this financial year and INR 7,081 crore of Q1 of this year. Year-on-year growth rate of operating profit is 5.46%. Net profit of the bank stands for Q2 of this year at INR 4,904 crore as against INR 4,303 crore for Q2 in the same period last year, depicting a healthy year-on-year growth rate of 14%. Efficiency ratios highlight the efficiency ratio of the bank are improving consistently. Our return on assets is at the level of 1.05% for Q2 as against 1.02% for the same period last year. The return on equity stands at 7.95%. EPS, earnings per share not annualized, is 4.27 for Q2 of this year against 3.90 for Q2 of last year. Our tangible book value per share as of 30th September is INR 95.92, which has significantly improved from the level of INR 79.18 as of 30th September 2024. We are mindful of improving our cost-to-income ratio, and the same has reduced from 54.58% in Q2 of FY25 to 51.20% in Q2 of this year. Asset quality highlights the bank has done extremely well in the gross NPA. Net NPA, gross NPA has reduced to 3.54% as of 30th September, from 4.48% in September 2024 and 3.78% in June 2025. Similarly, the net NPA percentage, which was 0.46% in September 2024, has improved to 0.36% in September 2025. We are on track to achieve our guidance for gross NPA and net NPA for financial year 2026. Our PCR stands at 96.91% as of 30th September 2025, which is well above our guidance of more than 96% for this financial year. Total slippages during Q2 for this year was INR 1,955 crore as against INR 2,181 crore in Q2 of last year. Our guidance for slippages ratio was to remain below 1% in FY2026, and we are well within our guidance level as slippages ratio for Q2 for this year has been on an annualized basis of 0.71%. Total recovery stood at INR 3,920 crore for Q2 as against INR 3,356 crore in Q1 of this year. Our recovery continues to be more than slippages, reflecting our commitment towards improving asset quality. As a result of maintaining tangible PCR more than 90% and having recoveries from gross NPA more than the slippages, we have witnessed pullback of NPA provisions in this particular quarter, and our credit cost has turned negative. From 1st July 2020 to 30th September 2025, we have sanctioned around INR 12.06 trillion loans, out of which we have disbursed around INR 10.47 trillion loans. The outstanding in these loans is INR 7.63 trillion as of now, which is close to 65% of our total outstanding loan book. The net NPA in this book is INR 4,282 crore, which is only 0.41% of the disbursed amount under phase underwriting. This speaks about the underlying standard of our bank. Highlights of the capital. As far as the capital is concerned, our capital adequacy is 17.19% as of 30th September 2025, compared to 16.36% as of 30th September 2024 and 17.50% as of 30th June 2025. Our CET1 is at 12.75%, Tier 1 14.41%, and Tier 2 is at 12.78%, which is well above the regulatory requirements. The bank is doing extremely well in the digital front, and the share of digital transactions is close to 95% in this financial year. There is a 53% increase in UPI transactions done through our mobile application PNB One in this financial year as compared to Q2 of last year. The number of WhatsApp banking users has grown by 92% from 4.35 million as of September 30, 2024 to 8.34 million as of September 30, 2025. Our corporate mobile banking application launched on September 18, 2025 serves more than 194,000 customers with an app rating of 4 on Play Store and 4.1 on iOS. We have sanctioned and disbursed digital loans to the tune of INR 74.8 million in Q2 of this year, and every fifth loan is sanctioned in the digital mode in our bank. We have onboarded 542,000 CBDC customers and 8.418 million transactions done through the CBDC app till September 30, 2025. We are promoting financial inclusion through digital channels with our comprehensive do-it-yourself SDG journey. DG MSME loans, E Mudra loans, EPM Vishwakarma, and DG Suriyagar are all digital loan products. We have launched digital journeys for Dairy Kisan credit card, tractor loan, revamped KCC, renewal of Kutela, and E loans against digital loan against securities during the quarter. We have planned to launch a unified solution to streamline our more than 100 digital journeys very soon. We are also looking forward to revamping our internet banking and mobile banking applications. The bank is focusing on the business of supply chain financing and has done tie-ups with most of the leading players in the automobile industry for financing their dealers through our dedicated supply chain management vertical. The bank is committed to enhancing our fee-based income and current account balance through the rapid rollout of cash management services. The bank understands the potential of the credit card business and will launch its premium metal card, PNB Luxura, with a target market of HNIs, high-end professionals, and affluent business owners. Our bank has adopted a new HR ecosystem driven by Project Uran. We are undertaking this project in two parts, namely digital performance management system and capacity building. Under digital performance management system, careers of employees are being revamped to make them more business-oriented and impact-driven, ensuring a stronger commitment and alignment with the strategic objectives and operational goals of the bank. Under capacity building, we are undertaking numerous steps involving leadership development programs, Gen AI learning chatbots, and comprehensive skill development programs for employees. Punjab National Bank remains focused on strengthening its core business fundamentals. The bank is prioritizing an increase in the CASA share with total deposits and enhancing the RAM portfolio in total advances, which will collectively support improvement in net interest margin and overall profitability. Containment of slippages and robust recovery efforts continue to be the key priorities to ensure asset quality stability. With ongoing digital and HR transformation initiatives, the bank is well positioned to achieve sustainable growth in the business and profitability. The deficit has strengthened significantly with a substantial reduction in bad assets, with higher provisioning coverage. Going forward, the bank aims to further enhance its market share across all the segments. Thank you very much and wish you all a very, very happy Diwali. I am open for any questions or any queries, any clarification related to our performance highlights. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on a touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Ashok Ajmera with Ajkorn Global. Please go ahead. Thanks for giving this opportunity to ask the question first. Sir, at the very outset, Chandra sir, we are very, very happy to tell all of you there in Punjab National Bank, all the top management and the other people who are there, a very happy Diwali in advance and a prosperous New Year. Thank you. Thank you very much, Chandra sir, to you and your family. Sir, and compliments for yet another good quarter for the good setup numbers, sir, especially on the profitability front. You have maintained your good operating profits. Thanks to the new tax regime, even the net profit is also quite sizable because of the lower tax impact in this quarter as compared to the last quarter. Having said that, sir, my first question is, or rather, a little concern is on the credit growth. The credit growth for the annualized basis is 10.14%. If you look at the current six months, like only five and a half months are left for the current year now, FY26, you need to, in order to meet your target of 12%, you will have to sanction and disburse almost about INR 80,000 crore in the remaining five and a half months or six months. Are we on target? Secondly, what is our sanction book pipeline and the proposals in pipeline through your MBG clearances and other things, and how confident you are in achieving this number of INR 80,000 crore remaining amount to meet your target? This is first on the credit front and the composition of the corporate and the retail book in that. That is my first question. Second one, sir, this Canara HSBC Life IPO reduction, our percentage has come down to 13% from 23% because of that IPO. This has happened in October, I think, the second week or so. Any adjustment or any impact was there in the September quarter on account of the sale of shares or reduction through the IPO? Any financial impact on the bank books? Thirdly, sir, this other income has gone down in this quarter, and mainly due to a lesser recovery in the return of from the return of account to INR 854 crore from almost INR 1,200 crore in the last quarter, and the fee-based income also going down to INR 1,685 crore from INR 2,250 crore. Some color on that. What is the reason? In the next six months, how are we placed on that? One is, sir, in this round is on the giving some, I mean, full information about the SMA number because whatever little time I got, we could see that only SMA 2 numbers are only given, which are INR 1,873 crore versus INR 1,596 crore in the last quarter. The full color, the entire SMA picture, where do we stand on 30 September 2025 on SMA front so as to assess the asset quality temporarily now? These are my few questions. You have done well on the cash recovery and upgradation, sir. I must compliment. Going forward, what are our recovery targets? This is also, if it may be added, sir. Thank you very much, Ajmera sir. First, I will touch your first question, that is the advances growth. In the advances growth, if you see the retail advances, we have grown by 18%, agriculture 13%, MSME 18.6%. Now, the corporate loan book in this particular quarter has grown with 7.9%. If you compare the corporate loan book growth in Q1 and Q2, there has been a substantial improvement that has happened. QOQ in the corporate loan book itself is 3%. That was one area which was a concern for Q1. Going forward, definitely, I am seeing a lot of disbursement should happen in the corporate loan book. With all those things, we have already given a direction of 11% to 12% in the credit book, and 100% we are going to achieve this. You have asked for what is the total pool which is available, and I will share that. Last time I have shared to all of you is that INR 1,600,000 crore was the total sanction book for which the disbursement was pending. Now that book has gone to INR 1,78,000 crore. This is not NBG. These are all, it is approved, and we have sanctioned, and the disbursements are pending. In this, around 40% to 45% we have given the project loan. You know that disbursement takes in the one to two years' time. All these disbursements are going to happen in the system, and we are looking forward for a good corporate loan book growth. With all those things, I'm expecting that definitely 11% to 12% credit growth is possible, and we are going to achieve that. Next, your question was the composition of the RAM and the corporate. We are putting a lot of focus on the RAM book. This quarter itself, it has touched 50. The RAM share is 55%, which we are going to improve to around 57% to 58%. To that extent, we are going to reduce the corporate loan book. In the long run, our goal is that our RAM percentage should touch 60%, and corporate loan book should come down to 40%. With all those things, you are seeing the operating profit being up now. The first time we had crossed INR 7,000 crore last quarter. In this quarter also, we have maintained that operating profit. Third, your question was Canada HSBC Life. In fact, we are getting INR 950 crore out of this 10% dilution. Nothing has been factored in the September quarter. All these things we are going to factor in Q3. TW recovery, yes, TW recovery in this particular quarter has been muted, but overall recovery is INR 3,930 crore. Almost we are touching INR 4,000 crore of recovery. In this particular quarter, there are certain accounts, and you know the recovery, you target certain things, and it happens sometimes it gets materialized in the subsequent quarters. There are many accounts under the TW for which the advance stage negotiations have happened, and the proposals are in advance stage. I'm expecting that in this particular quarter, definitely the TW recovery will be in the tune of around INR 1,200 crore. With all those things, we have given the yearly guidance of INR 16,000 crore of total recovery to happen. We are on track. In this particular quarter, Q3, I'm expecting somewhere around INR 4,500 crore of recovery should happen in the entire system now. Your next question was fee-based income. See, first quarter always there will be a higher income will be there in the non-interest income and that too in the fee-based income category because the processing charges and all the yearly charges which we collect, all these things come in the first quarter of every financial year. Since our credit pipeline is strong and the corporate loan book is also growing, definitely I think the BG Commission, LC Commission, the processing charges, all put together, I think definitely we can see some improvement in the Q3 and Q4. SMA book overall, the SMA 0, 1, 2, all put together, irrespective of the amount in the bank is 5.54%. I think I have covered all your points. Thank you. Mr. Ajmera, please rejoin the queue for more questions. Next question comes from the line of Mahrook Adjanyar with Nuwama. Please go ahead. Yeah, hello, sir. Congratulations. Thank you, madam. Sir, I had a few questions. Firstly, what is your outlook on margins? Right? Because they fell around 10 basis points on a global level QOQ. How do we see it from your end if there are no rate cuts? Do they stabilize? Do they improve? Will there be a change in mix, more corporate bringing down margins? How do we view margins in the next two quarters mainly? Because there'll also be downward MCLR repricing. That's my first question. Okay. See, madam, in fact, in my earlier conversation also, I had mentioned that Q1 and Q2 really it will be some challenges because of the 100 basis point rate cut in the repo. 49% of our book is priced with the EBLR. We have passed it on immediately after the announcement of the rate cut. Repricing of our deposit has already been started. If you see, our cost of deposit has also come down substantially. We are going to see those benefits happening in Q3, Q4. Last time also I had indicated that Q3, Q4 onwards, definitely there will be some good movement happening in the NIM front and NII. Okay, sir. Sir, there were reports on an ILFS-based ILFS account being upgraded this quarter. Have we taken that as an upgrade in costs and in NPL movement? Yes. That account has been upgraded, but the provision is not yet released. I think we may take this release in Q3 or Q4. Okay, you are permitted to release it, but it's your choice that you didn't. Yeah, yeah. Okay, sir. Okay. Thank you, sir. Thank you. Thank you. Thank you, Madam. Thank you. Next question comes from the line of Piran Engineer with CLSA. Please go ahead. Yeah. Hi, sir. Congrats on the quarter. Just going back to Marolf's question on NIM, can we see maybe 5 to 10 bps per quarter NIM improvement for the next two quarters? Conservative estimate, I can tell you that at least the 5 basis point improvement definitely it will happen in the Q3, and around 10+ basis point in the Q4. Because by that time, my entire one-year deposit will be repriced, and we will have the benefit of the entire thing in the full financial year. At least 15 bps over two quarters cumulatively. Yes, yes, yes. Definitely. Understanding. Okay. That's good. Just secondly, on OpEx, it was a positive surprise with cost cutting. I think earlier you had guided to INR 8,000, 8,200 crore quarterly OpEx. Anything to read into it? It came much lower than that. We are very, very mindful. At the top level at the Head Office level and the field level, we have sensitized about all those things. Wherever it is required, those expenditure only we are doing it. That is the reason it has been brought down now. Okay. That's good to know. Thank you and happy Diwali to the team. Happy Diwali to you also. Thank you. Thank you. Next question comes from the line of Harsh Modi with JP Morgan. Please go ahead. Hi. Thanks. Just one question, sir. How do we think about your ROA and ROE targets over, let's say, next in FY26 and FY27? As a management team, what are the key metrics you are looking to solve for for FY26 and 27? Thank you. ROA, there has been an improvement in this particular quarter, and we have already touched 1.05%. I'm expecting that there will be further movement in the ROA front. Somewhere I think in Q3 and Q4, it should be somewhere around 1.10%. We should definitely be in a position to touch that. The two, three other points, like you asked about the ROE, we are already at 17.95%, which compared to last year, if you see at the same time, a good improvement has happened in that particular quarter. Is the target to increase ROA year on year over the next two years, or would you be comfortable staying range-bound at the current level of ROA for FY26 and FY27? The reason I'm asking this is some of the comments from policymakers suggest there is a renewed focus on increasing returns at the PSU banks in India. To what extent that boils down to your targets, that's what I'm after, sir. Thank you. See, why we are all bullish about the ROA going forward is that with the existing 100 basis point rate cut in the repo and which we have factored now, with all those things, we are at 1.05%. Going forward, when the entire my deposit will be repriced, I am expecting that my NIM and the NII also will improve. Overall profitability is also likely to improve. I'm expecting that somewhere in the range of in this financial year, we will be touching around 1.10%. Going forward, definitely there has to be some improvement over that figure. I cannot give you the actual number, but definitely it will be more than 1.10%. Awesome. Thank you so much. Thank you. Thank you. Next question comes from the line of Ankit with ANB Investments. Please go ahead. Hello. Yes, please. Sir, on your number, sir, slippages have increased in this quarter. Any reason, sir? Next back quarter, you have said some one-off accounts, but this time, quarter on quarter, it has increased. How is the pattern going? Can you please explain? Pattern is absolutely there is nothing to worry about the slippages. If you see this quarter also, the slippages is only INR 1,900 crore. Last year, last quarter, it was INR 1,880 crore. We are in the range of around INR 1,800 to 2,000 crore. Last year, during the same period, our slippages were more than INR 2,100 crore. Slippages are fully under control. With a loan book of INR 11,69,000 crore, as of now, the slippages, if I annualize this, it comes to 1.71%. The guidance we have given is less than 1%. We are well within the guidance, and we are well under the control under the slippages management. I don't see any challenge happening anywhere now. Okay, sir. How are you seeing the business momentum among different verticals like energy sector, steel sector? Are their NPAs increasing, or how is the sentiment of the customer? Are they willing to invest or willing to take loans? What is the environment currently in the business economic environment? See, first of all, I will tell you the total loan sanction for which we are waiting for the disbursement to happen in a phased manner. That amount is INR 1.78 trillion in our bank as of today. I'm expecting that all those disbursements will happen, and this constitutes the various segments of the corporate loan book now. We are expecting that there has to be a good corporate loan book growth in Q3 and Q4 because of the sanctions which are already there. What we are seeing is that the overall growth which is happening in the retail, agri, and MSME, that is in the range of around 15% to 17%. Like MSME is growing at more than 18%. 18.8% was this quarter growth now. Retail is growing more than 17%. Agri is growing at 13%. All those things, still, the GST impact has not been factored because GST rate cut in September. Overall, the GST rate impact also I'm expecting that on the RAM advances book will come to 1% to 2%. Overall, the outlook is very bullish, and there is no dearth of proposal happening. Second important factor is as of today, none of my corporate book is even appearing in the SMA 0. That is the quality of the corporate loans which is happening in the system now. Sir, I'm asking like sector-wise, like energy sector, which sector are you more bullish, like energy, steel, or infra? How advances are you seeing in different, different sectors like this? Like in energy, you have tied up with a trade-off for loans. I will give you the figure also. See, like infrastructure, we are growing at more than 9% YOY if you see. Renewable energy is one of the champion sectors for our bank. There also, our growth is more than, you can show that slide. Sector-wise. Sector. There are proposals from the infrastructure, the road projects, even the renewable energy, even the steel sector also. We have got some two, three good proposals now. All put together, there has been a good traction and good proposals coming from across the industry now. Thank you. Mr. Ankit, please rejoin the queue for more questions. Next question comes from the line of Ashley Sange with Kotak Securities. Please go ahead. Hi, sir. Good afternoon. Sir, I have a few questions. I hope I'm audible. I'm just listing out the questions for you upfront. Firstly, if you can share your assessment of the expected impact from the ECL transition. Secondly, if you can share the SMA 1 and SMA 2 book overall. Thirdly, if you can elaborate on the large NPA provision reversal which you had and why have you added to the buffer of other provisions. The fourth one, your guidance. Just wanted clarity on the guidance which you have given for ROA. Did you say 1.1% for FY26 because your first half ROA is about 80 basis points? Lastly, on AS15 provision, that has declined nicely this quarter. Do you think you are well provided there on AS15? What is the expected run rate going forward? Yeah. First, I will tell you about the ECL transition. The final framework is yet to be prepared, but we have calculated the stage one, stage two, and stage three. The stage one, almost the same provision is there, which is there in our standard assets. I don't see much challenges happening in the stage one. Stage three also, since we have 96% PCR, stage three also, there is absolutely no challenge. Stage two, there is an elevated provision, and 5% provision requirement is there in the different sectors. Overall, all three sectors put together, rough estimate is in the range of around 75 to 80 basis point impact will come on our CRAR. We are well prepared for that because anyway, that has to be spread for five years. Before that itself, we have enough cushion and the profit which is there in the system. I think 75 to 80 basis point likely impact which is going to come, we will be able to bridge those challenges and bridge those gaps. That is the first thing. SMA 0, 1, 2, all put together, we have 5.54%. That is the total SMA book. SMA 0 is 3.54%. SMA 1 is 0.86%. SMA 2 is 1.14%. Good. Third question is your NPA provision. See, we have the 96% provision ratio. Whenever there is a recovery other than the TW, then there is a large scale reversal of provision that happens. That is a write-back of provision. In this quarter also, there is a write-back of provision that has happened. In fact, in this particular quarter, we have provided around INR 588 crore. First provision has happened, but since the write-back of provision was quite high, and since we had the 96% provision coverage ratio, still we have made some provision, but there is a negative credit cost. That will continue in the system because of having a good provision coverage ratio in the system. That benefit will be there in the bank when anybody, any bank, is having good provision coverage ratio now. ROA, last quarter, it was muted because I had already explained also that we had moved one time, that we exercised from the old tax regime to the new tax regime. When you are moving from the old tax to new tax, the DTA calculation rework has to be done. There is a gap of 10%. The new tax is 25%, and old tax was around 34%, 35%. There is a gap of 10%. When you do the recalculation of your DTA book, to that extent, you have to provide for the income tax. That impact came for the INR 3,200 crore. If we would not have gone for the new tax regime, last quarter also, our profit would have been INR 5,000 crore. That is the reason our ROA in that particular quarter was lower than what you have seen in this particular quarter. Now going forward, since we have moved to the new tax regime, every quarter, we have the benefit of 10% in the operating profit now. That impact this quarter also we have seen. That is one of the reasons why our ROA is more than 1%. Going forward, that is going to continue. Your last point was AS15 calculation. Last quarter, when we had calculated for the entire year, this calculation is based on the GS, the government securities yield, what has happened. Actually, they calculate that entire year's things now. Based on that, we had some elevated provision in the last quarter. This particular quarter, you have seen that yield has gone up. That is the reason the provision has come down in the AS15. I don't see Q3 and Q4 any major challenge going to happen because of this provision which we have made in that. There is no question of, or you should not understand that we have made any less provision. Rather, at this point of time, if the same government securities rate prevails, we have made the full provision for the entire year. Thank you, sir, for the elaborate response. If I may, just a couple of clarifications on those points. Firstly, there was a large other provision which you have made in the P&L line. Some clarity on that one. Secondly, the ECL impact which you said, 75 to 80 basis points on CRAR, would you absorb it upfront, let's say, on the 1st of April through P&L? I understand there is a four-year window available for the capital impact. The P&L impact, would it come through immediately on the 1st of April 2027? That's the cost we need to take. We have not yet formalized what we are going to do. We will see how the cushion is there, how the profitability is there. We need to see all those factors because anyway, when the cushion is there for five years, depending upon the profit and the capital position, we'll take a call. If it is in our favor, definitely we will take a call and we'll do that. Maybe at the end of the financial year only, we will be taking that call. The first question on other provision, if you can give some. Other provision, that is ILFS. There is one account, ILFS, one account was there where the upgradation has happened in this quarter. That was the NPA account, and that provision has moved from NPA account to the standard assets. That is the reason you are seeing the other provision going up now. On the NPA provision, you have had a reversal, and then standard asset, you have added the provision. Is that correct? Yes, yes. Correct. That standard asset provision also, you mentioned to, I think, Gerald Marolf or someone earlier, that the standard asset provision also is likely to get reversed at some point. Absolutely. Because this was an NPA account, and still we have not taken write-back. We have not taken in our operating profit or the write-back of provision. That call we will take depending upon our position. Understood, sir. Very useful. Thanks a lot for answering all my questions. Thank you. Thank you. Next question comes from the line of Yash Agarwal with UBS Securities. Please go ahead. Yes, sir. My questions have been answered. Thank you. Thank you. Thank you. Next question comes from the line of Panch Solanki with RSP Inventors. Please go ahead. Hello, sir. Am I audible? Yes, yes. Sir, my questions are on PSB mergers which the government has recently announced. Is there any communication from the recent government to the bank or any internal news about that? I am also hearing from you. We need to wait and find out. Okay. Are there also, given new circular about the M&A finance, the bank is going to in that field also? That is a very good scope for all the leading public sector banks in the country, leading banks in the country. I had just done one calculation that last year in the 2023-24 financial year, total INR 10 crore worth of the merger and acquisition spend. In that, if you take the 40% debt component, that comes to around INR 4 lakh crore. Even if I am conservative, I estimate that 30% of that debt will be funded by a bank like ours. That amount comes to INR 1,20,000 crore of scope that is there in the merger and acquisition funding now. What we will do now, we are all some big banks. We will sit together and find out the strategy for that because we need to have a proper policy in place. This was earlier not permitted by RBI. We will definitely find out and we will go for a proper policy. In that space, definitely Punjab National Bank will play some bigger role in that. Okay. Thank you, sir. That's from my side, and happy Diwali to all. Thank you. Thank you. Wish you a very happy Diwali. Thank you. Next question comes from the line of Xuan Gao with Xuanfield. Please go ahead. Hey, congratulations on the good quarter. Just to follow up on the previous participant's question on the other provision, just want to clarify. The entire INR 1,500 crore provision there is because of the IRFS provision. The INR 1,500 crore was reversed out of your NPA provision, right? Your NPA provision shown on the slide is negative INR 600 crore. The actual NPA provision is negative INR 600 crore plus INR 1,500 crore. No, that one account provision which has moved from the NPA to the standard assets, that constitutes around INR 1.2 billion. 1,200 crore. 1,200 crore. That is one component is there. We have not factored it as a write-back of provision that has moved from NPA to the standard assets. Overall, the negative in the credit cost that you are seeing is INR 639 crore. In fact, we have made a provision in this particular quarter also to the extent of INR 588 crore in the NPA accounts. That is the reason you are seeing that our provision coverage ratio has also gone from 96% to 96.7%. We have improved our PCR level also. Overall, our credit cost because of these things has come down and it has gone to the negative now. Got it, sir. INR 1,200 crore is that account movement. What's the other INR 300 crore in the others provision? You have that data? My CFO is there. I think he will just give you that. Sir, actually, this is a continuing provision to the extent of INR 187 crore, which we made, I think, probably during the COVID times, which is continuing. Apart from which, sir has supplemented that ILFS switchover from the standard to the other provisions is continuing, and the balances of the ILFS upgradation from the standard. Since we will be taking a call on the release of those provisions in the time to come, maybe quarter three or the current quarter or the coming quarter, we are continuing as of now. Got it, sir. Thank you so much. Thank you. Next question comes from the line of Vinayak Agarwal with Jefferies. Please go ahead. Good evening, sir. Thank you for the opportunity. Most of my questions have been answered. I have just one. If you could kindly clarify the estimated profit from sale of stake in Canada HSBC Life. That is around INR 900 crore. Okay. Thank you, sir. Thank you. Next question comes from the line of Yash Pacetti Group. Please go ahead. Hi, sir. Thanks for taking the question. Just one question, largely only a NIM clarification. If you could just, you know, see like 10 to 15 basis points of cumulative sequential expansion, what we have asked for. What proportion of deposits are still repriced? I've seen year to date, since over 4Q, we've seen around 18 basis points of benefit flowing in the cost of deposits. We're largely left with on the asset sides with the 27% of MCLR book. How much more deposit repricing would be available to us? See, around 60% of our term deposit, which was there for a maturity period of around four months, six months, and one year, that had been repriced. The remaining 30% to 40%, we are expecting that it will happen in Q3 and early part of Q4. That is the reason I am telling that those impacts we will be seeing on the NIM and the NII in Q3 and Q4. Definitely, there will be some improvement in the NIM and NII. Got it. With this lower guidance of 11%, after this particular quarter, the ask rate is slightly lower. Do we see any upward sort of risk to the guidance, or would it be higher than 11%? In credit, you are talking 11%? Yeah, in the credit growth, even given our expanded or increased sanction pipeline as well, considering that. Credit growth, see, in the RAM, agri, and MSME, all these things are happening at more than 15%. The MSME is 18%. The agri is 13%. The retail is 18%. Only the corporate loan book, which was very muted in the first quarter, was somewhere around 3.5%. In this quarter itself, QOQ is 3% and overall YOY is 7.9%. We have INR 178,000 crore sanction book for which the disbursements I am expecting to happen in Q3, Q4 onwards now. All put together, I'm expecting that, yes, there has to be some good growth. The moment the corporate loan book goes to 10%, I think my overall credit growth will be more than 12 to 13%. Okay. Got it, sir. Thanks. This is Varian. Thank you. The next question comes from the line of Sunil C. Choksi with Indus Equity Advisors. Please go ahead. Congratulations to Punjab National Bank management for a very stable and a positive result and outlook. Happy Dankritas and happy Diwali to all. Sir, my first question is you replied to M&A financing that big banks are working together, or is it a coordinated effort or IBA? Can you clarify what you mean by that coordinated or discussion? I think we will have to explore through the IBA also. Otherwise, also some big banks, four or five big banks in the country, we will be proposing to come together and do for financing to this particular area because the opportunities are very high and the scale will also be very high. If two or three banks put together, if we come out collectively, I think definitely we can take a bigger pie in this particular sector. It will be some joint lending or a consortium kind of a program. That's what I understand. It will be like that, definitely. In the same RBI meeting, also banks were permitted to lend for retail share advance up to INR 1 crore against INR 20 lakh IPO financing. Is bank planning because the margins are very stable at around 10% or in double digit, a little higher than that? Is bank planning to do anything on that product? We are planning to come into this particular area now. In fact, the IPO financing limit also for the individual per person has also improved from INR 10 lakh to INR 25 lakh. We are seeing the good IPO happening in the country. A lot of the new corporates are coming in the IPO market. I mean, we are seeing a good opportunity. We will be coming out with a separate policy for this financing. You highlighted in your opening remarks and even after in Q&A that your retail, RAM, other sector growth all above 15%, and you see that sustaining. Your credit corporate growth pipeline sanctioned but unavailed is approximately INR 1,80,000 crore. By any chance, can you indicate what kind of sectors and where are you seeing this green shoot other than renewables, where these advances are concerned? One is that infrastructure sector, like other than renewable, if I can talk, the telecommunication also, we have got some proposals. Roads and the ports, ports also, there are some proposals there. We are given how power we are given now. Even one data center, that is one area that has picked up very well, and we have got some good proposals in that. Engineering sector, I think various sectors put together, this book comprises of many sectors put together. This amount is around INR 1,28,000 crore. Is it more of private sector capex or public sector? No, no. Mainly private sector CapEx. We are putting a lot of focus on the project financing because that is one area PNB had the niche, and we are coming back in that particular area. 40% of this particular book is the project financing. What is the digital spend likely to be this year, specifically related to RAM and retail book? Digital? What is your digital annual budget and spend for the year? Digital, digital, yeah. For this year, financial year, both CapEx and the revenue expenditure put together is INR 3,500 crore, is the budget for this particular financial year. How much have we spent in first half, sir? I think around 25 to 30% we would have done that. Yeah, 30% we have achieved. You also said that your margins would improve by 5 bps in the current quarter and 10 bps in the fourth quarter. This is keeping in mind advances at current number. Do you see, led by Government of India measures where GST was concerned, this M&A activity is concerned, some other new products are concerned, margins can have a higher uptick compared to your estimate? I think for Q3 and Q4, the estimate which I have given, I will be holding to that level. We can see all those impact in the 2026 to 2027 financial year going forward. Thank you for answering all my questions, and good luck and best wishes to Team PNB. Thank you. Happy Diwali. Thank you, sir. Wish you a very, very happy Diwali. Thank you. Next question comes from the line of Abhishek Agarwal with Investech. Please go ahead. Hi, am I audible? Yes, yes. Please go ahead. Thanks for taking my question. Last quarter, you had mentioned that the AFS reserve outstanding is roughly INR 800 crore. I just wanted to know what would be the number this quarter? 700 crore provision, which we have made in this particular quarter now. The outstanding amount is INR 700 crore? Yeah. What is your outlook on treasury profit from here? How do you think the management would use treasury as a lever to support ROAs? See, if you see our performance in the treasury income, Q1 and Q2, both the quarters we have maintained a good stream now. INR 1,800 crore was the treasury profit in Q1, and in this particular quarter also, the treasury income all put together is around INR 1,800 crore. The same flow is there in this particular quarter. Q3 also, I think let us wait and see how the bond movement happens. Depending upon the bond movement, I think we can find out the actual what is the traction that is going to happen. Somewhere definitely around INR 1,500 crore, that is a minimum treasury gain we will be holding in. Got it. That was my question. Thank you, and best of luck and happy Diwali. Thank you. Thank you so much. Thank you. Next question comes from the line of Sukrit Deep Patil with Eyesight Fintrade Private Limited. Please go ahead. Good afternoon to the PNB team. My question to you, Mr. Chandra, is PNB has outlined its focus on digital transformations and expanding the retail penetration. What are the biggest execution challenges you foresee in delivering this, especially in terms of legacy system integration and customer onboarding and talent readiness? How is the bank prepared to overcome these challenges by still maintaining service quality and regulatory compliance? Yes, sir. Thank you. Yeah. See, the bank is coming out with a lot of digital initiatives, but the biggest challenge is how to educate the people, how we can inform them that, yes, these are the channels which are available. That is one of the biggest challenges. For that, we are coming out with the initiative. That's also one of the digital channels which we are using. We have launched a GenAI-based Pihu chatbot at our website and the other channels, the customer-facing channels. There, the people can ask anything, and the Pihu will give the reply that what are the things that need to be done. That is one thing. Second, we are moving out in the field, conducting the outreach activity. There also, we are bringing out this initiative which the bank has come out. Creating awareness through the social media, through personally, physically reaching out to the people, and making them comfortable that, yes, this is a very, very easy and convenient way of doing the things now. These are the ways which we are popularizing it. The third important factor about the robustness of our system and the legacy system which you are talking about, in fact, we are shifting the data center to the new center at Gulgam, where infrastructure is world-class now. Almost infrastructure is ready. Somewhere in the month of March or April, we will be shifting our entire data center with a very robust cybersecurity framework. Our own private cloud space is there. That center will enhance the legacy system also. The speed with which we are doing the business, I think that also will go up. Okay. The final question, coming to credit growth. Now, with credit growth picking up across MSME and retail segments, how are you balancing growth with risk management, especially in the areas of unsecured lending and stressed sectors? What are the internal frameworks PNB is focusing on to secure your portfolio's health? Unsecured market bank is not very active. We are doing unsecured lending only to the, there are three segments. One is that the personal loan. In the personal loan also, it is restricted to those people whose salary comes to the bank. The classification is unsecured, but it is fully protected. We don't see any much challenge in that particular segment. Second unsecured loan is the education loan. There, you have the guarantee from the government also is there. That portfolio is also behaving very well. We don't see any much challenge in that. Third portfolio is the credit card business. That portfolio is very, very stable. I don't see much challenge happening because of the unsecured advances of our bank now. I think this is good enough guidance. I wish the entire team happy Diwali and best of luck for the next Q3. Happy Diwali to you also. Thank you. Thank you. Next question comes from the line of Srijit Nair with BNK Securities. Please go ahead. Yeah. Hi, sir. Can you hear me? Yeah, yeah. Please go ahead. You mentioned that INR 1,200 crore of NPA provision has moved to standard asset provision. Did that hurt? I correct? Yes, yes. These provisions are against which accounts? If I can. This is one account. One big account was there in that particular account. It was a very legacy account which got upgraded. We are holding the provision in that particular account. Okay. This is not ILMFS. You know the things. Thank you. Okay. Okay. Secondly, you mentioned that treasury income would be around INR 1,500 crore. This is for every quarter, are you saying? Yeah, every quarter because Q1 also we had INR 1,800 crore of treasury income. Q2 also we have around INR 1,790 crore, so almost INR 1,800 crore. We have enough book under that treasury. INR 5 trillion book is there under the treasury. We will be able to at least make an income of INR 1,500 crore in every quarter. Okay. That's all from my side. Thank you, sir. All the best. Thank you. Thank you. Next question comes from the line of Ashok M. Ajmera from Ajcon Global. Please go ahead. Thanks for giving this opportunity again. Sir, very, very exhaustive replies and very satisfactory replies of all my colleagues, and you have covered almost everything. Just one small little feedback. Yes, please. From you. Sir, because of the old past legacy of Punjab National Bank and the both issues which were there a few years back, we are into the still the gross NPA zone of almost about 3.5% now, though it has come down from 5% in Q1 2025 to now 3.45%. Do you intend to accelerate the fall in the gross NPA and any target on that so that we come in that comfortable zone of maybe below 2.25% or something? That even aging also provisions and other things also can be, you know, sovereign because of that. Second is overall your use. Some of the questions in between I might have missed also because I was on some other call also for some time. On the NIM, you know, the overall, sir, we are, I mean, from 3.07% in Q1 2025 to now today, we are at 2.60% going 2.92%, 2.93%, 2.81%, 2.70% and 2.60%. On these two, sir, if you can give some broader color on that and in which direction and how are we moving in that direction, sir. Yes, yes. I will touch first about the asset quality. First point is the net NPA percentage. If you see, we have come down to 0.38%. The guidance for this entire year is 0.35%. Definitely, we are going to do that. We will be well below 0.35%. Provision coverage ratio, we are at 96%. So well provided. Gross NPA, we are at 3.45%. The guidance for this entire year, what we have given is below 3%. We are going to achieve that guidance. Going forward, in 2026-2027, I think again we will come out with a new strategy. There, we will indicate how we are going to move forward. I am very confident that since for the last two years, quarter to quarter, if you see, the recovery in every quarter is higher than the slippages. In this particular quarter also, if I exclude the TWO part, still our recovery INR 2,700-800 crore is the recovery under the upgradation. Upgradation and the cash recovery, yes, which is higher than the slippages which has happened to the tune of INR 1,900 crore. Even if I exclude that TWO recovery and recovery in the interest income, still our recovery is higher than the slippages. This trend is going to continue. On our own, we are going to reduce that. The technical write-up, if you see in this quarter, hardly we have used only INR 1,200 crore of technical write-up. We have the net NPA-wise absolute number is only INR 4,400 crore. Our one-quarter profit is sufficient to take care of the entire net NPA, and we can make a zero NPA bank now. NPA-wise, we are well provided. Asset quality is doing very well. I told you that none of my corporate book is even in the SMS zero now. I think credit writing has improved. In my opening remarks also, I had mentioned that for the last five years, how my sanctioned book is behaving. Hardly the NPA percentage in the last five years' sanctioned book is only 0.40%. I think that gives you comfort that, yes, the book is behaving well. Going forward also, there will not be any challenge on our gross NPA and net NPA. Yes, sir. Second part, your question was NIM. Yes, the impact of the repo cut has already happened in Q1 and Q2. The repricing of deposit has already started, and more than, I think, a bigger book has already been repriced. I'm expecting that in Q3, around 70% to 80% of the term deposit of one year will get repriced. We will definitely have the benefit under the NIM and the NII in Q3 and Q4. That is the basis on which I'm telling that at least by 5 basis points, the ROA will improve in this particular quarter, Q3, and around 10 basis points in Q4. It's around 1.10%, 1.09% ROA. Yeah, it will be around 1.10. The NIM improvements are, again, 10 to 15 basis points? Yeah, around 15 basis points, definitely it will happen. Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of the question and answer session. I would now like to hand the conference over to the management for closing comments. Yeah, bank is doing very well for the last two years. Quarter to quarter, if you see the performance, there has been a consistency in the performance. The quality, the asset control-wise, asset quality, overall growth, I think we are all poised for a good performance, both in the top line and the bottom line. My request to all my analyst friends is that you should repose faith in our performance. We will continue to deliver better and better. All my good wishes and all the best for the Diwali festival to you and your family members. Thank you very much. Thank you. On behalf of Elara Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.