Ladies and gentlemen, good day and welcome to Punjab National Bank Q2 FY 2027 earnings conference call. 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 and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Aggarwal. Thank you, and over to you, sir.
Thanks, [Operator]. Good evening, everyone. On behalf of Motilal Oswal, I welcome you all to this call to discuss the 2Q FY 2027 results of Punjab National Bank. We have with us Mr. Ashok Chandra, Managing Director and CEO, along with his top leadership team, represented by Executive Directors Mr. M. Paramasivam and Mr. Amit Kumar Srivastava, to take us through the key highlights of the quarterly performance. I will now hand over the call to Mr. Sunil Kumar Goyal, Chief General Manager from the Strategic Management and Economic Advisory Division to take things forward. Over to you, Mr. Goyal.
Good evening. Now I am speaking up the disclaimer. Statements made during this call may contain 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 statement to reflect events or circumstances after the present date. Now I request , MD and CEO, for his opening remarks.
Good evening, ladies and gentlemen. First of all, I would like to touch upon the state of Indian economy. Indian economy continues to demonstrate a strong underlying growth momentum supported by resilient domestic demand, infrastructure investment, expanding services activity, and a steadily strengthening financial system. India recorded real GDP growth of 7.8% in the first quarter of 2026-2027, compared with 6.9% in the corresponding quarter of the previous year. Recently, MPC, in its meeting and World Bank in its India Development Report, has also revised the GDP estimates for financial year 2026-2027 to 7.1% from the previous estimates of 6.7% and 6.6% respectively. On the external front, India's merchandise exports grew by 17.85% YoY during the period April to August of 2026, reaching an estimated USD 215.91 billion.
The banking sector, categorized by historically low levels of stressed assets and strong profitability, is well-positioned to play a pivotal role in supporting and sustaining India's economic expansion. Coming to Punjab National Bank, we sustained a strong business momentum in Q2, marked by a decisive improvement in margins in line with our expectations, continued strengthening of asset quality, and enhanced operating efficiency. Our performance reflects the strength of our franchise and disciplined execution of strategic priorities. We remain firmly on track to deliver our FY 2026-2027 guidance. Our focus on retail, agriculture, and MSME continues to guide our efforts towards building a diversified and resilient advances book. At the beginning of the financial year, we have targeted to open 250 branches in this financial year, with particular emphasis on strengthening our footprint in the Southern and Western regions.
We have already opened 162 branches, out of which 119 are in the Southern and Western region. In parallel, we are accelerating our digital transformation to build a more agile, efficient, and customer-centric organization. Our investments in technology, process automation, and data analytics are aimed at simplifying banking journeys, improving service delivery, and enhancing productivity while positioning the bank to scale efficiency in a rapidly evolving banking environment. With this context, let me now turn to the bank segment by performance and key developments during the quarter. First, I will touch on the overall business growth. Our gross global business has reached INR 31.18 lakh crore, registering a robust YoY growth of 11.9%. Our advances grew by 14.7% YoY to INR 13.41 lakh crore, despite reducing IBPC exposure by INR 23,700 crore.
Excluding this impact, core advances registered a robust YoY growth of 17.4%, reflecting healthy credit demand and strong underlying business momentum. Our core RAM portfolio continued to deliver healthy growth, with retail advances excluding IBPC growing by 16.3%, MSME by 19.8%, and agriculture by 18.1% YoY, reflecting broad-based traction across key segments. Credit growth is well-positioned to maintain its strong momentum, supported by a robust sanction pipeline. Bank sanctioned INR 4 lakh crore in 2025/2026 in corporate credit lines. Further, in the first half of this year, we have already crossed more than INR 2.5 lakh crore of sanction in the corporate credit. Our pipeline credit is to the tune of INR 1.58 lakh crore, which provides a strong visibility for future credit growth. Global deposits of the bank have reached to INR 17.77 lakh crore with YoY growth of 9.9%.
Our CASA strategy is centered on deepening customer engagements and enhancing individual saving account balance, which grew by 8.1% YoY. In the beginning of SC&R campaign, we had targeted to raise USD 2.5 billion, and we have raised USD 2.7 billion in a calibrated manner. The same has been utilized for shedding off our high-cost bulk deposits and CDs. With a CD ratio of 75.5%, we have adequately balanced headroom to support planned credit expansion. Accordingly, our deposit mobilization remains measured and strategic, with a clear emphasis on optimizing the cost of funds rather than pursuing volume at any cost. I will touch upon the profitability. Improving profitability remains the bank's foremost strategic priority, as consistently emphasized across various forums. As indicated in our previous interaction, we had expected a sequential improvement in margins during 2026-2027.
Our Q2 performance validates this assessment with a substantial improvement in margins during the quarter. Domestic NIM improved by 10 basis points sequentially from 2.64%- 2.74%, while global NIM increased from 2.5% -2.58%. We expect this positive trajectory to extend further in the coming quarters, supported by disciplined balance sheet optimization. NII increased to INR 11,601 crore, registering YoY growth of 10.8% and sequential growth of 7.4%, surpassing our stated guidance of 7%. Operating profit is continuously above INR 7,500 crore mark from the last three quarters and stands at INR 7,532 crore for Q2 of this year.
Core operating profit, excluding recoveries from written-off accounts and treasury gains, grew by 29.4% YoY basis and 8% on QoQ basis. Core operating profit forms 79% of the total operating profit in Q2 of 2027, which was 64% in Q2 of FY 2026. Our fee-based income grew by 16% on YoY basis, reflecting continued progress in diversifying revenue sources. The bank recorded a net profit of INR 5,532 crore in Q2 with a YoY growth of 12.8%. The bank's overall earnings profile reflects a sustained focus on profitable growth and strengthening core earnings. Efficiency ratios. Our return on assets has consistently remained above 1% mark and stands at 1.05% in Q2 of this year. Our return on equity stands at 17.32%.
Our tangible book value per share stood at INR 111.94 as of September 30th, 2026, registering a significant improvement over INR 95.92 as of September 30th, 2025. Our cost-to-income ratio has demonstrated a consistent declining trend, improving to 50.45% in Q2 from 51.20% in Q2 of last year, reflecting our continued focus on operational efficiency and cost optimization. I will touch upon the asset quality. Asset quality continues to strengthen with the gross NPA ratio decline 2.55% as on September 30th, 2026, from 3.45% as on June 30th, 2026. The net NPA ratio has also improved to 0.25% as of September 30th, 2026, from 0.36% as on September 30th, 2025.
This sustained improvement reflects our disciplined credit underwriting, robust monitoring, and focused recovery efforts while keeping us firmly on track to achieve our FY 2026-2027 guidance on both GNPA and net NPA. We have not seen any material impact of geopolitical tensions on the bank's asset quality. Our slippages remain contained, SMA accounts are stable, and the overall credit portfolio continues to perform well. Our SMA 0, 1 and 2 all combined is all-time low levels of 2.50% of the overall loan book. Our PCR stands at 97.32%, which is well above our guidance of more than 96%. Total fresh slippages during the Q2 of this year is INR 2,395 crore, and our guidance for slippages ratio to remain below 0.9%. We are at 0.77%.
Total recovery stood at INR 2,805 crore for Q2 of this year, and our recovery is 1.17x of the slippages in Q2, reflecting our commitment towards improving asset quality. We have made additional floating provision of INR 125 crore on prudential basis, making our total floating provision of INR 2,560 crore. I will also touch upon the asset quality underwriting standards. From July 1, 2020 to September 30, 2026, almost 6.25 years, we have sanctioned around INR 15.97 lakh crore, out of which we have disbursed INR 14.09 lakh crore loans. The outstanding in these loans is INR 9.60 lakh crore, which is close to 71.60% of our total outstanding loan book as of today.
NPA in this book is hardly 0.42% of the disbursed amount. Our capital adequacy is 17.95% as of September 30 and compared to 17.19% as on September 30, 2025. Our CET1 capital stands at 14.44% against regulatory requirement of 8%. Tier 1 capital stands at 15.89% against regulatory requirement of 9.5%, including CCB, and Tier 2 capital stands at 2.06% as on September 30, 2026. More than 87.6% of the total externally rated advance above INR 25 crore are above A-rated. More than 52.4% are AAA -rated, which indicates our balance sheet strength from a risk point of view. Our digital transformation is reshaping the bank into a future-ready institution, driving superior customer experience, operational efficiency, and sustainable growth.
Our H2 2027, our digital sanction has crossed INR 41,500 crore, reflecting a strong momentum towards our ambition of adding INR 1 lakh crore during this financial year. On the transaction side, over 95% of the customer transactions are now digital, and there is 31% YoY increase in digital transactions. We have further strengthened our digital payment offering by enabling UPI services for our current account customers through flagship product, PNB ONE Biz mobile app. There is good traction in the PNB ONE Biz app, and this app caters to more than 4.14 lakh customers with more than 225 features. We remain at the forefront of supporting RBI and government-led initiatives in CBDC and digital public infrastructure. Going forward, we are expanding the application of AI and machine learning across operations, advanced analytics, risk management, and decision-making.
Anchored in responsible AI practices, robust governance, and regulated compliance, this initiative will further enhance the bank's agility, productivity, and customer centricity. PNB is taking a step towards becoming Quantum ready. We have deployed Quantum safe encryption in 256 of our customer-facing applications based on framework provided by NIST U.S. We are pioneering quantum technologies in banking through our Quantum Finance Innovation Hub at Amaravati, Andhra Pradesh, to advance cybersecurity, fraud detection, and secure digital financial services to strengthen the bank's technological resilience and future readiness. Now I will touch upon the most important aspect, that is the human resource. We are investing in targeted capability building through customized certification program in collaboration with IIBF. Bank has launched a large-scale artificial intelligence enablement program with Microsoft, which has trained 47,544 officers of the bank.
These initiatives have equipped our workforce with future-ready skills and enhancing technology adoption across the bank, and the bank has received Golden Peacock National Training Award for the year 2026. Through initiatives such as PNB Sparsh offering tele-counselling support for mental well-being, regular health checkups and wellness sessions, and childcare facilities, including crèche services, we are fostering a supportive and inclusive workplace that prioritizes employees' physical, mental, and family well-being. Our pan-India initiatives such as PNB Khel Utsav and PNB Kalotsav provide platforms for employees to showcase their sporting and cultural talents, fostering a sense of belonging and promoting a vibrant organizational structure. I will be concluding.
The bank is sharpening its focus on profitability by strengthening its savings individual franchise and drive calibrated growth in the retail, agri, and MSME segments to enhance margins, optimize the cost of funds, improve business mix, and deliver sustainable growth in the earnings and returns ratio. Our robust risk management framework, anchored in prudent underwriting, disciplined credit monitoring, and focused recovery, is strengthening asset quality and containing credit cost. Credit cards, cash management services, and supply chain finance are emerging as key drivers of diversified fee-based revenue growth. In parallel, the bank is expanding its growth avenues through the introduction of wealth management services and the comprehensive revamp of trade finance models aimed at enhancing customer value, strengthening service delivery, and improving non-interest income.
Anchored in a strong balance sheet, disciplined execution, and diversified growth drivers, the bank is well-positioned to drive sustainable profitability, strengthening return ratios, and deliver consistent long-term values to stakeholders. Thank you very much, and I am open for any questions or any clarification related with the financial performance of our bank of Q2 FY 2026-2027. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one. Your first question comes from the line of Kunal Shah with Citi. Please go ahead.
Yeah. Hi, sir. Congratulations for good set of numbers. Firstly, on the utilization of FCNR side, if you can just highlight in terms of how we have utilized it, was it more towards the repayment of the bulk deposits as well as maybe repayment of some of the low-yielding corporate advances? As there is no inch up either on the investments or on the cash side. How much of FCNR is, how it is utilized, that would really be helpful. Yeah.
Yeah. Thank you, Kunal. We raised USD 2.7 billion and whatever amount we have mobilized, to that extent, our high cost deposit in the bulk segment and the CD, we have already said now. So we have perfectly utilized the entire amount now.
Okay, so it is just replaced, and that's the reason we are seeing the decline in the cost of deposits.
Absolutely.
Because last time you mentioned like larger part of the repricing is already done, so I think entire benefit would have been because of the repair. Now how much is the bulk deposit or the high cost deposit in the overall deposit base now?
It is around 17%. Both bulk deposit plus CD put together.
Was this last quarter?
It was around 19%. Around INR 23,000 crore, it is already there in the public domain also.
Yeah.
We had the CD of around INR 60,000 crore and we have brought it down to INR 40,000 crore now.
Okay. Overall now in terms of margins, yield also appear to have improved. That is hardly because of the repayment of the low cost, maybe the corporate advances or anything much to read into this-
Yeah
-almost like 8 basis points increase in the yield on advances. Yeah.
Domestic yield has gone by 10 basis point, 2.64% to 2.4%. If you recall my last conversation also, I had indicated that PNB is working on the rebalancing of our balance sheet towards the credit portfolio. That is one of the reasons you are seeing the growth in the advances side. We are growing at around 13%-14%. We are setting the low cost, low yielding advances. To that extent, we are mobilizing the good portfolio now. I think coming quarters also you will see these things are happening and I think there will be improvement in the NIM further.
How should margins pan out? We are very comfortable to get into the guidance of 2.6%-2.7%, given that we are already at 2.5% right now.
Yes. I think in this quarter also we are expecting that with the strategy which we have put in place, there will be some good improvement. Now 25 basis points, the repo rate hike which has happened, I think that's also going to add. I was expecting around 7 basis points- 9 basis points addition should further happen in this particular quarter.
Our reset of this entire repo linked book 53 odd percent, that would happen say quarterly or how is it?
No, it is very same day, means the next working day. The day-
Yeah
-the day it gives whether it is increase or decrease, as per the policy, we need to pass it on to those things in the very next working day. Already that we have done it and 56% of our book is linked with the.
Yeah.
Yeah.
25 basis points of 56 basis points, that should clearly reflect in terms of yielding the next quarter itself.
Absolutely.
Almost like 10 basis points- 12 basis points impact would be there.
Minimum 7 basis point overall impact will be there in the NIM side.
Sorry, didn't get you. Overall 7 basis points, sorry?
7 basis point s improvement minimum it should happen in the NIM side.
Okay. On NIM it should be 7 basis points and on yield it will be more than 10 basis points.
Yield will be, yes.
Okay. Got it. One last question on the corporate side, after a long we saw some slippage. Anything to read into that or maybe it is a smaller amount, but maybe what that pertains to almost like 300 odd crores and that is leading to slightly higher slippages quarter-on-quarter. Any worry which we would see on the MSME or the corporate or maybe any of the retail portfolio given the Middle East conflict which is there. Yeah.
No, there is no impact of the Middle East crisis or the geopolitical tensions. I think it is one case and for a very long time we have seen any corporate loan is slipping to NPA. So I do not think any other stress is there in the system now.
This is domestic?
It is domestic.
Okay.
Yeah.
Thank you.
Thank you, Kunal.
Thank you.
Thank you. The next question comes from the line of Chanchal, an individual investor. Please go ahead.
Hello.
Yeah, please.
Hello.
Yeah.
My question was basically on the write back. I say this quarter the provision are only 9%, right? Despite you have INR 1,817 crore of NPA provision, an additional INR 1,150 crore standard of provision. From where does this few thousand crore of write back comes from? Is it one time and you recover INR 50 crore parts to your retail requirements?
See, INR 125 crore we have kept as a floating provision. There was a write back to the extent of around INR 148 crore. Write back of provision is there. We have made some additional provision also to keep the Provision Coverage Ratio intact. All put together, it is INR 817 crore provision we have made in the NPA book now.
Then my question was basically on the write back. Is there any write back of close to INR 2,000 crore? It seems like it is there.
No. Write back of INR 2,000 is not there.
Okay. I think the other question of slippage was already answered. I also see there is a slippage increase in agriculture sector, right? When I see there is a dotted slippage happening in Maharashtra and Andhra. Do you see further stress in this particular segment?
As of now, stress is not there, but yes, you are right. I think we need to be very careful and team is working on that. The larger scale connector program with the farmers that we have organized now in all the geography wherever the agriculture loans is there. We need to be very watchful. Need to have very close liaising with our borrowers, and I think we will be able to navigate this.
Yes. Possibly my last question on your recovery. It seems that you are able to reach INR 5,600 crore. We still have a target of actual guidance more than INR 14,000 crore. Will you be able to reach that? How do you
Yes. In fact, we were expecting in this quarter to have recovery in the range of around INR 3,000 crore -INR 3,500 crore. But recovery always happens. Sometimes you initiate the process, but it slips to the next month or next quarter. I am expecting that at least in this quarter, the recovery should happen in the range of around INR 3,500 crore. We will be trying to reach that figure, around INR 13,000 crore of figure. But of course, it is a challenging figure. Somewhere around INR 12,000 crore -INR 13,000 crore definitely will be there.
Sure. Thank you so much, and congratulations for the best quarter.
Thank you. Thank you so much.
Thank you. Ladies and gentlemen, to ask a question, please press star and then one. Once again, to register for a question, you may press star and then one. Your next question comes from the line of Ankit Bansal with AB Investment Limited. Please go ahead.
Hello.
Please go ahead, Ankit.
Sir, okay. Sir, the question of slippages on the corporate loan. Sir, can you tell me from which sector that has been?
It is a road sector.
Roadways and infrastructure.
Infrastructure, yeah.
Okay, sir, roads. Okay, sir. Sir, you are doing your best to revive PNB, and your efforts have also been seen. Sir, what negative or what environment are you seeing that will affect the bank in a negative way? You are doing everything right, NPAs, slippage is provision, everything is under control. Bank is doing its best to perform at the highest level. What future negatives are you seeing that can affect the environment of banking that an investor can be careful of?
I can tell you that we are in the best of position. Not only from the PNB angle I am talking about, for the entire banking industry I am talking. See, when the economy is growing at 7.8%, and not only the Indian data it shows, even the World Bank report and the IMF has also confirmed that in 2026-2027, the GDP growth will be around 7.1%. If that growth is going to happen, and if the nominal GDP will be around 11%, it means that much opportunity is going to come in the country now. We always say that if 7.7%+ is the real GDP and around 11% is the nominal GDP, it means around 13%-14% credit growth should happen in the country. It is happening, it is getting reflected.
I will tell you that for the last 1.5 years, we are talking that, and really it is a geopolitical crisis is there. Earlier, two years back, the Russia-Ukraine challenges were there, and now the Middle East crisis is there. Globally, a lot of challenges are happening, and that is one of the reasons you see all the countries in the global, they are at the GDP growth of around 3.1%, whereas the country, India, is growing at this speed. I am expecting that and all the latest data also shows that all the retail, agri, MSME, lot of opportunities are going to come. And it is for every financial institution to participate and take the cake from the bigger size which is available in the country now. So what I am expecting, that growth momentum is going to continue.
Q3 anyway in every financial year, it becomes a very busy season for the bankers. That is the best season for everybody now. I am expecting that a further 1% or 2% growth should happen in the credit side. And since the repo hike is also there, so there will be momentum and there will be growth in the NIM and the NII also. All put together, a lot of opportunities are there in the system now.
Okay. Sir, have you used that INR 900 crore provision that you got right back?
INR 900 crore, which one particular account you are talking about?
Yes. That you have not utilized from the quarters, no?
Yes.
Have you utilized that?
We have utilized in this quarter, and you must have seen in the note also, we have mentioned that INR 1,150 crore, we have made a provision in the standard provision now. We have kept an extra provision, and we will utilize this at the time of migration in the ECL.
You have not utilized yet?
We have kept it as a provision in the standard account.
Okay. Thank you, sir. Thank you very much.
Thank you.
That is all my time.
Thank you.
Thank you. The next question comes from the line of Sameer Bhise with Dymon Asia. Please go ahead.
Thank you very much for the opportunity and congrats on the strong quarter, sir.
Thank you.
Sir, I do not know if this is covered earlier. Can you comment if we have further improvement left on the cost of fund side or cost of deposit side? How do you see the trajectory shaping up in H2? That is my first question, and then I will come to second up.
Okay. Cost of deposit side, September 2025, our domestic cost of deposit was 5.18%, which we have brought it down to 4.97%. June 26, it was 5.02%. Every quarter that is coming down, it means the incremental deposit which we are garnering, we are very mindful of the cost of deposit there now. We have kept it at a very nominal growth, which we are increasing and consciously we are keeping it at between 8% and 9%. This quarter, because of the SC&R deposit, it has gone to 9.9%. Otherwise, consciously, we are going to keep it between 8%-9%. Cost of Fund s also, we are well within that parameter. If you see the data, domestic cost of fund was 4.5% and 5.7%, and today we are at 4.34%. Even the global cost of deposit also, it has reduced from 5.18% to 4.96%.
Global cost of funds also from 4.58% to 4.35%. A lot of improvements have happened, and we are very mindful of garnering any high cost deposits. In this entire financial year, I am not talking about only Q2. If you see in the Q1 and Q2 put together, absolutely we have totally came down from the CD business. We have not gone for the mobilization of the CD now. PNB is putting a lot of focus on the profitability. In our every review of the zones and the circles, this is the top most priority. We start with the review of these parameters only. That is the reason, in one quarter itself, you are seeing the 10 basis point improvement has happened in the domestic NIM now.
No, sir, I appreciate the excellent execution. Wanted to understand how should one think going ahead, given the way rates are moving.
Going forward also, we are not going to increase the deposit rate. First of all, I want to clarify that, because enough liquidity is there and having 75% to CD ratio, I think we are well-placed to grow in the credit side to the extent of around 77%- 78% with the present deposit growth now. That is one thing. From the credit side also, lot of churning we have done in this particular quarter. In my remarks also, I have mentioned that 58,000 crore of low-yielding advances we have saved. In this last six months, we have sanctioned 2,50,000 of corporate loan book. We could have grown 17%, 18% in the corporate loan book. But what we have done now, we have replaced those advances, what we are sanctioning at good rates with the low-yielding advances.
The entire activity, I am going to continue in Q3 and Q4. I think you will find from all the profitability angles, bank will be well-placed after this end of this financial year.
Sure. Great, sir. Thank you. Second question is slightly more medium-term. You have also indicated that obviously the recovery number you will achieve it, I am sure, but it is bit of an uphill task. Next year when we have slightly lower recoveries and probably credit cost starts normalizing, how should one think of ROA for next year? Will we still be able to deliver at least 14%, 15% ROE on tangible equity? Is that a fair assumption to make?
Absolutely fair, and I will share some data to you. If you see our core operating profit, the core operating profit is growing at more than 29%. Last quarter also, the core operating profit had grown by 35%. Core operating profit, you know that it is excluding that technical write-off recovery and the treasury recovery. If that is picking up so well, and there is a consistency is there in that. If you see the June quarter, our total core operating profit was INR 5,531 crore, and in this quarter it is INR 5,971 crore. This anyway it is going to continue, it is not going to come down.
Further, the activity with the bank has started, and when we are putting a lot of focus on the high-yielding advances, I think this core operating profit will further go up, and that will be the strength of our bank as far as the profitability is concerned. The activity
Even if there is some bit of ECL inch up and lower, say, recoveries and lower trading profits, at least that number should be protected.
Absolutely. ECL has going to be no impact on our book now. We have done the ECL calculation. Last time I had told that we will have the detailed calculation also in place in the month of October, and we have those calculations. What we had envisaged earlier that it will be around INR 9,000-INR 10,000. Roughly it is going to come to around INR 8,000 crore now on the loan book.
No, sir, on ongoing basis, the run rate credit
Ongoing basis also, see, the credit underwriting, why the ECL has come down to the extent of around INR 8,000 crore, it is because of the underwriting standard of the bank which has improved now. I mentioned in my opening remarks, the last 6.5 years, the bank which has sanctioned and disbursed our NPA percentage is only 0.42%. To that extent, our provisioning requirement is going to come down. I am factoring that also in my credit cost to the extent of around 15 basis points. With that, our credit cost will still remain between 0.25%-0.30%. Rest assured that we are very mindful to provide the ROA of more than 1.04% to 1. 05% and the ROA around 15%-17%. Minimum it will be there.
Good, sir. Thank you, and all the best.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to two questions each and rejoin the queue for any further questions. The next question comes from the line of Jayant Kharote with Axis Capital. Please go ahead.
Thank you for the opportunity. Sir, just clarifying on the previous, you said, you are expecting a 15 basis points impact on a steady state basis from the ECL next year. With that, where do you expect your credit cost to be running at?
Around 0.25% to 0.30%.
0.2 5% to 0.3%?
Yeah.
Understood. Sir, if I take your second quarter, you are literally at zero credit cost, and you have done an ROA of 1.09%. So that 15 basis points means you have to compensate on the NIMs by at least that much. Are there other line items where you have identified that should compensate for this 15 basis points in your P&L?
See, when presents also, our credit cost is 0.25%. Still I am committing that with the ECL provision also, we will be able to maintain this. See, this 0.25% also, which is the additional provisions which we have made in the system. This quarter also, we have made extra provision of, in the NPA account itself, we have made extra provision of around INR 700 crore. Otherwise, there was a write-back of provision to the extent of INR 146 crore. So to keep the provision coverage ratio at around 97% and net NPA under control, we have made this additional provision. We have also made INR 125 crore extra floating provision in this quarter. With all those things, the credit cost is 0.25%. That is already been factored, and that we are doing every quarter.
Understood, sir. Sir, what is your total outstanding standard provisions which you can use against that INR 8,000 crore to offset?
That is INR 1,150 crore this quarter we have made in the standard account.
Yeah.
We have kept it now.
Total?
INR 2,560 crore, we have kept it in the NPA account as an ECL provision, extra provision. These two things put together, substantially it will reduce my burden on the ECL migration.
You might also make some for the next two quarters to make sure the transition is smooth.
Some amount we will do that, around INR 100 crore-INR 150 crore.
Understood. Sir, second question is on the cost of deposits at system level. We are seeing CD rates have hardened. Your SA growth this quarter is like 2%, 1.5%, 2%. While I understand you are willing to take the CD ratio up, but every time you press the pedal on deposit growth, it is going to be NIM dilutive unless the asset mix is meaningfully different. How do you address the structural problem, sir? The SA growth doesn't seem to be moving up.
There are two components. One is the SB individual and another is the SB institutional. SB institutional, it is there for all the banking industry, it is coming down because of the government deposits moving to just-in-time deposit to RBI. Going forward also, there will be decline in the SB institutional. What we are putting focus on the current account and SB individual. SB individual, we are growing at more than 8.5%. In this quarter also, we have grown at 8.36%. Last quarter, it was at 9.41%. A lot of activities we are doing it, in the SB individual and the current account. Current account, there has been a good growth and it was more than 10.76% growth was there in the current account. Almost 12% growth is there. Going forward, bank will put lot of emphasis on mobilization of these deposits.
Along with that, we are also mindful of mobilizing the retail deposit, which comes at a reasonable price. Incremental cost of deposit, bank is putting lot of focus and we are not in the CD business at all. We are also not aggressive at all in the bulk deposits. We are quite comfortable at this point of time to grow the credit around 77%- 78% with the present deposit source rate.
Your previous comment that you will not take hikes on deposits was about bulk, not retail. Retail CD, you are willing to take hikes to get that growth.
As of now, we are not going to change any rate in this particular month now. We will be still holding on because we are able to mobilize deposit. Every day we are monitoring it, and we are able to garner the deposit in the retail term deposit and SB individual.
Sir, last data keeping question. Sir, in the SA book, how much is individual SA and government SA split broadly?
I will tell you. The exact figure I will tell you. See, the total saving deposit is INR 5,042.90 crore. In that, SB individual is INR 4,82.70 crore. Institutional is only around INR 60.10 crore.
You are saying it is the institutional that is de-growing and individual is growing 8.5%?
Yeah. Individual has grown by 8.5% and institutional has de-grown by 3.84%. That is the reason overall CASA, it comes down and CASA growth is only 7.33%.
Great. Thank you, sir. Again, congrats on the excellent performance on the NIMs that you are heading since two quarters. Congrats.
Thank you.
Thank you. Your next question comes from Bhavik Shah with Goldman Sachs . Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, what is the LCR ratio for the quarter?
133%.
Okay. And sir, how much of the FCNR was self-funded?
Self-funded, it was around 30%. 70% was the leverage, 30% was self-funded.
Okay, understood, sir. How should we think about your recovery from written off? I understand INR 13,000 crore is the overall recovery that you are seeing for the-
Yeah.
Of that-
Around INR 900 crore. Yeah, INR 900 crore- INR 1,000 crore, I am expecting recovery should happen in the next two quarters also.
Okay. How confident are you to sustain this pace over the next two years?
Definitely, recovery, it will come down in the coming years now. I think next year, we will be keeping the target at around 12,000 crore of total recovery. What we are doing it, in fact in the last concall also I had mentioned, keeping in mind that recovery in the next two, three years will come down and going forward also it will come down because now the slippages are coming down.
Raw material is coming down, so definitely recovery also will come down. What we have done now, the credit card business, which we have accelerated, supply chain vertical, which we have started, headed by a general manager, and the third is a cash management services. These three activities last year, first we put the digital platform in place. It took five, six months to put in place and then November onwards we have started this activity. All these three activity has picked up very well in this financial year.
That is the reason fee-based income of our bank, if you see, it is growing at more than 16% YoY.
Understood, sir.
This year we have started another two activities. One is the wealth management services. I think from January onwards, that vertical will be in place. Another activity which we have accelerated is the trade finance model. We are putting it in the full entire thing on the new digital stack. Another two months' time, that journey will be through the mobile app and the digital facility. These five activities put together will navigate our profitability point of view when the recovery is coming down or the treasury will come down. I think these are the activities which will supplement our profitability.
Understood, sir. This is very helpful. Lastly, sir, in the treasury gains, is there any lumpy one-off gain during the quarter?
No, nothing.
Nothing from NSE or anything?
NSE, we had a small amount, so MTM was there in that, but very small amount.
Okay.
Not a substantial thing.
Understood, sir. Thank you, sir. That is from my side.
Thank you. Your next question comes from the line of Jai Prakash Mundhra with ICICI Securities. Please go ahead.
Yeah. Hi, good evening, sir, and congratulations on a good quarter. Sir, I have few questions. First on the clarification, first sir on ECL, right? You mentioned that what the transition impact needed is INR 8,000 crore, and we have already done INR 2,560 crore + INR 1,150 crore, right?
Yeah
Around INR 3,700 crore we have done and INR 4,300 crore is pending. Is that understanding correct?
Absolutely
INR 8,000 is still needed?
No.
Okay.
We'll be requiring only around INR 5,000 crore, that's all.
Okay. And sir, this is only related to loans, right? There may be ECL impact because of the HTM hardening. Have you taken that or that is outside of this remaining INR 5,000.
That is outside. This is what I'm talking about is only the loan book. And, yeah, rest still the discussions are going on with RBI, and we will see how it comes out, then we will take a call.
Right. So sir, in the notes to account, they have also mentioned that because this IFR reserves is no longer needed, some INR 4,000 crore have been added back. Could this be utilized towards, let us say, ECL transition or the HTM if you were to do MTM on HTM books?
Yeah, we will see that because as it is going to happen for the HTM transition then I think that amount will be required for that. We will use that.
Okay, sure. And sir, on your asset quality, one is if you are given the SMA 1+ 2 number is at 2.5%, which I believe has improved even from Q1, which was I think
Yeah
2.9% something. Do you have the number, sir, separately, SMA 1, SMA 2, and SMA 0 also?
Yes, I have. SMA 0 is INR 16,963 crore, SMA 1, INR 7,463 crore, and SMA 2, INR 8,984 crore. All put together, it is INR 33,410 crore. It comes to 2.49%.
All right. Okay. And sir, in the area or I think a few districts have been declared drought hit. Have you done any rough calculations, sir, if those will require restructuring, that is number one, or you are seeing a delayed recovery in those districts or states? Any preliminary assessment there?
No. As of now, if you see my SMA 0, SMA 1,SMA 2 book also, those challenges are not visible. You are absolutely right. We are very mindful of that. Those things may happen in the next two, three months time. What we have done now, we have accelerated the activity in the field, connecting with the borrowers, especially in the agriculture segment. A lot of activities in the field level we are doing it to have a very close monitoring. Our monitoring department headed by a CGM is looking into entire aspect. As in today when I am talking to you, still the things are fully under control. There is no alarm button to be pushed now.
Right. But sir, do you suspect any restructuring window to be opened or that has already been decided by SLBC?
No. There are, I think one or two states, they had decided some two, three months back. But the larger scale, we need to wait for some time now. Once the SLBC decides and the local government and the SLBC decides, then there is a proper framework is there as per the RBI guideline. We need to restructure those things and all those things will do that. But as of now, no such things have started happening now.
Right. Okay. And sir, sorry, just to come back on yields. Do you have the movement of AFS reserves? So AFS reserves for Q1 and at the end of Q2, and this loss profit of revaluation of investment, which is only INR 32 crores. If you were to strip off NSE, MTM, then how much would that be, if you can go in that number?
Yes. AFS reserve, I think my CFO is there, he will make a comment.
AFS reserves in this quarter was minus INR 128 crore. It was total INR 1,286 crore negative cumulative.
Right. Versus the last quarter?
Last quarter it was positive.
Yeah, but
INR 445 crore positive.
Sure.
Yeah.
Okay. Lastly, sir, this gold loan and the progress, sir. I think like you mentioned on CMS and other things, I wanted to check on gold loan. What is the quantum? How are we doing?
It is growing at almost 97%, 98% YoY.
That is right.
Yes. September 2025, the figure was INR 18,300 crore and now we are at INR 36,000 crore now.
Okay. Sir, you have the breakup between Agri and non-Agri of the gold?
It is 93%- 94% is Agri.
Okay. And the similar thing, sir, for PL and credit card, sir. Now I think credit card, has it reached decent size or PL also, personally?
It has started picking very well now. Today we are at around 11 lakh credit card. It was 6 lakh on March 2025, and March 2026 it was 8 lakh. Today we are at 11 lakh now. This area we are going in a big way now. You remember we had launched a very high premium PNB Luxura Credit Card.
Yeah.
That number has also crossed almost 27,000 number now. This activity, bank is putting lot of focus, a lot of higher management offers we have brought in now. I am expecting that from next financial year, this particular activity itself will contribute around INR 200 crore of fee-based income to the bank.
Right.
Similarly, the supply chain where the dealer and vendor financing which we had started, there also outstanding book under that supply chain is around INR 4,000 crore now. Sanction itself is more than INR 7,600 crore and outstanding is INR 5,000 crore now. Similarly, the cash management services which we have started. I think all those areas, bank has started putting a lot of focus. That is the reason if you see, last time also, we had a discussion that pre-operating the core operating profit now, excluding the treasury and the recovery, PWO recovery. That is growing at 29%. In this quarter also, growth is 29%. Last quarter also it was 35% YoY growth.
Correct.
I think this is one area which is going to bring a stability in our profitability.
All right. Very well said, sir. Thank you so much and all the very best.
Thank you. Thank you, Mundhra.
Thank you. Your next question comes from the line of Param Subramanian with Investec. Please go ahead.
Hi, sir. Congrats on the quarter. Thanks for taking my question. My question is on the provisioning for the quarter. Sir, the provisioning is only INR 97 crore, while you have shown the NPA provision is INR 817 crore. What is the balance, sir, which is the negative number here?
See, INR 817 crore constitute the provision which have been made as a floating provision, INR 125 crore for ECL. The remaining additional provision we have made in our NPA accounts to keep the provision coverage ratio at 97%.
No, I got that, sir. The P&L provision is only INR 97 crore. Despite having INR 817 crore NPA provision in the quarter.
This means there is a write back of provision from somewhere else. That is what I am trying to understand.
Yes.
How much is it?
Yes. I think INR 720 crore.
INR 798 crore.
INR 798 crore. INR 798 crore write back is there.
Got you. So this is coming from where?
That one account was there, a particular account, there the write back of provision has happened. One particular account.
Okay. NPA account, is it? Standard account or?
It is a standard account.
Okay. Sir, when you were speaking initially, you said the SMA book 0, SMA 1, SMA 2 is 2.5%.
Yeah.
That is including all ticket sizes, is it? Less than INR 5 crore, correct?
Yeah.
Okay.
All ticket.
Sir, if you could kindly break that up into, say, SMA 0, 1 and 2, if that is available.
SMA 0. Yeah.
Yes.
SMA 0, shall I give you the percentage number or you want the absolute number?
Sir, whichever way is convenient.
SMA 0 is 1.26%. SMA 1 is 0.56%, and SMA 2 is 0.67%. All three put together is 2.49%.
Okay, sir. Perfect. That is all I wanted to ask. Thank you so much and congrats on the call.
Sure. Thank you.
Thank you. The next question comes from the line of Ashlesh Sonje with Kotak Securities. Please go ahead.
Sir, just a few questions from my side. What is the retirement-related provision that you have made in the employee expenses line during this quarter?
I think INR 394 crore. INR 345 crore. INR 345 crore we have made.
Sir, what was the corresponding number last quarter?
Q1, it was INR 440 crore. INR 490 crore was there in Q1, and this quarter, we have made INR 340 crore.
Understood, sir. Sir, if you can share what is the average yield you have on the gold loan book.
It is around 8.6%.
Okay. Sir, you think this gold loan pricing, which is closer to the bottom end of the industry, do you think there is scope to increase it from this level?
The portfolio you are talking?
Yeah. When we look at the pricing offered by peers on the gold loan portfolio, it varies between this level of, let's say, 8.5%, 9% to as high as, let's say, 20% for some NBFCs.
Correct. Yeah.
Do you think you can take this 8.6% number, let's say, closer to 9% or 9.5%?
I think there will be some increase will happen now. Somewhere I think 8.75%- 8.9% we will take it now.
But that would be led by the repo rate increase, or you think beyond that also you can increase the spread?
No, repo rate will do that.
Okay, understood, sir. Sir, and just one last clarification. There used to be this INR 1,200 crore to INR 1,300 crore of provision from the IL&FS recovery, which was available.
Yeah.
Has that been fully written back now?
We have done now, and that is the reason we have made additional provision in the standard account now as a
Understood
part for keeping the ECL provisioning now. So INR 1,150 crore additional provision we have kept now in the standard account.
Perfect, sir. Thank you. Those were all the questions I had.
Thank you.
Thank you. The next question comes from Sushil C.hoksey with Indus Equity Advisors. Please go ahead.
Good evening. Congratulations to team PNB for excellent result.
Good evening, Sushil.
My question is more pertaining to growth outlook rather than the past numbers.
Yeah.
Do we anticipate based on what is credit pipeline, the current Indian economy situation, demand coming from infra, new sectors are emerging, whether it is GPU trade, financing for data centers, power transmission, that you will outbid the system by few higher basis points and even higher than your estimates?
In fact, absolutely you are right. A lot of activities are happening, and that is the reason last year our corporate credit sanction was INR 4 lakh crore. This year, already within six months' time, we have crossed INR 2,50,000 crore of sanction. It is not the pipeline. It is sanction we have given now. Still INR 1,57,000 crore of disbursements are going to happen of the previous year sanction and this year sanctions now. All those areas which you have mentioned, in fact, these are the emerging areas where the bank is putting a lot of focus now. So whether it is the infra power, renewable. In fact, renewable energy is the champion sector we have identified, and we are taking up good proposals under this particular segment. Road anyway, it is happening.
Petroleum and natural gas, even the chemical, fertilizer, real estate, data center, the food processing, we are getting some good proposal. EPC anyway it is there. REIT, InvIT, all those sectors, in fact, a diversified field, PNB is taking the exposure now. Actually our corporate loan book should have grown by 17%- 18% +. What we are doing it, that is the impact you are seeing on our NIM now, that there was some low yielding advances, which we are supplementing it with these new advances, which we are doing it at a higher price now. This we are going to continue in this quarter and the next quarter also. So have the full, the shedding of our low yielding advances and maybe from FY 2027 and FY 2028, I think the profitability will be absolutely there will not be any challenge.
How do you see your balance between RAM and corporate book by the year-end based on the current prospects?
I am expecting that somewhere around 58%- 59% by end of this year will be there.
58%- 59% on RAM and balance on corporate.
Balance corporate, yeah.
Then you are outbidding all your peers from a perspective of corporate book is concerned.
Yes. I think you are right. Many corporates they are still at around 40%- 41% now.
What kind of CD ratio you expect?
See, I am not averse to the corporate loan book. If I am able to get at the same return from the corporate loan book, we should be very reasonable in the corporate loan book growth also, as well as RAM growth also. Basically, our strategy is that wherever we are able to get the pricing which we have set for ourselves, that this is a return which we should get out of any proposal. Whether it comes from the corporate or the mid corporate or from the RAM, we are able to do that and we will be doing it. But with that, still we will be holding that around 58%- 59% RAM contribution should be there in the overall credit.
Sir, any view on M&A financing, GIFT City and your international book?
Yeah. M&A, very shortly we are going to have an MoU with one foreign bank, and I am expecting that one or two transactions should happen in this quarter. Even the GIFT City.
Any ballpark number?
I think give me some time, I will announce that. Let me have that clarity. Then GIFT City branch also, lot of activities we have started. Even for the aircraft engines, their maintenance, that funding also we have started there.
Aviation is one, any other sector where you are seeing Second thing is lot of global houses and domestic Indian industry are opening their offices in GIFT City because-
Correct
-we escape all the norms which the international guys enjoy through GIFT City.
Yeah.
Are we targeting some large numbers, businesses out of there for routing of finances and healthy balances to accrue in GIFT City?
We are planning now. We are planning. In fact, the MoU which we are going to sign with one foreign bank, I think that sort of arrangement, we are going to do it in the GIFT City also. You will see some good traction happening from the Q4 onwards.
Sir, a key question on this. If our ambition and PNB's prospects can be better than many peers, to emerge a winner, we need good talent on the sectors which traditionally public sector banks were not permitted.
Yeah.
We may need faster TAT for such transaction because M&A can't wait. You may have alignment with foreign banks, one or 10, that doesn't matter. Ultimately, Indian humans have to work faster on those services and capability to even engage in certain transactions. How are we creating a team to accept this kind of business emerging?
See, we have created a separate department in the corporate credit. First, I will talk about the corporate credit. Different verticals are there headed by an industry expert in the infra, in the renewable energy power sector, transmission. There are three, four important key verticals. Even the emerging areas we have created a vertical. That is the reason, in fact, we have gone for financing to the defense also, even for the hydrocarbon. I think another major activity which is happening in the country towards the drone and all. All those areas, bank has started creating the pool and the expertise to do the funding. Second thing, bank has put lot of emphasis on the technology side, whether the artificial intelligence, GenAI, or the quantum. We have declared, in the country now, that we are going to have the center of excellence in these three areas.
That we will work not only for PNB but for the entire financial community now. I think you must have heard that we are the only bank in the country who have started working on the quantum. I have mentioned in my opening remarks also that 200+ of our public-facing applications we have declared the quantum now. That has been certified by the NIST U.S.A. We have also created a Quantum Finance Innovation Hub in Amaravati along with the Andhra government partnership. That lab is providing. They are working on three use cases, not only for PNB, for the entire financial sector now. Lot of activities, lot of talent, the churning we are doing it. In-house we have good talent. We have more than 150 good software technology people are there.
I think you assign any job and within 48 hours, they can deliver the things now. That is the stacks and that is the talent pool Punjab National Bank is having now.
Sir, my last question.
Sorry to interrupt. Sushil sir, may I request you to return the queue for.
No, please. Let him. This is the last question. Sushil Choksey, please continue.
Sir, as all public sector banks have expedited their results earlier than most of the private sector banks, any view on consolidation which is a rumor in the market, or the committee is being formed for consolidation for the 2047 vision?
No, this I am also hearing from you.
Thank you for answering my question.
Thank you.
Good luck for the year. Yeah.
Thank you. Thank you so much.
Thank you.
Thank you. We will take the last question from the line of Saket Kapoor from Kapoor & Company. Please go on.
Yeah. [Non-English content] sir.
[Non-English content]
Sir, thank you firstly for the opportunity. Sir, thank you for the very exhaustive discussion on the operational numbers and clarifying all our doubts. Just to summarize, sir, H2 in all parameters looks to be a better quarter, a better half than what H1 was in terms of the operating performance and with more impetus on improvement in NIMs because of the repo hike. This understanding is correct, sir, on the summary part?
Yes. Absolutely right.
Okay.
Not only from the repo rate hike. In fact, I had mentioned in my last conversation also that since internally PNB has put lot of focus on the profitability. So without repo also, you have seen the growth happening in the NIM and the NII. 10 basis point domestic NIM has gone up without any repo impact. Now, repo impact which has come, that will add further fuel to increase the NIM now.
Okay. Secondly, when we mentioned in our P&L statement line number D, wherein we provide two line items, firstly, about the provision other than tax and contingency. Then the second line is on the non-performing assets. So that number is only mentioned for our understanding. It does not have any calculative impact in generating the profit. Can you explain the rationale, sir? Why is this INR 817 figure mentioned there, and it is not accounted for, if we take the profit and loss from Yeah.
My CFO will give you the.
INR 817 crore, the figure is, that is computed for the purpose of the credit cost. So if we are mentioning INR 817, that is the provision which has been accounted for computation of the credit cost and INR 97 which has been arrived at. There are other provisions in the form of the, not only in the loans, but in the investments also. As sir has already mentioned in the earlier question that there is a release of INR 798 crore in one account, which was in the form of an investment. NPA provision has been released. So netting that, it comes to INR 97 crore.
Okay. The total, sir, net of figure through P&L route is 97, but total provision of non-performing assets is INR 817 crore. That is what
Loans provision is 817. It is a part of the credit cost. Our investments provision is netted and reflected in the balance sheet investments schedule within schedule eight.
Okay. Lastly, sir, the impact of the hardening of our government securities for 10 years in this quarter, and going ahead, I think there are further 40 basis points, 30 basis points hardening of it. So how is our book positioned, and what will be its impact on MTM? Held to maturity and
There is an impact, a negative impact in this quarter also. Otherwise, the treasury profit would have been more than INR 1,700 crore because last year in the same quarter, INR 1,700 crore was our treasury income. So because of that MTM loss, the profit from the treasury is subdued now. But we are putting a lot of focus on other activity like exchange income, trading income. So I am expecting that around INR 700-800 crore things should happen in this quarter also. Let us see that how the yield movement happens. Maybe it is a transitory thing where the 7.41 G-Sec yield is there, but that rate will not continue for a long time.
That is correct, sir. But when we look at the P&L part for treasury income, our number for this quarter is INR 2,193 crore. That is quarter-on-quarter up only from INR 2,182 crore. What explains You are mentioning that there is a negative impact, so where is this accounted then, that INR 700 crore?
INR 753 crore is the income of treasury income.
Treasury income, yeah.
Treasury income is INR 753 crore.
Where you are seeing
Sir, I am just referring to the P&L segment result, wherein our treasury operations income is INR 2,193 crore. Our submission, page number 12. In our
Our CFO will speak to you, but our treasury income is INR 753 crore.
Our treasury contribution is INR 753 crore. What you are saying, then I will
He will speak to you.
I will reach out to you on this. I will note it down.
Okay, sir. My number is on the call. Kindly get back to me.
Yes.
Thank you once again, sir, for answering and explaining to us in a very detailed manner. Thank you, sir, and all the best. Yes, tell me.
Segment reporting.
Okay, tell me. Okay.
Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference back to the management for closing comments.
Thank you very much to all the esteemed analysts and investors. I think the faith which you have reposed in our bank, it is our responsibility to continue this momentum. And definitely going forward, like every quarter, I mentioned that we will maintain the consistency in the growth, profitability, and asset quality improvement. I think that trend will continue. And we are all committed. We are all committed to the important stakeholders of the organization, and we need to deliver the best, the thing which is going to happen in the future now. Thank you very much.
Thank you. On behalf of Punjab National Bank, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines. Thank you.