Punjab National Bank (PNB) has released its results for the first quarter of fiscal year 2025-26. The biggest setback in the quarterly results has been on the profit front. The bank's net profit has decreased by approximately 49 percent year-on-year, reaching ₹1,675 crore, whereas in the corresponding quarter of the previous year, the bank recorded a profit of ₹3,251 crore. In the previous quarter (Q4 FY25), PNB's profit was ₹4,567 crore, indicating a significant decline on a quarter-on-quarter basis as well.
The bank has attributed this decline in profit primarily to a sharp increase in tax expenses. In the first quarter, tax expenses rose from ₹2,017 crore to ₹5,083 crore, directly impacting the net profit.
Increase in Bank's Income, Strong Operating Profit
However, the bank's total income witnessed a good increase. On a year-on-year basis, total income increased by 15.7 percent to reach ₹37,231 crore. Along with this, the bank's operating profit increased from ₹6,863 crore to ₹7,081 crore.
This clearly indicates an improvement in the bank's operational efficiency, but the increased tax burden and other factors have become obstacles in the path to profit.
Marginal Increase in Interest Income
PNB's Net Interest Income (NII), i.e., net income from interest, saw only a marginal increase of 1 percent in this quarter. It increased from ₹10,468 crore to ₹10,578 crore.
The bank has not yet disclosed any specific changes regarding the Net Interest Margin (NIM), but the data indicates that the bank has had to work hard to maintain a balance between loan and deposit rates.
Significant Improvement in Gross and Net NPA
PNB's asset quality has seen considerable improvement in this quarter. The bank's Gross Non-Performing Assets (GNPA), i.e., bad loans, have decreased to ₹42,673 crore. In the same quarter last year, this figure was ₹61,033 crore.
The Gross NPA ratio has also fallen from the previous 4.98 percent to 3.78 percent. Meanwhile, Net NPA has reduced to ₹4,132 crore, which was ₹10,167 crore last year. As a result, the Net NPA ratio has decreased from 0.60 percent to 0.38 percent.
Profit Hit in Banking Sector, but Improvement in Quality
PNB's results indicate that even though there has been a decline in profit, the bank's fundamental health has improved. The decrease in Gross and Net NPA and the strength at the operating level indicate that the bank has taken steps to improve its credit profile.
Status of Fee Income and Other Income
Regarding the bank's other income, stability has been maintained in this area as well. Information on income from fees, trading, and other non-interest sources has not yet been clarified, but the improvement in total income suggests that stability has also been maintained in the bank's diverse income sources.
Expected Acceleration in Loan Growth and Deposits
Although the bank has not given any separate figures regarding loan book expansion, it can be assumed, based on industry trends, that PNB has also achieved growth in the Retail and MSME loan segments.
The bank's hold on deposits has also remained b, maintaining a balance in the Loan Deposit Ratio.
Impact on Share in the Market
If we look at the market reaction after PNB's results, there was a slight pressure on its shares in early trading. Investors showed caution regarding the decline in profits, but the improvement in asset quality somewhat offset the losses.
