The PNB profit target is now out in the open. In a PTI interview published on October 18, two days after Punjab National Bank reported the best quarter in its history, MD and CEO Ashok Chandra said the lender wants to move from about ₹5,500 crore a quarter towards ₹6,000 crore. Asked when that would happen, his answer was short: “just wait for a few quarters”, ET reported.
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Where the PNB profit target starts from
The base is solid. According to the bank’s Q2 FY27 press release filed with BSE, net profit for the September quarter rose 12.8% year on year to ₹5,532 crore, from ₹4,904 crore. Net interest income grew 10.8% to ₹11,601 crore. Global net interest margin improved to 2.58% from 2.50% in the June quarter.
Operating profit is the odd one out. It came in at ₹7,532 crore, up only 4.2% on the year. We went through the full scorecard in our PNB Q2 results report, and the gap between profit growth and operating profit growth was the obvious question then too.
Treasury dragged, the core business didn’t
Chandra’s explanation is treasury income. It fell to ₹753 crore in the quarter from ₹1,769 crore a year earlier, a hit of roughly ₹1,000 crore. At the results briefing on October 16 he told reporters that operating profit would have crossed ₹8,500 crore if you added that shortfall back, BusinessLine reported.
The number he wants investors to watch is core operating profit, which strips out treasury gains and recoveries from written-off accounts. That grew around 29% year on year in Q2, after 32-34% growth in the previous quarter, he said in the PTI interview. If that pace holds and bond markets stop costing the bank money, the jump to ₹6,000 crore looks less like a stretch.
Loan growth is doing the heavy lifting
The press release shows retail advances (excluding IBPC) up 16.3%, agriculture priority-sector advances up 18.1% to ₹1,71,156 crore and MSME advances up 19.8% to ₹2,14,619 crore. Chandra expects the festive season to add another 1-2% to the retail, agriculture, MSME and corporate books in the third quarter.
Corporate lending is the interesting bit. Sanctions are growing at 17-18%, but the book on the balance sheet is growing only 10-11%, because PNB is letting low-yielding corporate loans run off. He said the bank plans to keep doing that through the second half of the year.
On guidance, Chandra told reporters that full-year credit growth is likely to be 13-14% against the earlier 12-13%, and the full-year NIM guidance stays at 2.6-2.7%. He also said the bank will raise $1 billion under its medium-term note programme, waiting for the right moment.
What we’d watch next
Asset quality gives PNB room. Gross NPA fell to 2.55% in September from 3.45% a year earlier, and net NPA to 0.25% from 0.36%, as per the filing. The open question is treasury. A bank this size can’t control bond yields, and one more weak treasury quarter could push the ₹6,000 crore mark further out even if the core business keeps compounding.
For a wider view of how state-run lenders did this season, see our Central Bank of India Q2 results, and our guide on how to analyse quarterly results explains why operating profit and core income matter more than the headline number.
Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making any investment decision.
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