Source: piggy
After the bank announced a net profit for Q1 FY26 declining sharply by 48%, the shares of Punjab National Bank fell by 4% to ₹103.9. The bank reported a net profit of ₹1,675 crore against ₹3,251.5 crore in the same quarter last year.
Income and Expenses
Total income increased by 15.7% from ₹32,166 crore the previous year to ₹37,232 crore.
However, interest income net of interest expenses, or Net Interest Income (NII) increased by just 1% to ₹10,578 crore.
The detriment in net profit was primarily due to a one-time tax charge of ₹5,083.3 crore, much higher than the amount of ₹2,017 crore paid the previous year. Considering a consolidated perspective, net profit decreased by 52% to ₹1,832 crore.
Asset Quality and Profits
While the profits dipped, the loan portfolio quality witnessed an improvement:
GNPA went down from 5.73% last year to 3.78%.
In absolute terms, gross bad loans shrank to ₹42,673 crore, declining by ₹8,500 crore.
Net NPAs also went down to ₹4,132 crore, with the ratio improving from 0.60% last year to 0.38% this year.
Deposits and Loans Growth
PNB did well in growing customer deposits:
Savings deposits increased by 2.8% to ₹4,97,981 crore.
Current deposits advanced by 9.2%, to ₹70,656 crore.
The loan growth was moderate; however, the MSME sector did well.
Market Reactions and Analyst Views
PNB performance was viewed by two leading brokerages and under:
Antique Stock Broking rated it a Hold, with a target price of ₹123. It said that while the bank had stable operations, a high tax hit the profit. They expect return on assets (RoA) to remain in the area between 0.8% and 1%, and return on equity (RoE) to be between 12% and 14.5% for the next few years.
Motilal Oswal gave a Buy rating with a target price of ₹125. It said that the outlook for the bank’s loan growth remains stable, and that the credit-to-deposit ratio of around 69% is also healthy. Expectations are for RoA to reach 1.05%, and RoE to go up to 15.5%, by FY27.
Synopsis Although Punjab National Bank’s income increased and the quality of its loans improved, the bank’s profit decreased precipitously as a result of a high tax expense. Both deposits and loans are steadily increasing at the bank, particularly in the MSME sector. Investor confidence is still impacted by short-term issues, but analysts are optimistic about the company’s future.
