Punjab National Bank (PNB) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Punjab National Bank Q2 FY '27 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal. Thank you, and over to you, sir.
Nitin Agarwal (Motilal Oswal): Thanks Sagar. Good evening, everyone. On behalf of Motilal Oswal, I welcome you all to this call to discuss the 2Q FY '27 results of Punjab National Bank. We have with us, Mr. Ashok Chandra, ji, Managing Director and CEO, along with his top leadership team represented by Executive Directors, Mr. M. Paramasivam,
Nitin Agarwal (Motilal Oswal): and Mr. Amit Kumar Srivastava to take us through the key highlights of the quarterly performance. I'll 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.
Sunil Kumar Goyal (Punjab National Bank): Good evening. Now I'm sharing about 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 the 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. Now I request MD Sir for his opening remarks.
Ashok Chandra (Punjab National Bank): Good evening ladies and gentlemen. First of all, I would like to touch upon the state of Indian economy. Indian economy continues to demonstrate 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 26-27 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 26-27 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 2026, reaching an estimated USD 215.91 billion. The banking sector, characterized 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 sustain 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 of our franchise and disciplined execution of strategic priorities. We remain firmly on track to deliver our FY 26-27 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's segment-wise performance and key developments during the quarter. First, I will touch on the overall business growth. Our gross global business has reached to 31.18 lakh crore, registering a robust YoY growth of 11.9%. Our advances grew by 14.7% YoY to rupees 13.41 lakh crore, despite reducing IBPC exposure by 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 rupees 4 lakh crore in 25-26 in corporate credit line. Further, in the first half of this year, we have already crossed more than 2.5 lakh crore of sanction in the corporate credit. Our pipeline credit is to the tune of 1.58 lakh crore, which provides strong visibility for future credit growth. Global deposits of the bank have reached to 17.77 lakh crore with YoY growth of 9.9%.
Ashok Chandra (Punjab National Bank): is centered on deepening customer engagements and enhancing individual saving account balance which grew by 8.1% YoY. In the beginning of FCNR campaign, we had targeted to reach $2.5 billion, and we have reached $2.7 billion in a calibrated manner. The same has been utilized for shedding of our high-cost bulk deposits and CDs. With a CD ratio of 75.5%, we have adequately balanced it 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 a 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 '26-'27. 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% to 2.74%, while global NIM increased from 2.50 to 2.58%. We expect this positive trajectory to strengthen further in the coming quarters, supported by disciplined balance sheet optimization. NII increased to ₹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 ₹7,500 crore mark from the last 3 quarters and stands at ₹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 formed 79% of the total operating profit in Q2 of '27, which was 64% in Q2 of FY '26. Our fee-based income grew by 16% on YoY basis, reflecting continued progress in diversifying revenue sources. The bank recorded a net profit of ₹5,532 crore in Q2 with 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 111.94 as on September 30, 2026, registering a significant improvement over 95.92 as on September 30, 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 declining 2.54% as on September 30, 2026, from 3.45% as on 30th June, 2026. The net NPA ratio has also improved to 0.25% as on September 30, 2026, from 0.36% as on 30th September, 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 '26-'27 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%
Ashok Chandra (Punjab National Bank): I will also touch upon the asset quality underwriting standards. From the 1st July 2020 20 to 30th September 2026, almost 6.25 years, we have sanctioned around 15.97 lakh crore, out of which we have disbursed 14.09 lakh crore loans. And the outstanding in these loans is 9.60 lakh crore, which is close to 71.60% of our total outstanding loan book as on today. And NPA in this book is hardly .42% of the disbursed amount. Our capital adequacy is 17.95% as on 30th September, and compared to 17.19% as on 30th September 2025. Our CET1 capital stands at 14.44% against regulatory requirement of 8%. Tier 1 capital stands at 15.89% against regulatory regulatory requirement of 9.5%, including CCB. And Tier 2 capital stands at 2.06% as on 30th September 2026. More than 87.6% of the total externally rated advance above 25 crore are above A-rated. And more than 52.4% are AAA-rated, which indicates our balance sheet strength from risk point of view. Our digital transformation is reshaping the bank into future-ready future-ready institution, driving superior customer experience, operational efficiency, and sustainable growth. Our H1 '27, our digital sanction has crossed 41,500 crore, reflecting a strong momentum towards our ambition of adding 1 more 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 Business mobile app. There is good traction in the PNB One Business 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 initiative 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, these initiative will further enhance the bank's agility, productivity, and customer-centricity. PNB is taking towards step towards becoming quantum-ready. We have deployed quantum safe encryption in 246 of our customer-facing applications, based on framework provided by NIST, US. We are pioneering quantum technologies in banking through our Quantum Finance Innovation Hub at Amaravati, Andhra Pradesh, to advance cyber security, 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 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 Ennoblement 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 telecommunication support for mental well-being, regular health checkups and wellness sessions, and child care facilities, including creche services, we are fostering a supportive and inclusive workplace that prioritizes employees physical, mental, and family well-being. Our pan-India initiative such as PNB Khel Utsav and PNB Taal Tarang provides platforms for employees to showcase their sporting and cultural talents, fostering a sense of belonging, and promoting a vibrant organizational structure. Now, 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 recoveries 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.
Ashok Chandra (Punjab National Bank): government services and the comprehensive revamp of trade finance modules 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 FY26-27. Thank you.
Moderator: 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 touch-tone 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.
Kunal Shah (Citi): Yeah. Hi, sir. Congratulations for good set of numbers. So, 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 impact on the either on the investments or on the cash side? So, how how much of FCNR raise, how it is utilized, that would be that would really be helpful. Yeah.
Ashok Chandra (Punjab National Bank): Yeah. Thank you, Kunal-ji. We raised $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 shed now. So, we have effectively utilized the entire amount now.
249 more turns of this transcript: log in to Stocksigma to read the full call.