Punjab National Bank reported a 12.8% year-on-year increase in standalone net profit for the quarter ended September 30, 2026, reaching ₹5,532 crore. The growth was driven by higher interest earned and improved operating margins.

Management expressed optimism about reaching the global Net Interest Margin (NIM) target of 2.6-2.8%. This confidence follows a QoQ improvement in NIM to 2.58%, supported by lower funding costs and higher loan yields.

Interest earned rose to ₹34,585 crore from ₹31,872 crore in the corresponding period last year. Other income declined slightly to ₹3,601 crore from ₹4,342 crore. Total income expanded to ₹38,185 crore, while total expenditure excluding provisions stood at ₹30,653 crore.

Analyst views

Brokerage houses have issued divergent ratings following the results. Citi maintained a Sell rating on the bank but raised its target price to ₹110. The brokerage noted that the NIM rose 8 bps QoQ to 2.58%, driving NII growth of 10.8% YoY and 7.4% QoQ. Citi highlighted that lower funding costs and higher loan yields supported margins, while near-zero credit costs helped sustain Return on Assets (RoA) above 1%. Global advances grew 14.7% YoY, above guidance, though management retained its 12–13% loan growth and 2.6–2.7% NIM targets.

In contrast, CLSA maintained an Outperform rating with a target price of ₹140. CLSA stated that Q2FY27 Profit After Tax (PAT) beat estimates by 20%, driven by stronger NII and one-off recoveries, partly offset by lower other income. Loan growth accelerated to 16% YoY, while deposit growth remained at 10%. The asset quality remained stable, with a gross slippage ratio at 0.8%.

Asset quality and capital metrics

The bank continued its trajectory of improving asset quality. Gross Non-Performing Assets (GNPA) ratio improved to 2.55% from 3.45% in Q2FY26 and 2.78% in the preceding quarter. Net NPAs decreased to 0.25% from 0.36% in the same period last year and 0.28% QoQ. The Provisioning Coverage Ratio strengthened to 97.32%, up from 96.91% a year earlier. GNPA declined by ₹6,153 crore to ₹34,190 crore, while NNPA fell by ₹713 crore to ₹3,313 crore.

Fresh slippages for the quarter stood at ₹2,233 crore, up from ₹1,996 crore in the previous quarter. The slippage ratio rose to 0.77% in Q2FY27 from 0.71% in Q2FY26. Total slippages were ₹2,395 crore. Agriculture accounted for the highest slippage amount at ₹815 crore, followed by MSME at ₹756 crore and Retail at ₹360 crore.

Capital adequacy ratios remain robust. The Basel-III Capital Adequacy Ratio (CAR) stood at 17.95%, with the Common Equity Tier 1 (CET1) ratio at 14.44%. Both figures show improvement compared to the previous fiscal year-end.

Segment performance

Retail Banking emerged as the largest contributor to segment revenue, generating ₹12,252 crore in Q2FY27, up from ₹11,003 crore in Q2FY26. Corporate/Wholesale Banking revenue grew to ₹14,263 crore from ₹12,193 crore. Treasury Operations revenue saw a marginal decline to ₹10,679 crore from ₹11,322 crore.

What the numbers show

A divergence exists between the strong growth in interest income and the contraction in other income. While interest earned increased by 8.5% YoY, other income fell by 17.1%. This shift suggests that the bank's profitability is increasingly reliant on core lending activities rather than fee-based or treasury gains. However, fee-based income specifically grew 16.0% YoY to ₹1,954 crore, indicating resilience in specific fee streams despite the broader decline in other income categories.

Additionally, the significant drop in provisions for Non-Performing Assets, from negative ₹639 crore (reversal) in Q2FY26 to positive ₹8,169 crore (provision) in Q2FY27, indicates a normalization of credit costs after prior periods of aggressive recovery-driven reversals. The Global Net Interest Margin (NIM) improved to 2.58% in Q2FY27 from 2.50% in Q1FY27, supporting the NII growth and aligning with management's optimism toward the 2.6-2.8% target range.

The board also approved the transfer of the outstanding Investment Fluctuation Reserve (IFR) balance of ₹4,143.55 crore to Other Reserves, following RBI guidelines discontinuing the IFR requirement. This accounting change impacts the reserves structure but does not affect the reported net profit for the quarter.

Detailed financial breakdown

Net Interest Income (NII) grew significantly by 10.8% YoY to ₹11,601 crore, up from ₹10,469 crore in Q2FY26. This was primarily driven by a 11.0% increase in interest on advances to ₹24,323 crore. Interest paid rose 7.4% to ₹22,984 crore, reflecting higher deposit costs despite a slight moderation in the cost of deposits to 4.96% globally.

Operating profit expanded 4.2% YoY to ₹7,532 crore. Provisions other than tax decreased sharply to ₹97 crore from ₹643 crore in the year-ago quarter, contributing to the bottom-line expansion. Return on Assets (RoA) remained stable at 1.05%, while Return on Equity (RoE) stood at 17.32%. Book value per share (Tangible) improved to ₹111.94 in September'26 from ₹95.92 in September'25.

Business growth and digital adoption

Global business grew 11.9% YoY to ₹31,18,434 crore. Global advances expanded 14.7% YoY to ₹13,41,194 crore, outpacing deposit growth of 9.9% to ₹17,77,240 crore. Domestic CASA share declined slightly to 36.6% from 37.3% a year earlier, indicating a shift towards term deposits. CASA deposits themselves grew 7.3% YoY to ₹6,25,945 crore.

Digital adoption accelerated with PNB One activated users rising 19% YoY to 285 lakh. Digital transactions increased 31% YoY to 408 crore, representing 95.7% of total transactions. UPI remitter transactions grew 31% YoY to 397 crore. WhatsApp Banking users surged 72% YoY to 143 lakh.

Sector-wise asset quality

Asset quality improvements were broad-based across key sectors. MSME GNPA improved significantly to 6.08% from 10.24% in Sept'25. Agriculture GNPA declined to 8.63% from 10.30%. Retail loans GNPA improved to 0.73% from 1.00%. Corporate and overseas portfolios maintained low GNPA levels at 0.13%, though this represents a slight increase from 0.06% in the previous year.

Earnings call details

The audio/video recording of the earnings call with analysts and investors regarding the unaudited financial results for the quarter and half-year ended September 30, 2026, is now available. The session was held on October 16, 2026, at 6:15 pm IST. Stakeholders can access the recording via the bank's official financials page.

Punjab National Bank has appointed Sushil Katara as a Part-Time Non-Official Director of the bank. The appointment is effective from October 9, 2026.

The bank submitted the profile of the newly appointed director to the National Stock Exchange and BSE on October 12, 2026. This filing was made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Director profile

Sushil Katara holds a Bachelor of Law (LL.B.) degree and has been practicing law since 2003. His legal practice has been before the District Courts and the High Court of Rajasthan.

Beyond his professional career, Katara is actively associated with several social organizations. These include:

• Shree Govind Guru Seva Sansthan, Dungarpur, Rajasthan
• Samiksha Seva Sansthan, Dungarpur, Rajasthan
• Jaan Hai To Jahan Hai Foundation

Regulatory compliance

The intimation regarding the appointment was initially made on October 9, 2026. The subsequent submission of the detailed profile ensures adherence to statutory disclosure norms for listed entities.