Punjab National Bank has received a rating upgrade from Fitch Ratings, with the agency upgrading the bank's Viability Rating (VR) to 'bb' from 'bb-' while affirming the Long-Term Issuer Default Rating (IDR) at 'BBB-' with a Stable outlook. The rating action, announced on February 25, 2026, reflects significant improvements in the bank's financial profile and operating performance.

Rating Upgrade Details

Fitch has revised multiple rating categories for Punjab National Bank, demonstrating the agency's confidence in the bank's improved financial metrics and operational efficiency.

Key Drivers Behind the Upgrade

The Viability Rating upgrade is supported by substantial improvements across multiple financial parameters. Fitch has revised Punjab National Bank's risk profile score to 'bb-' from 'b+', reflecting enhanced underwriting standards and risk controls that have reduced impaired loan formation and corporate loan risk. The bank has demonstrated better loan diversification and continued progress in cleaning up legacy bad loans.

The asset quality improvements are particularly noteworthy, with Fitch revising the asset-quality score to 'bb-' from 'b+'. The impaired-loan ratio fell to 3.20% in 9MFY26 from 4.00% in FY25, with expectations that it will be sustained below 3.00% through FYE27. The bank maintains specific loan-loss coverage of approximately 90.00%, which exceeds the peer average.

Financial Performance and Capitalisation

Punjab National Bank's earnings and profitability score has been upgraded to 'bb' from 'bb-', reflecting improved profitability metrics. Fitch expects the operating profit/risk-weighted asset ratio to remain close to 3.00% through FYE27, supported by better margins and tight cost controls.

The bank's capitalisation has strengthened significantly, with the common equity tier 1 (CET1) ratio reaching a record 13.80% in 9MFY26. Fitch anticipates the ratio will settle close to 13.00% after FY26 dividend payments and expects internal accruals will be sufficient to maintain the CET1 ratio near 13.00% through FYE28.

Government Support and Market Position

Punjab National Bank's Long-Term IDR continues to be underpinned by government support, reflecting the bank's 70.00% state ownership and significant market presence as one of India's three largest state-owned banks. The Government Support Rating of 'bbb-' is equalised with India's sovereign rating, indicating Fitch's expectation of high probability of extraordinary state support if required.

The bank benefits from robust funding and liquidity, with customer deposits comprising approximately 95.00% of total funding in 9MFY26. The loans/customer deposits ratio increased to 79.00% in 9MFY26 from 76.00% in FY25, remaining well below the peer average of approximately 87.00%.

Future Outlook and Rating Sensitivities

Fitch has assigned positive outlooks on most rating factor scores, reflecting the potential for higher scores if the operating environment score is revised upward. The rating agency recently revised the outlook on Indian banks' operating environment score to positive from stable, citing reduced sector risks due to enhanced regulations and supervision by the Reserve Bank of India.

A VR upgrade is likely if Fitch revises the bank's operating environment score to 'bbb-', which would indicate lower system risks and could result in upward revisions of other rating factor scores. However, Punjab National Bank's risk profile will remain a key consideration in determining whether the improved financial metrics are sustainable over the long term.

Punjab national bank announced its participation in the Goldman Sachs 2026 Asia Financials Corporate Day through a virtual group meeting held on February 23, 2026. The bank's representatives engaged with investors and analysts during this corporate interaction session.

Meeting Details

The virtual meeting was conducted as part of Goldman Sachs' Asia Financials Corporate Day program. Punjab National Bank's representatives participated in the session, which commenced at 12:00 p.m. on February 23, 2026.

Regulatory Compliance

The bank submitted this information in compliance with Regulation 30 of SEBI (LODR) Regulations, 2015. Punjab National Bank had previously intimated the exchanges about this meeting on February 18, 2026, demonstrating adherence to regulatory disclosure requirements.

Information Sharing Protocol

During the interaction with investors and analysts, Punjab National Bank confirmed that only information available in the public domain was shared. This approach ensures compliance with regulatory guidelines regarding selective disclosure and maintains transparency in corporate communications.

The notification was signed by Bikramjit Shom, Company Secretary of Punjab National Bank, and submitted to both the National Stock Exchange of India Limited and BSE Limited as part of the bank's regulatory obligations.