Punjab National Bank (PNB), one of India's leading public sector banks, has announced a reduction in its Marginal Cost of Funds Based Lending Rates (MCLR) across all tenors. The new rates will come into effect from November 1, 2025, potentially bringing relief to borrowers.

Key Rate Changes

PNB has implemented a uniform cut of 5 basis points across all MCLR tenors. Here's a breakdown of the revised rates:

Other Rates Remain Unchanged

While the MCLR has seen a reduction, PNB has kept other key rates constant:

• The Repo Linked Lending Rate (RLLR) remains at 8.35%, which includes a base spread of 0.10%.
• The Base Rate continues to be 9.50%.

Implications for Borrowers

This reduction in MCLR could potentially lead to lower interest rates on various loans linked to these benchmarks. Borrowers with MCLR-linked loans may see a slight decrease in their equated monthly installments (EMIs) once the new rates take effect.

Bank's Perspective

By reducing the MCLR, PNB aims to make borrowing more attractive to its customers. This move could be seen as part of the bank's strategy to boost credit growth and remain competitive in the lending market.

As the banking sector continues to evolve, such rate adjustments play a crucial role in shaping the lending landscape. Borrowers and potential customers of Punjab National Bank should keep an eye on these changes and consider how they might impact their financial decisions.

Punjab National Bank (PNB), one of India's leading public sector banks, has reported a robust financial performance for the second quarter, with significant improvements in profitability and asset quality.

Key Highlights

• Net profit increased by 14% year-on-year to INR 4,904.00 crores
• Operating profit rose to INR 7,227.00 crores from INR 6,853.00 crores year-on-year
• Global business grew by 10.6% to INR 27.87 trillion
• Gross NPA ratio improved to 3.45% from 4.48% in September 2024
• Net NPA ratio declined to 0.36% from 0.46% year-on-year

Financial Performance

PNB reported a net profit of INR 4,904.00 crores for Q2, marking a 14% increase from INR 4,303.00 crores in the same period last year. The bank's operating profit also saw an improvement, rising to INR 7,227.00 crores from INR 6,853.00 crores year-on-year.

The bank's global business stood at INR 27.87 trillion, reflecting a growth of 10.6%. Global deposits reached INR 16.17 trillion, growing by 10.9%, while advances grew to INR 11.70 trillion, showing a 10.1% increase.

Asset Quality Improvement

PNB demonstrated significant improvement in its asset quality metrics:

The bank maintains a robust provision coverage ratio of 96.91%, indicating strong protection against potential loan losses.

Profitability Metrics

PNB's profitability indicators showed positive trends:

• Return on Assets (ROA) improved to 1.05% from 1.02% last year
• Return on Equity (ROE) stands at 17.95%

Business Outlook

The bank has sanctioned credit lines worth INR 1.78 lakh crores pending disbursement, indicating a strong pipeline for future growth. Management expects Net Interest Margin (NIM) to improve by 5 basis points in Q3 and 10 basis points in Q4, primarily due to deposit repricing benefits.

PNB targets credit growth of 11-12% for the full year and aims to achieve a gross NPA ratio below 3% by year-end.

Management Commentary

Ashok Chandra, Managing Director and CEO of Punjab National Bank, commented on the results during the earnings call: "Bank is doing very well for the last 2 years. Quarter-to-quarter, if you see the performance, there has been a consistency there in the performance and the quality -- the asset to control-wise, asset quality, overall growth, I think we are all poised for a good performance, both in the top line and the bottom line."

The bank's management expressed confidence in maintaining the positive trajectory, focusing on asset quality improvement, credit growth, and operational efficiency.

As PNB continues to strengthen its core business fundamentals, the bank appears well-positioned to capitalize on the growing opportunities in India's banking sector while maintaining a prudent approach to risk management.