PNB Q4 Results Reports Strong Profit Surge Driven by Lower Provisions; Shares declined by 2%

Despite reporting a significant 52% year-on-year jump in net profit for the fourth quarter ended March 2025, shares of public sector lender Punjab National Bank (PNB) traded largely flat on Thursday, May 8. At 14:15 PM, the bank's shares were trading at a decline of 2.12% at ?92.25.

Profit Performance

PNB posted a net profit of ?4,567 crore in the January-March quarter of FY25, a marked increase from ?3,010 crore in the same period last year. This profit surge for the quarter was notably driven by a sharp reduction in provisions for non-performing assets (NPA). Provisions for bad loans fell to ?588 crore in Q4 FY25, down significantly from ?1,958 crore in the year-ago period. For the full financial year 2024-25, PNB's net profit more than doubled, rising by 101% to ?16,630 crore compared to ?8,244.62 crore in FY24.The growth in profit is attributable to overall business growth, recovery in technically written-off accounts, and treasury income, among other factors.

Key Drivers and Asset Quality

The bank's net interest income (NII), which is the difference between interest earned and expended, saw a 4% annual increase, reaching ?10,757 crore in Q4 FY25 from ?10,363 crore. Asset quality showed an improvement during the fourth quarter. Gross NPA, as a percentage of total advances, stood at 3.95% at the end of Q4 FY25, an improvement from 5.73% in the corresponding period of the previous financial year. In absolute terms, gross NPA amounted to ?44,081.60 crore as against ?56,343.05 crore in the year-ago period.

Total business, encompassing deposits and advances, grew by 14% to ?26.83 lakh crore. The recovery in technically written-off accounts contributed ?4,926 crore in FY25. Treasury income also saw a significant increase, rising to ?4,314 crore in FY25 from ?1,157 crore in the previous financial year.

Outlook and Capital Plans

Looking ahead to the current financial year, the bank anticipates credit growth of 11-12% and deposit growth of 9-10%. The focus for corporate loans is expected to result in 9-10% growth, with an emphasis on sectors like renewable energy, roads, and ports, despite some uncertainty over tariffs. PNB's capital adequacy ratio remains strong at 17%, indicating no immediate need for equity capital during the current financial year. However, the bank has considered a proposal to raise up to ?8,000 crore through the issuance of Basel III compliant bonds (up to ?4,000 crore in Additional Tier-I and up to ?4,000 crore in Tier-II) in one or more tranches during FY 2025-26.

Dividend Recommendation

The bank's board has recommended a dividend of ?2.90 per equity share of a face value of ?2 each for the financial year 2024-25.?

Market Reaction

Despite the robust financial results, shares of Punjab National Bank opened flat at ?95.50 in early trades on the NSE on 08 May.?

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