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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