PNB Q2 profit rises 12.8% to Rs 5,532 crore as bad loans fall to 2.55%

Punjab National Bank (PNB), the public sector lender, reported a 12.8 per cent rise in standalone net profit to Rs 5,532 crore for the July to September quarter, from Rs 4,904 crore a year earlier. The bank announced the results on Friday, October 16, 2026, after market hours. Net interest income, the difference between what the bank earns on loans and pays on deposits, rose 10.8 per cent to Rs 11,601 crore from Rs 10,469 crore. Asset quality improved: gross non-performing assets fell to 2.55 per cent of loans from 3.45 per cent a year earlier, and net NPAs fell to 0.25 per cent from 0.36 per cent. PNB shares had closed 1.09 per cent higher at Rs 116.30 on the National Stock Exchange before the results, so Monday's trading will show the market's verdict.

PNB's numbers add to a picture of steady health among India's public sector banks. Profit growth of nearly 13 per cent, driven by higher interest income, and a further fall in bad loans point to a cleaner balance sheet than a year ago. A net NPA ratio of just 0.25 per cent means very little of the bank's loan book is stressed after provisions.

At the same time, the details show where pressure lies. Operating profit grew only about 4 per cent, much slower than net profit, which suggests lower provisions for bad loans did much of the work in lifting the bottom line. Several reports this results season have noted that treasury income, the gains banks make on their bond holdings, has weighed on bank earnings. UCO Bank, for example, saw treasury income fall about 72 per cent from a year earlier.

For investors, the question is whether the strong asset quality can support continued profit growth as provisions stop falling. Indian Bank's 14.7 per cent profit rise included a one-off benefit of about Rs 1,400 crore linked to NSE shares, a reminder to look beyond headline figures. Indian Bank's board also approved raising up to Rs 7,000 crore.

Short-term: PNB's stock will react to the results when markets open on Monday, October 19. Investors will compare the numbers with those of other state-run lenders.

Long-term: Low bad loans give public sector banks room to lend more, but slower growth in operating profit and weaker treasury income could limit earnings growth in coming quarters.

Who is affected: PNB's shareholders, its borrowers and depositors, and investors tracking public sector bank stocks.

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