Punjab National Bank Shares Jump 11% in Two Sessions as Margins and Asset Quality Improve
Key Facts
Punjab National Bank shares jumped 11% in the two trading sessions ended Nov. 11, with volumes rising to more than twice their average and 59.2 million shares changing hands on the NSE and BSE during the session in question. The move came weeks after the bank reported results on Oct. 16, rather than immediately after the announcement. The results showed standalone net profit rose 12.8% year over year to 5,532 crore rupees in the second quarter of fiscal 2027, from 4,904 crore rupees in the year-earlier period. The stock’s rise coincided with an update from JM Financial, which raised its rating to “Buy” from “Add” and lifted its price target to 140 rupees from 120 rupees. The gains highlight investors’ response to a combination of interest income growth, wider margins and improving nonperforming loan metrics. They also coincided with higher-than-usual trading activity, according to market data cited by Business Standard.
Net interest income rose 10.8% year over year to 11,601 crore rupees in the second quarter, compared with 10,469 crore rupees a year earlier, according to NDTV Profit. The global net interest margin widened to 2.58% from 2.50% in the first quarter, an increase of 8 basis points quarter over quarter. On the results call, Chief Executive Ashok Chandra said the domestic margin improved 10 basis points to 2.74% from 2.64%, while the global margin rose to 2.58% from 2.5%. JM Financial analysts attributed the wider margin to lower funding costs and the gradual reduction of low-yield exposures. They added that loan growth remained at 16% year over year, with the advances mix shifting toward retail, agriculture and small and medium-sized enterprises. The mix indicates that interest income growth came alongside margin improvement, supporting operating performance during the quarter.
Operating profit was 7,532 crore rupees, up 4.2% from 7,227 crore rupees in the year-earlier quarter, according to NDTV Profit. Gross nonperforming assets fell to 2.55% on Sept. 30 from 2.78% at the end of June, while net nonperforming assets declined to 0.25% from 0.28%. On the cost-of-risk front, provisions plunged 84.9% to 97 crore rupees from 643 crore rupees a year earlier. These developments coincided with interest income growth and margin expansion over the same period. Fee income rose 16% to 1,954 crore rupees from 1,685 crore rupees a year earlier, according to the bank’s statement. Fee income therefore contributed to additional revenue sources, alongside improved operating profit and lower provisions.
The bank’s total global business rose 11.9% year over year to 31,18,434 crore rupees through September 2026, from 27,86,673 crore rupees a year earlier, according to Upstox. Global loans and advances increased 14.7% to 13,41,194 crore rupees in September from 11,69,592 crore rupees in the same month a year earlier, according to the bank’s statement. On the results call, Chandra cited Indian gross domestic product growth of 7.8% in the first quarter of fiscal 2026-2027, compared with 6.9% in the corresponding quarter a year earlier. He said he believes the bank is on track to meet its guidance for the fiscal year. These figures provide context for the bank’s business and credit growth during the quarter, while management also linked its assessment to the performance of the Indian economy. They do not change the fact that the stock’s latest move came in November, after the quarterly results were announced in October.
Investors will focus in coming quarters on the bank’s ability to continue improving its net interest margin. Management said it expects a further increase of between 7 and 9 basis points in the next quarter, driven by repricing of loans linked to the repo rate and stable funding costs. On the results call, Chandra said he expects an improvement of about 7 to 9 basis points in that quarter, noting that 56% of the loan book is linked to the repo rate. That proportion shows how much of the lending book is tied to the repricing mechanism management cited as a factor in margin improvement. The chief executive estimated the total impact of moving to the ECL standard at about 8,000 crore rupees on the loan book, and said the additional amount required after existing provisions is about 5,000 crore rupees. These estimates and the margin outlook remain statements made by management during the results call.