PNB expects NIM to bottom out in Q2 FY26, with recovery visible from Q3 onward and sharper improvement in Q4. Global NIM stood at 2.70% in Q1, with management guiding to sustain ~2.7% in Q2 before a sequential uptick to 2.8–2.9% in Q3 and >2.9% in Q4. A key driver is the sharp reduction in CDs, which have fallen to ~Rs 400 billion currently from Rs 900 billion in Dec-24.
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Motilal Oswal Report
Punjab National Bank has transitioned from a legacy-stressed balance sheet to a fundamentally stronger franchise, with assetquality concerns decisively addressed. The steady reduction in gross non-performing asset (3.78%) and net non-performing asset (0.38%), coupled with robust PCR (90.3%), underpins earnings predictability.
With credit costs at just 14bp and RAM expansion driving yields, the medium-term RoA trajectory towards >1% by FY27 appears credible.
The bank’s near-term profitability is weighed down by elevated opex and one-offs, but structural earnings drivers remain intact.
At current valuations, PNB trades at a discount to both private peers and select PSBs, offering a margin of safety.
Re-rating catalysts include consistent delivery on double-digit loan growth, progress on reducing cost ratios, and sustained asset-quality leadership.
We retain our constructive stance and currently estimate PNB to deliver a consistent RoA of 1% in FY27/28. We reiterate our Buy rating with a target price of Rs 130 (premised on 1.0x FY27E book value).
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