Punjab National Bank aims for 7% net interest income growth by FY27 and $2.5 billion in FCNR(B) deposits by September 2026. The lender plans to achieve this through aggressive NRI outreach and new business verticals, while maintaining a comfortable credit-deposit ratio of 73.4%.
Punjab National Bank (PNB) has outlined a roadmap to drive growth over the coming fiscal years, setting a goal to reach a 7% increase in Net Interest Income (NII) by FY27. This target follows a 2.1% NII growth reported in the first quarter. To support this objective, the bank is focusing on expanding its credit portfolio while optimizing its cost of funds. A key component of this strategy involves ramping up Foreign Currency Non-Resident (FCNR) deposits, with a specific target of collecting $2.5 billion by September 2026.
Expanding Business Verticals and Profitability
Beyond interest income, the bank expects operating profit to grow between 9% and 10%, an improvement from the 6.2% recorded in the recent quarter. This growth is expected to be driven by the scaling of three business segments introduced last year: credit cards, cash management services, and supply chain finance. Additionally, the bank is restructuring its balance sheet by reducing its exposure to low-yielding loans to improve overall margins. Management also expects an uptick in recoveries, which were muted during the previous quarter, to provide a further boost to profitability.
Provisioning and Credit-Deposit Management
In its recent quarterly results, PNB reported a significant year-on-year increase in net profit, though sequential growth was stable. This stability is partly due to the bank’s decision to set aside additional funds for Expected Credit Loss (ECL) provisions, including a specific ₹390 crore allocation. This brings the total floating provision to ₹2,435 crore. The management noted that this conservative approach to provisioning is intended to prepare the bank for future regulatory transitions expected after April 2027.
Regarding the gap between credit and deposit growth, the bank maintains that there is no immediate pressure. With credit growing at 12.7% against deposit growth of 8.5%, the Credit-Deposit (CD) ratio currently stands at 73.4%. The management indicated that there is sufficient headroom to expand credit up to a ratio of 77% or 78% before the bank needs to aggressively chase higher-cost bulk deposits. The bank remains selective about participating in the certificate of deposit market, prioritizing cost-efficiency over rapid deposit accumulation.
Investors will likely monitor the progress of these specific business verticals and the bank's ability to maintain its margin levels as it balances credit expansion with deposit mobilization. Future updates regarding the bank's progress toward the $2.5 billion FCNR deposit target and its ongoing recovery performance will be key indicators of execution success.