PNB profit jumps 12.8% in Q2; brokerages raise targets on margin gains

The state-owned bank's net interest income expanded 10.8 percent year-on-year to Rs 11,601 crore during the quarter, indicating steady growth in core lending operations. The improvement was driven by favorable movement in net interest margins—the spread between lending and borrowing rates—which brokerages cited as a key driver of future profitability.

Credit costs, which measure loan losses and provisions, moderated during the quarter, providing additional support to bottom-line growth. The combination of margin expansion and contained asset quality pressures has prompted multiple brokerages to revise their earnings estimates and price targets for the bank upward.

Analysts pointed to PNB's steady deposit mobilization and disciplined lending approach as factors supporting the improved financial metrics. The bank's performance suggests a stabilizing trend for public sector lenders amid a competitive operating environment.

The results come as PNB, along with other nationalized banks, navigates rising competition from private sector peers while maintaining its substantial retail and corporate customer base across India. Brokerages noted that sustained margin strength and controlled credit costs will be crucial to sustaining the positive momentum in coming quarters.

Photo: Punjab National Bank's head office in Dwarka, New Delhi, September 2018. Meet.arpit99 via Wikimedia Commons (CC BY-SA 4.0).