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Informist, Friday, Oct. 17, 2025

 

By Shubham Rana

 

NEW DELHI - Punjab National Bank is expected to report a rise in its net profit for the September quarter despite a flat operating profit and higher provisions. This will likely be because of a lower tax outgo after the bank shifted to the new tax regime, according to brokerages tracking the lender.

 

Punjab National Bank, the country's second-largest public sector bank by deposits, is expected to post a net profit of INR 44.74 billion in Jul-Sept, according to the average of estimates by six brokerages. This will be up 4% on year and nearly three-fold higher than the June quarter profit of INR 16.75 billion.

 

While most brokerages pegged September quarter's net profit at around INR 45 billion, Nirmal Bang Equities Pvt. Ltd. was an outlier with an estimate of INR 37 billion. The bank will detail its September quarter financial results on Saturday.

 

The New Delhi-based lender migrated to the new tax regime in the June quarter, which led to a one-time charge of INR 33.24 billion. This resulted in the bank's net profit declining on year for the first time in 10 quarters. Under the Income Tax Act, domestic companies can opt for the concessional tax regime with a lower tax rate of 22%, against the normal tax of 30%. The lower tax regime does not allow the company to claim deductions and exemptions.

 

"While recognising the provision for income tax for the quarter ended June, the deferred tax assets (net) have been re-measured based on the tax rate applicable as per new regime along with release of certain income tax provisions that are no longer required. The resultant impact is a one-time charge of INR 33.24 billion in the profit and loss account for the quarter ended June," the bank had said in July.

 

After the one-time fall in profit in the June quarter, Punjab National Bank expects to save around INR 7 billion in each of the three remaining quarters of 2025-26 (Apr-Mar), the bank's management said in July. Change in the tax regime is expected to help the bank report an on-year rise in net profit for the September quarter, brokerages said.

 

"We expect the bank to report modest earnings growth year-on-year, supported by lower tax rate, while operating profit is expected to be flat on year and provisions are expected to be higher on year (low base)," Kotak Securities Ltd. said in an earnings preview report. The brokerage expects the bank's loan loss provisions to rise over three-fold on year to INR 6.46 billion. According to Emkay Global Financial Services Ltd., better credit growth, near flat margins, and a lower tax rate will drive the bank's profitability on a sequential basis.

 

Domestic advances of the bank rose 11% on year to INR 11.19 trillion as on Sept. 30, according to provisional figures released by the bank. Domestic deposits were up 10% on year at INR 15.64 trillion. Both loan and deposit growth at the end of September were in line with the bank's FY26 growth guidance of 11-12% and 9-10%, respectively.

 

According to an average of estimates from six brokerages, Punjab National Bank's net interest income – the difference between interest earned and expended — for the September quarter is seen at INR 105.90 billion. This is largely unchanged from a year ago as well as a quarter ago.

 

Net interest margin of the bank is seen moderating slightly from 2.7% in the June quarter, brokerages said. Margins are expected to be lower across the banking sector in the September quarter following the 100-basis point reduction in the policy repo rate by the Reserve Bank of India's Monetary Policy Committee between February and June. Punjab National Bank's management has previously said it expects the margin to start improving from the December quarter.

 

Brokerage firms expect the bank's asset quality to remain stable in the September quarter. Kotak Securities said the bank's slippages and credit cost will remain low in the September quarter. Motilal Oswal Financial Services Ltd. said asset quality is likely to improve further in the reporting quarter.

 

The gross non-performing asset ratio of the public sector lender improved to 3.78% on Jun. 30 from 3.95% on Mar. 31. The net non-performing asset ratio also improved to 0.38% as on Jun. 30 from 0.40% a quarter ago.

 

Of the 12 brokerage reports on the bank available with Informist, nine have a 'buy' rating on the stock with an average target price of INR 117. Two brokerages have a 'hold' rating and one has a 'sell' rating. The bank's share price has risen 7% since it released its June quarter earnings on Jul. 30. At 1022 IST Friday, shares of the bank were trading at INR 115.45 on the National Stock Exchange, down 0.6% from the previous close.

 

The following are the Jul-Sept earnings estimates for Punjab National Bank from six brokerages in descending order of the estimate of net profit in INR million:

 

Brokerage Firm	NII (in INR million)	Net Profit (in INR million)
Motilal Oswal Financial Services Ltd.	105,382	47,856
Emkay Global Financial Services Ltd.	105,825	46,678
Kotak Securities Ltd.	105,815	46,204
Nuvama Wealth Management Ltd.	106,800	45,300
JM Financial Institutional Securities Pvt Ltd.	105,424	45,210
Nirmal Bang Equities Pvt Ltd.	106,145	37,205
Average	105,899	44,742

 

End

 

Edited by Nishant Maher

 

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