PNB's margin turns up to 2.58%; a Rs 798 crore release was matched by extra provisions

The margin has recovered from its 2.47% low of March 2026

Punjab National Bank's global net interest margin, the spread between what it earns on loans and what it pays for funds, rose to 2.58% in the quarter to 30 September 2026, 8 basis points (bp) above the quarter before.

Management has guided to a rebound before. On 18 October 2025 it said the margin would improve in the quarters that followed, and it fell instead. In May 2026 it guided to a global margin of 2.6-2.7% for the current financial year; the CEO said the bank had chosen that range rather than 2.8-2.9%. The latest reading sits just under the bottom of that range.

Cheaper funding lifted the margin; repo-rate effect to come

The bank said it raised a large block of FCNR deposits, foreign-currency deposits from non-resident Indians, and used the money to run down bulk deposits and certificates of deposit that cost more. Its domestic cost of deposits also fell on the quarter. The 25 bp repo-rate rise has already taken effect, and the CEO expects its effect on the margin in the current quarter, because loans linked to it reprice the next working day.

Part of the gain is balance-sheet reshaping. Management said it shed low-yield advances, and a margin can rise simply because the weakest assets leave. Net interest income did grow as well, on the quarter and on the year, so the margin is not rising on a shrinking income base.

Operating profit has been flat for three quarters

The bank's own operating profit, its income before provisions and tax, was Rs 7,532 cr, almost level with the quarter before. Growing net interest income has not lifted it, because two older supports are shrinking.

Core operating profit, which leaves out recoveries from written-off loans and treasury trading, rose on a year ago. What remains, recoveries and treasury together, fell on the quarter, by our subtraction of core profit from operating profit. Treasury income was Rs 753 cr after a mark-to-market loss on bonds as yields rose, below the level the bank guided in July. The CEO called the recovery target for the year challenging and now gives a range that starts below it.

A provision release, and extra provisions against it

Net profit for the bank on its own rose 5.3% on the quarter by our arithmetic. With operating profit almost unchanged, the gain came from below the operating line, where the provisions line was Rs 97 cr after a release of Rs 798 cr on one account. The CFO said it was a provision on an investment in one account; the call did not name the account. In the same quarter the CEO said the bank made about Rs 700 cr of extra provisions on bad loans to hold its coverage ratio, plus Rs 125 cr of floating provisions. Separately, asked about an IL&FS-linked provision, the CEO said it had been written back and that the bank had kept Rs 1,150 cr of additional provision in the standard account.