PNB Q1 net profit plunges 48% to ₹1,675 crore on higher tax outgo

PNB's profit dips due to switch to new tax regime; operating metrics improve with better asset quality, strong retail credit growth and healthy capital adequacy

Punjab National Bank (PNB), the country’s second-largest state-run lender, on Wednesday reported a sharp 48 per cent on year drop in its net profit for the first quarter of financial year 2026 (Q1FY26), which the bank attributed to one-time tax expense arising from its transition to the new tax regime.

 

PNB’s net profit dropped to ₹1,675 crore in Q1FY26 from ₹3,252 crore reported in the same quarter of the previous financial year. The bank’s tax expenses soared to ₹5,083 crore in the quarter under review from ₹2,017 crore reported in Q1FY25.

 

While the bank’s total income rose by 15.7 per cent year-on-year (Y-o-Y) to ₹37,231 crore and operating profit rose to ₹7,081 crore, the elevated tax outgo weighed heavily on the bottom line.

 

“The fall in net profit is mainly due to our transition in the new tax regime form old one. The key benefit of switching to the new tax regime is the significant difference, nearly 10 per cent, between the old and new tax structures. With an operating profit of ₹7,000 crore, we expect to save around ₹700 crore from Q2FY26 onwards, which will directly boost our bottom line. So, this was the right time for us to migrate to the new tax regime,” said Ashok Chandra, managing director and chief executive officer of PNB, during a press conference.

 

The gross non-performing assets (GNPA) ratio improved by 120 basis points (bps) on Y-o-Y basis to 3.78 per cent in Q1FY26 from 4.98 per cent as on Q1FY25. And net non-performing assets (NNPA) ratio improved by 22 bps on Y-o-Y basis to 0.38 per cent as on June’25 from 0.60 per cent as on June’24.

 

The PNB has maintained healthy capital adequacy at 17.50 per cent under Basel-III norms, with CET-1 at 12.95 per cent.

 

The public sector lender CASA (Current Account Savings Account) deposits increased to ₹5,68,638 crore recording a Y-o-Y growth of 3.6 per cent.

 

CASA share of the bank stands at 36.99 per cent as on Q1FY26.

 

The total retail credit increased by 11.8 per cent Y-o-Y to ₹2,62,219 crore in Q1FY26.

 

The bank’s housing loan book grew by 16.6 per cent Y-o-Y to ₹1,18,708 crore, vehicle loan posted a growth of 25.3 per cent Y-o-Y to reach ₹27,229 crore, agriculture advances grew by 6.2 per cent on Y-o-Y basis to ₹1,78,885 crore.

 

As on June 30, 2025, the PNB has 10,209 domestic branches and 2 international branches. The bank also has 11,240 ATMs and 31763 business correspondents as part of its distribution network.