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PNB Eyes Project Financing Revival Amid Sluggish Business Loan Growth

Thursday, 31 July 2025, 10:37 IST
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  • PNB to focus on infrastructure, smart metering, and renewable energy to boost sluggish business loan growth.
  • Net profit fell 48% due to one-time tax charge, but gross NPAs improved to 3.78%.
  • Bank aims to revive project financing and reduce gross NPAs below 3% by FY26.

Punjab National Bank (PNB) plans to ramp up project financing in infrastructure, smart metering, and renewable energy to revive its business loan growth, CEO Ashok Chandra said in an interview on Wednesday.

Despite aiming for an overall loan growth of 11-12% in FY26, India’s second-largest state-owned lender saw a tepid 6.9% increase in business loans in the first quarter ending June. Business loans form nearly 43% of PNB’s domestic advances.

Chandra attributed the subdued growth to the bank's exposure to low-yielding advances but emphasized that a renewed focus on project financing where the bank was previously very active will be central to its strategy moving forward. “The focus this year will be on project financing”, he said, adding that PNB is also targeting sectors like real estate, rental discounting, and data centres for fresh lending opportunities.

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While corporate loan growth lagged, loans to medium and small businesses rose sharply by 18.6%, and retail loans grew by 11.8%, helping PNB's overall domestic advances grow 9.6% in Q1. However, this still fell short of its projected growth target.

On the financial front, PNB reported a net profit of Rs 1,675 crore for the June quarter, down 48% from Rs 3,252 crore a year ago. The decline was largely due to a one-time tax-related charge of Rs 3,324 crore following a shift in the tax regime. Notably, the bank’s profit before tax rose by 28%.

Asset quality improved, with gross non-performing assets (NPAs) declining to 3.78% from 3.95% in the previous quarter. Chandra affirmed that the bank is on track to bring NPAs below 3% its lowest ever and meet a recovery target of Rs 16,000 crore by FY26.