PNB Battles Core Profit Worries

The December quarter (Q3FY25) results of Punjab National Bank (PNB) show an optically positive picture, but reveal a softer underlying performance.

- Manish Joshi

While net profit surged 100% year-on-year to ₹4,508 crore, core pre-provisioning profit (PPOP) fell 4% to ₹4,777 crore.

Here, core PPOP is derived by subtracting operating expenses from total core income, comprising net interest income and fee-based income. Now, since fee income as a percentage of core income is only 12%, it leaves scope for improvement, but the road to repair a weak core performance may be stretched.

Note that the Q3 profit surge was driven by two factors. One, profit from treasury operations (a volatile and risky income, therefore not considered as core income) of ₹1,007 crore, compared to a treasury loss of ₹699 crore a year earlier. Two, an almost 90% year-on-year decline in NPA (non-performing asset) provisions to ₹318 crore, as recoveries out-paced slippages.