Punjab National Bank issues fresh guidance

PNB’s FY27 NIM guidance is 2.60–2.70% ^[1], but the bank has not quantified a FY27 CASA target, CASA improvement path, or the basis-point benefit expected from repricing the existing loan book. The range therefore cannot be reverse-engineered into a specific CASA or loan-reset assumption.

What the range appears to assume

• Funding-cost relief continues: PNB’s cost of deposits declined from 5.16% in FY26 to 4.99% in Q1 FY27, while cost of funds fell from 4.55% to 4.36%. However, NIM was still 2.50% in Q1 FY27 versus 2.57% in FY26, indicating that lower funding costs had not yet fully offset asset-yield pressure ^[2].
• CASA is not the disclosed driver: Management has not stated whether CASA is expected to rise, remain stable, or decline. Its specific funding-cost initiative is the mobilisation of FCNR(B) deposits, which management said should reduce deposit costs because these deposits do not carry the same CRR-SLR requirement ^[3]. That is a cost-of-funds lever, not a quantified CASA assumption.
• Gradual improvement in loan yields: Yield on advances declined from 7.80% in FY26 to 7.53% in Q1 FY27 ^[2]. Management said it is working simultaneously on reducing deposit costs and improving the yield on advances, with the expectation that the quality of the credit book and loan growth will support NII from subsequent quarters ^[3].
• Upper end requires better asset-side pass-through: A brokerage interpretation linked the 2.60–2.70% range to loan repricing and a better loan mix ^[4]. This is an analyst view, not a detailed PNB disclosure of reset schedules or repricing quantum.

Analytical reading: the 2.60% lower end appears consistent with continued deposit-cost easing and only gradual loan-book repricing. Reaching 2.70% would require a stronger combination of lower funding costs, improved loan mix, and faster repricing of outstanding floating-rate assets. The key uncertainty is that PNB has not provided the CASA trajectory or the proportion and timing of the existing book that will reset; hence the range is a directional margin-recovery framework rather than a fully specified rate-cycle model.

Verdict: PNB’s Q1 FY27 asset-quality indicators are consistent with a low FY27 credit-cost outlook, but the exact comparison depends on the missing value of [X]. Q1 FY27 annualized credit cost was 0.25%, or 25 bps; therefore, a FY27 target of 25 bps would be broadly in line with the opening run-rate. A target below 25 bps would require further moderation, while a target above 25 bps would provide some conservatism. ^[5]

• Slippages: The Q1 FY27 slippage ratio was 0.68%, down from 0.71% a year earlier, although fresh slippages increased to Rs 2,080 Crores from Rs 1,886 Crores. The lower ratio therefore reflects the larger advance base as well as better slippage intensity, rather than an absolute decline in new slippages. ^[6]
• PCR: Provision coverage was 97.23% including technical write-offs, up 35 bps YoY; PCR excluding technical write-offs was 90.30% in June 2026. ^[5]
• Interpretation: The high PCR should limit the incremental provision burden from future recoverable losses, supporting a low credit-cost outcome. However, slippage ratio and credit cost are not identical: slippage measures loans entering NPA, whereas credit cost reflects the eventual provisioning impact after recoveries, write-offs and coverage.

Sector drivers

The reported Q1 asset-quality disclosure is aggregate and does not identify specific sectors as the source of slippages or future stress. The sectoral lending categories disclosed are MSME, retail and agriculture, but these are lending and business-augmentation categories—not confirmed asset-quality problem areas. ^{[7] [8]}

Accordingly, the evidence supports an aggregate asset-quality improvement thesis, supported by GNPA of 2.78%, NNPA of 0.28%, and the high PCR, but does not support attributing the anticipated trend to a particular sector. ^[9] Any claim that MSME, agriculture, retail, or another segment is driving FY27 slippages would require sector-wise slippage or restructuring disclosure.