India Ratings and Research has affirmed Punjab National Bank’s (PNB) long-term issuer rating at ‘IND AAA’/Stable. The rating reflects PNB’s systemic importance, strong government support, and improved profitability. The affirmation also applies to PNB’s debt instruments, including Basel III Additional Tier 1 Bonds, Fixed Deposits, and Senior Infrastructure Bonds. The stable outlook indicates expectations of continued government support and stable financial performance.
Rating Affirmation Details
India Ratings and Research (Ind-Ra) has affirmed the ‘IND AAA’/Stable rating for Punjab National Bank (PNB) and its debt instruments. The key factors supporting the rating include PNB’s systemic importance as the second-largest public sector bank and the expectation of continuous financial support from the Government of India (Gol).
Key Rating Drivers
The rating affirmation is supported by several key factors:
- Systemic Importance: PNB’s large pan-India franchise and significant market share.
- Capital Buffers: Adequately placed with improving internal accruals. In Q2FY26, the common equity tier-1 (CET-1) ratio stood at 12.75%.
- Liability Franchise: Stable low-cost deposit base.
Financial Performance Highlights
PNB has demonstrated improved financial performance, with a return on assets of 0.71% in 1HFY26. The bank is targeting to exceed 1% in the medium term. Pre-provisioning operating profit grew by 7.6% yoy in FY25.
Instrument Details
The following debt instruments have had their ratings affirmed:
- Long-Term Issuer Rating: IND AAA/Stable
- Basel III Additional Tier 1 Bonds: IND AA+/Stable
- Fixed Deposits: IND AAA/Stable
- Basel III Tier 2 Bonds: IND AAA/Stable
- Senior Infrastructure Bonds: IND AAA/Stable
- Certificates of Deposit: IND A1+
Rating Outlook
The stable outlook reflects the expectation of continued government support and PNB’s ability to maintain its market share and financial stability. Ind-Ra believes PNB’s capital buffers are adequate to meet regulatory requirements. The bank’s ability to enhance retail exposure and improve its CASA franchise will be crucial for maintaining stable performance.
Source: BSE