Punjab National Bank (PNB) on Monday reported a mixed set of numbers for the quarter ended December 31, 2025. While the state-run lender posted a 13.1% year-on-year (YoY) rise in standalone net profit to ₹5,100 crore, up from ₹4,508 crore in the year-ago period, the market reacted negatively to a decline in core income and a spike in provisions.

Following the earnings announcement, PNB shares plunged 5.37% to an intraday low of ₹125.25 on the NSE.

Core income misses mark

The sharp correction in the stock price was largely triggered by a 4.5% decline in net interest income (NII)—the difference between interest earned and interest expended. NII fell to ₹10,533 crore in Q3 FY26 from ₹11,032 crore in the corresponding quarter last year. This contraction came as a negative surprise to analysts who had priced in steady core growth.

Provisioning surge

PNB's Q3 report card also marked a major jump in provisions. The bank set aside ₹1,150 crore for provisions (other than tax) during the quarter, up from the ₹643 crore recorded in the preceding September quarter.

However, this surge was largely voluntary. Management said that the bank created a floating provision of ₹955 crore during the quarter as a prudential measure, rather than solely due to fresh bad loans.

Asset quality improves

Despite the gloom over NII, PNB’s asset quality showed continued improvement.

• Gross NPA ratio improved to 3.19% as of December 2025, down from 4.09% a year ago.

Business growth

On the business front, the bank reported steady traction. Global gross business grew by 9.5% YoY to ₹28.91 lakh crore. Global advances rose 10.9% to ₹12.31 lakh crore, while total deposits increased by 8.5% to ₹16.60 lakh crore.