Business Performance Highlights

Advances Growth:

  • Gross advances stood at ₹9,755 crores as of September 30, 2026, up 23.4% year-on-year and 7.5% quarter-on-quarter
  • Disbursements for the quarter were ₹1,095 crores, up 36% year-on-year
  • Average ticket size increased to ₹19.53 lakhs from ₹17.1 lakhs in Q2 FY26

Portfolio Composition:

  • Business Loans: 28% of portfolio (up from 23% YoY)
  • Mortgage: 24% of portfolio (down from 26% YoY)
  • Agriculture: 26% of portfolio
  • Corporate: 14% of portfolio (deliberately maintained)
  • 97% of portfolio is secured, with 76.7% backed by immovable property or own FDRs

Deposit Performance:

  • Total deposits grew to ₹10,831 crores, up 16.2% YoY and 2.2% QoQ
  • CASA stood at ₹3,734 crores (34.5% of total deposits) compared to 33.9% a year ago
  • Cost of deposits stood at 5.68% against 5.92% a year back
  • Average credit-to-deposit ratio stood at 85.4% during the quarter (81.5% in corresponding period last year)

Asset Quality Metrics

  • Gross NPA: 2.36% (improved from 2.47% in June 2026 and 2.70% a year ago)
  • Net NPA: 1.12% (improved from 1.14% last quarter and 1.38% a year back)
  • Credit cost for the quarter: 0.18%
  • SMA1 and SMA2 accounts: 3.31% of advances (down from 4.78% previous quarter and 4.42% a year back)
  • Gross slippage for H1FY27: 1.11% annualized
  • Net slippage for H1FY27: 0.24%

Financial Performance

  • Pre-provision operating profit (PPOP): ₹68 crores, up 31% YoY
  • Profit after tax: ₹46 crores, up 31% YoY
  • Net interest margin: 4.24% (against 4.04% a year back and 4.21% previous quarter)
  • Net interest income: ₹139 crores, up 24% YoY (from ₹112 crores in Q2 FY26)
  • Non-interest income: ₹30 crores, up 25% YoY (from ₹24 crores in Q2 FY26)
  • Cost-to-income ratio: 59.8% (improved from 61.7% last year)
  • Return on assets: 1.39% (against 1.26% a year back and 1.3% previous quarter)
  • Return on equity: 12.23% (against 10.22% a year back and 11.2% previous quarter)

Geographical Diversification

  • Network: 222 branches across 5 states and 2 union territories
  • 77% branches in semi-urban and rural areas contributing 75% to deposits
  • 23% urban and metro branches contributing 46% to advances
  • Out-of-Punjab business: 26% of advances (grew 39% YoY) and 8% of deposits
  • 47 branches outside Punjab (21% of network) contributing 26% of advances
  • Deposit market share in home state increased to 1.3% (from 1.17% as of March 2025)

Capital and Liquidity Position

  • Capital adequacy ratio: 20.8%
  • Tier 1 capital: 18.5%
  • Average liquidity coverage ratio: 216%
  • No immediate need to raise fresh capital

Strategic Outlook and Vision 2029

  • Target loan book of over ₹16,000 crores by FY29
  • Target network of more than 300 branches by FY29
  • Focus on three key drivers: accelerating growth from newer markets, improving operating leverage, and maintaining clean balance sheet
  • Aspiration to become a universal bank post-FY29 when scale and metrics are achieved
  • Targeting ROA of 1.6%+ and ROE of 15%+ by FY29

Management Commentary on Operating Environment

  • Banking industry credit grew at 19.4% YoY against deposit growth of 17.8%
  • RBI raised repo rate by 25 basis points to 5.50% in October and moved to calibrated tightening stance
  • Environment shifts focus to managing higher rates for longer, protecting lending spreads, and disciplined underwriting
  • Bank believes its model is well-suited to current environment with deep semi-urban/rural presence and secured loan book

Q&A Session Highlights

Agriculture Portfolio Resilience: Management indicated no significant impact from deficit monsoon due to strong irrigation infrastructure in Punjab/Haryana, canal water availability, and high water tables from previous year's good rainfall. Historical data shows resilience through previous deficit cycles.

Geographical Expansion Strategy: Out-of-Punjab branches following 'asset first' approach where liability follows trust building. Targeting 30%+ branches outside Punjab by FY29 with out-of-Punjab advances expected to reach 32-37% of portfolio.

NIM Outlook: Expect NIM expansion from 4.24% to 4.3-4.35% driven by CD ratio improvement (from current 85.4% to mid-high 80s) and favorable balance sheet structure (52% fixed rate advances, 48% floating rate).

IRDAI Draft Circular Impact: Banca commission constitutes 33% of non-interest income (₹10.2 crores of ₹30 crores). Management has contingency plans to diversify fee income sources and believes impact won't be material to ROA expansion plans.

Product Strategy: Consumption loans (7% of portfolio) are primarily cross-sell to existing customers. Evaluating pilots for direct customer acquisition in newer geographies. Constant product innovation within existing segments.

Universal Bank Aspiration: Targeting universal bank license post-FY29 when scale (₹21,000-23,000 crore balance sheet), diversification, and systems are in place. Current SFB model not restricting growth until then.