Fitch Ratings Boosts PNB's Viability Amidst Steady Growth

Fitch Ratings has upgraded PNB's Viability Rating, acknowledging the bank's improved risk profile and financial performance. Despite past volatility, PNB's asset-quality outlook is positive, with impairments expected to decline. India's economic growth further supports PNB's potential for sustainable business, aided by enhanced loan diversification and reduced bad loans.

Fitch Ratings has affirmed the Punjab National Bank's (PNB) Long-Term Issuer Default Rating (IDR) at 'BBB-' with a 'Stable' outlook. Meanwhile, the bank's Viability Rating (VR) has been upgraded to 'bb--' from 'b+', and its Government Support Rating (GSR) remains at 'B--'.

The upgrade reflects ongoing improvements in PNB's risk profile and financial performance, which have exceeded Fitch's expectations. However, the agency warns that the bank's risk profile continues to be crucial, given its volatile history and moderate financial buffers.

Fitch suggests that India's economic growth should bolster the ability of Indian banks, including PNB, to maintain profitable operations if they manage risks effectively. The bank has made strides in diversifying its loan mix, cleaning up bad loans, and limiting unsecured retail exposure, leading to an upward revision of its outlook on asset quality to positive from stable.

The bank's impaired-loan ratio fell to 4.1% in the first nine months of 2024-25, down from 5.7% in the previous year, although it remains above the industry average. Punjab National Bank, India's second-largest public sector bank, boasts a vast network with over 51,000 touchpoints, including branches, ATMs, and business correspondents.