Fitch Ratings Boosts PNB's Viability Amid Positive Growth Trajectory

Fitch Ratings has upgraded Punjab National Bank's (PNB) Viability Rating to 'bb--' citing improvements in its risk profile and financial performance. The Long-Term Issuer Default Rating remains at 'BBB-' with a 'Stable' outlook. PNB's asset-quality score outlook has been revised to positive, reflecting better loan mix diversification.

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

The elevation in PNB's viability rating by Fitch indicates a positive shift in the bank's risk profile and financial metrics, which have surpassed previous expectations and are on a promising trajectory. Despite this progress, the bank's risk profile continues to be a crucial factor, considering its historical volatility and moderate risk buffers.

Fitch emphasizes that economic growth in India will likely bolster banks like PNB, provided risks are effectively managed. PNB's loan mix and legacy loan clean-up have notably improved, leading to a revised positive outlook for its asset-quality score, as impaired-loan ratios are anticipated to decrease below a 5% threshold by 2026-27.

(With inputs from agencies.)