Punjab National Bank

Punjab National Bank has showcased robust performance in FY'2024-25, marked by significant business expansion and enhanced financial health. The Bank's Business grew by 14 per cent on yearly basis. The profitability of the Bank remained upbeat with Net Profitof FY'2024-25 grew by 102 per cent. The Bank also improved its asset quality with Gross Non Performing Asset (GNPA) at 3.95 per cent and Net Non-Performing Asset at 0.40 per cent.

Over the past 130 years, Punjab National Bank has played an indispensable role in nation building by providing credit to all the segments and sectors of the economy. Bank through its various innovative products and services has aimed to drive business growth citizens, supported through education of youth, enhanced farmer's income and promoted entrepreneurship. Staying true to its commitment of financial inclusion and equitable development, Punjab National Bank (PNB) has expanded rapidly into previously unbanked regions and acted as a key facilitator in providing essential credit.

As we reflect upon the past FY'2024-25, we do so against a backdrop of a dynamic and evolving global landscape. The global economy has been challenged by two ongoing wars, escalating trade tensions led by a slew of tariffimpositions and a highly Global economic activity cent real GDP growth rate, but is expected to slow down to 2.8 per centin20251. continue theongoing recalibration to shape the opportunities and challenges before us.

The Indian Economy, however, has been, outperforming other large economies with a narrative of robust growth and increasing resilience. India stands as a beacon of stability, driven by strong domestic demand, strategic government initiatives, and a vibrant entrepreneurial spirit. The economy is expected to grow at around 6.5 per cent as per the NSO Second advance estimates for FY'2024-25. The growth

1 As per IMF World Economic Outlook, April 2025 momentum of Indian economy is anticipated to remain healthy in FY'2025-26 as well with a projected GDP growth of 6.5 per cent as per RBI estimates. While potential headwinds from global factors, such as trade uncertainties due to imposition of tariffs may moderate this pace slightly, the underlying momentum remains strong.

The growth will be supported by improvement in agriculture sector due to healthy rabi crop prospects and projected above normal monsoon2 this year. Industrial activity in India is also expected to recover. The service sector will continue to be vital component of economic growth. Among the key drivers on demand side, household consumption is expected to remain upbeat aided by the tax relief measures announced in the Union Budget 2025-26, cooling inflation and anticipated rate cuts by RBI. Fixed Capital Investment by corporates is also expected to recover supported by surge in consumption, higher capacity utilization levels, lower interest rates and healthy balance sheets of banks and corporates. Government's continued emphasis on capital expenditure and resilient services exports will further aid India's economic momentum.

The banking sector in India is a critical pillar of this progress, facilitating financial inclusion, supporting economic activity, and channelling resources towards national development goals. It is within this promising yet competitive environment that Your Bank has continued its journey of progress and value creation.

India's strong domestic demand and present significant opportunities for credit expansion and growth for the banking sector. However, credit growth of SCBs' in the past FY'2024-25 moderated compared to the previous years3 but still remained robust in double digits.

The commencement of a rate-cut cycle by RBI is expected to drive credit growth in FY'2025-26. Rising government and private capex may also lead to increased demand for corporate credit. Unsecured lending is expected to be curtailed due to tighter regulations.

Banks will continue to face competition for deposit accretion, especially for low-cost current account savings account (CASA) deposits. Going forward, Banks are likely to witness pressure on their Net Interest Margins (NIM) as RBI continues with its rate easing cycle. The advances of the Banks linked to External Benchmark will be immediately repriced at lower rate while the Deposits will be repriced at lower rate with a lag as most of the Deposits are Term Deposits and will be repriced only when it will mature.

Asset quality remains a bright spot for the banking sector, with gross non-performing assets (GNPA) at a 12-year low of 2.51 per cent and net non-performing assets (NNPA) at 0.57 per cent as on 31st December 20244. However, stress is emerging in unsecured retail loans, including personal loans, credit cards, and microfinance. Conversely, secured loans, such as mortgages and vehicle finance, continue to perform well, that helps limit the overall impact of delinquencies on the banking system.

Rapid Digital Transformation is a defining trend throughout the Banking sector. Banks are increasingly leveraging technologies like Artificial Intelligence (AI), Machine Learning (ML), the Unified Payments Interface (UPI), and sophisticated digital platforms to enhance operational deliver superior customer experiences. Though, digital transformation drives efficiency and customer convenience, it also creates avenues for risk, particularly cybersecurity threats. This underscores the need for enhanced, forward-looking risk management frameworks to encompass sophisticated monitoring of digital channels and early warning systems for emerging stress points. The Indian banking sector's resilience in 2025 will depend on its ability to navigate economic challenges and embrace technological innovations.

At the heart of our strategy lies an unwavering commitment to customer centricity. We firmly believe that our success is intrinsically linked to thesatisfactionand prosperity of customers. During the FY'2024-25, deposit mobilization was a particular challenge that entire banking industry faced. To overcome this challenge, your Bank undertook various initiatives functionalities.

Your Bank has redesigned and launched new variants of loan products and has also digitized the process of loaning to provide easy and quick access to credit with maximum benefits to customers. The Bank has designated already existing branches as 1,000 dedicated Agriculture Intensive Branches and 1,000 MSME Intensive Branches along with Customer Acquisition Centers to deliver credit to these sectors that are considered engines of development of our economy.

Digital Transformation seamless, secure, and Investing in convenient banking experiences across all channels is our top most priority. Bank remains committed in creating a comprehensive and integrated digital ecosystem that empowers both our customers & employees.

In the past years, bank has launched numerous digital products and process to make Punjab National Bank Digital First Bank. Over the last FY'2024-25, the bank has made substantial progress in its generative AI initiatives toimproveoperationalefficiencyand enhance customer experience.

At Punjab National Bank, we continuously strive to enhance the welfare of our employees and invest in their constant learning and grooming. Bank has successfully completed two years of HR Transformation FY'2024-25, under Project UDAAN, the bank has achieved significant position in transforming HR ecosystem, ensuring a future-ready workforce that is agile, skilled, and aligned with the bank's strategic goals. We focused on Capability Building through initiatives like basic to Advance level Grooming plan for each job family, Skill Assessment, Psychometric Assessment, Leadership Development Program, 360 Degree Feedback, Succession Planning and upgraded infrastructure in Advanced Learning Institutes that have shown tremendous impact in upskilling our workforce and placing the right talent in the right roles. Going ahead, our focus will be on further embedding these transformational changes, ensuring that we continue to build a world-class talent pool for the Bank.

In today's fast-evolving financial landscape, effective risk management has become more than just a safeguard, it's a competitive advantage. Banks face unprecedented challenges, from complex new regulations to rising cyber threats. Amid this turmoil, robust risk management is crucial not only for safeguarding financial stability but also for capitalising on growth opportunities. Your Bank has always remained a quick adopter of best risk management practices in the industry.

Bank provides mandatory training sessions and online questionnaire for increasing awareness on operationalrisk and risk culture. The Bank prioritizes a strong cybersecurity framework and keeps upgrading its cybersecurity components. For mitigatingClimate risk, Bank has established a dedicated Climate Risk Management Policy incorporating Task force on Climate related Financial Disclosures and a dedicated Sustainability Cell. Your Bank has also become PCAF (Partnership for Carbon Accounting Financials) signatory and honoured its commitments related to disclosing of financed emissions.

Being one of the largest PSB in India, Your Bank acknowledges the inevitable role it needs toplaytoenhancefinancialInclusion. Bank continuously strives to expand its presence across India particularly in remote areas and unbanked regions. Your Bank continues to support government initiatives and schemes for financial inclusion by leveraging its strong network of Branches and Business Correspondents. The Bank also provides free residential training to farmers, women, rural youth, for skill up-gradation to undertake self-employment ventures and Jobs. It also conducts various seminars/ programs/Camps on Financial Education and Customer Rights.

Your Bank is committed to contributing significantly to India's inspiring vision of Viksit Bharat- the transformation into a developed nation by 2047 with $30 trillion economy. At PNB, we see our role evolving beyond that of traditional financial intermediary to a strategic partner in this national endeavour. Following are the business strategies that we aim at to impact fully contribute in this national goal. We are actively reimagining our internal processes and customer journeys to eliminate friction points, reduce complexity, and make banking interactions simpler, faster, and more convenient. This includes initiatives like reducing paperwork and digitizing workflows wherever feasible. Further, we will harness the power of AI and data analytics to gain deeper insights in customer behaviour and preferences and to provide a hyper personalized experience to our customers.

We will intensify our focus on the MSME sector, recognizing it as the engine of growth and employment. This includes providing tailored financing solutions,leveraging digital platforms for Digital Commerce (ONDC) to improve market access, initiating supply chain finance, and to ensure formal financialinclusion of these vital enterprises. We will continue to channel capital towards critical infrastructure development projects and key economic sectors like agriculture, manufacturing, services, construction.

We will increasegreenfinancing, support renewable energy projects, fund climate-resilient infrastructure and encourage sustainable practices across all industries we financeas environmental sustainability will be an integral part of India's development. We will actively support the burgeoning start up ecosystem and encourage youth entrepreneurship through dedicated mentorship programs, incubation support, and targeted financialproducts designed for early-stage ventures so as to give wings to India's aspirational entrepreneurs. We will drive Financial Inclusion by leveraging India's world-class Digital Public Infrastructure (DPI), including the Jan Dhan-Aadhaar-Mobile (JAM) trinity, UPI, and the Account Aggregator framework. These powerful tools will enable us to expand our reach efficiently and affordably to previously underserved populations and remote geographies, making essential banking services accessible to all citizens. We will continue our active participation in government initiatives.

Going forward, we will further accelerate the pace of adoption of digitalsolutionsby offering seamless and secure platforms. The bank's goal is to evolve into a digitally driven bank that fully aligns with industry's best practices,all while maintaining a customer-first approach.

Our strategic objective is - to pursue growth in a sustainable and profitable manner that delivers consistent and enhanced value to you, our stakeholders. Our strategy for achieving this balance involves prudent credit growth, active management of our assets and liabilities to optimize NIM, growing CASA diverse fee income streams, achieving efficiencyby operational leveraging technology and automation and establishing a robust risk management framework.

Trust is the cornerstone upon which the entire banking system is built, and it forms the bedrock of Your Bank's philosophy and are unequivocally committed to upholding the operations. highest standards of business ethics, integrity, transparency, and corporate governance in every aspect of our functioning. This commitment is manifested through a robust governance framework, building ethics and compliance culture that permeates all levels of the Bank and maintaining open and transparent communication with all our stakeholders including customers, shareholders, employees, regulators, and the community.

We reaffirm our commitment to all our stakeholders. To our shareholders, we pledge to deliver sustainable,profitable growth and long-term value. To our customers, we promise exceptional experiences and solutions tailored to their needs. To our employees, we offer a dynamic environment for growth and development and to the community and the nation, we commit to being a responsible corporate citizen, contributing positively to societal well-being and economic development.

I extend my heartfelt gratitude to our customers and shareholders who continue to place their valuable trust in us. I also extend my gratitude to each and every member of PNB Parivar with whose dedication and hard work, Punjab National Bank continues to achieve new heights. I also would like to express my sincere thanks to the Government of India, RBI and other regulators for their continuous support and guidance. The path ahead requires continued dedication, collaboration, and innovation. We are confident that, together, we will successfully navigate the opportunities and challenges that lie before us.