Indian Bank vs PNB (2026): ROA, NIM, Deposits, NPAs & Which Is Better?

Indian Bank vs PNB: Q1 FY2027 scoreboard

The opportunity is large because PNB starts from enormous scale

The simple CD-ratio thought experiment produces roughly ₹1.25 lakh crore of theoretical additional advances if PNB matched Indian Bank's current deployment ratio.

That amount alone is larger than the entire loan books of several listed banks.

Again, PNB should not mechanically chase that number. The comparison simply demonstrates that even modest deployment changes at a ₹17 lakh crore deposit franchise can create significant incremental earning assets.

Indian Bank has much less unused funding—but it earns more from what is already deployed

Indian Bank's CD ratio is 81.06%.

The bank therefore has less spare deposit capacity, but the existing balance sheet produces:

• 3.29% global NIM.
• 1.31% ROA.
• 19.48% ROE.

PNB produces:

• 2.50% global NIM.
• 1.04% ROA.
• 17.33% ROE.

Indian Bank has already solved more of the monetisation problem.

The 79-basis-point NIM gap is more important than the one-percentage-point loan-growth gap

Indian Bank advances grew 13.89% versus PNB at 12.7%.

That difference is modest.

The spread difference is not.

Indian Bank earns roughly 79 basis points more global NIM. On banking balance sheets measured in lakh crores, that is economically substantial.

PNB could therefore improve profitability meaningfully even if loan growth remained around 12%-13%, provided margin and deployment improve.

Indian Bank's funding franchise is also stronger despite being smaller

Domestic CASA is approximately 39.73% compared with PNB at 36.7%.

Indian Bank also reported cost of deposits at 4.80%.

PNB's cost of deposits has been improving as older deposits reprice, which gives PNB a margin-recovery lever.

The important observation is that Indian Bank already combines stronger CASA with significantly better asset-side monetisation.

PNB's margin recovery does not require a riskier loan book

Management's FY27 global NIM guidance is approximately 2.60%-2.70%, compared with Q1 actual NIM of 2.50%.

If deposit costs continue falling and the bank deploys more of its liability base, some margin recovery can occur through balance-sheet mechanics rather than higher-risk borrowers.

That is a healthier rerating route than simply chasing yield.

The problem is that PNB's Q1 NII growth was only 2.1%

This is arguably the single most important weakness in the quarter.

PNB has already achieved most of the dramatic NPA repair that powered recent profit growth.

Future earnings need to come increasingly from recurring banking revenue.

At 2.1% NII growth, that transition is not yet complete.

PNB's 214% PAT growth should not distract from that revenue gap

PNB reported ₹5,253 crore of Q1 profit, up 213.6% year on year.

The number is mathematically correct, but the comparison quarter contained an unusually large tax charge associated with PNB's transition to the new tax regime.

PNB's current profit level is real. The growth percentage is not representative of recurring banking growth.

Operating profit +6.2% and NII +2.1% are more useful measures for assessing the current earnings engine.

Indian Bank's reported 10% PAT growth is much less dramatic—and much easier to interpret

Net profit increased to ₹3,273 crore from ₹2,973 crore.

NII rose 16.92%.

Operating profit increased 16.50%.

Provisioning and tax moderated the final increase.

The quarter therefore does not require a major prior-period adjustment before it can be used in a forward operating comparison.

Operating efficiency creates another large Indian Bank advantage

44.80% cost-to-income versus PNB at 50.31%.

Five and a half percentage points is significant.

PNB has more than 10,000 domestic branches and one of the country's largest physical banking networks. That network is valuable for deposits, government business, agriculture and MSME distribution—but it also costs money.

As PNB moves routine servicing into digital channels, branch productivity becomes one of the key paths toward closing this efficiency gap.

PNB is already improving branch and employee productivity

Official Q1 disclosures show business per branch rising to roughly ₹278 crore and business per employee to about ₹29.7 crore.

Digital transactions increased 24% year on year, PNB One activated users grew 19%, and WhatsApp banking users doubled.

These changes matter because a legacy physical network becomes economically more attractive when customers execute routine transactions digitally while branches concentrate on deposits, lending and relationship products.

Indian Bank begins from the more efficient base

The bank's 44.8% cost-to-income ratio is already close to its roughly 45% FY27 guidance.

That means the investment thesis does not depend on a huge efficiency transformation.

PNB's does.

This is an important distinction between a compounder and a rerating story.

Asset quality favours Indian Bank on both gross and net ratios

Indian Bank GNPA is 1.86% compared with PNB at 2.78%.

NNPA is 0.15% versus 0.28%.

Both banks are heavily provisioned, with Indian Bank at 98.22% provision coverage and PNB at 97.23% including technical write-offs.

The old argument that PNB is simply a distressed balance sheet is therefore outdated.

Indian Bank is cleaner, but both have already absorbed most recognised legacy stress.

PNB's asset-quality repair remains one of the strongest parts of the thesis

GNPA declined by 100 basis points year on year, from 3.78% to 2.78%.

NNPA fell to 0.28%.

With provision coverage above 97%, the remaining net recognised exposure is very small.

This changes the earnings model. PNB no longer needs massive declines in old NPA provisions just to remain profitable.

The next stage is revenue productivity.

Fresh slippages actually give PNB a slight current advantage

PNB's annualised slippage ratio was approximately 0.68%.

Indian Bank reported 0.77%.

Credit cost was almost identical: about 0.25% at PNB and 0.23% at Indian Bank.

These figures matter because they show PNB's much higher GNPA is primarily a legacy-stock issue rather than evidence of dramatically worse current loan formation.

Indian Bank's 0.15% NNPA still gives it a remarkable buffer against old stress

Very little recognised bad-loan exposure remains after provisions.

For investors paying 1.54x book, this is important: the book value being purchased is less burdened by legacy unprovided NPAs than it was in earlier PSU-bank cycles.

Capital is strong at both banks

Indian Bank total capital adequacy is 17.58%.

PNB reported 18.13%.

Neither bank appears constrained by regulatory capital today.

That is especially relevant for PNB because greater use of its deposit headroom will increase risk-weighted assets. Strong capital means the theoretical ability to deploy more exists; underwriting quality and profitability become the binding constraints.

PNB does not need to close the entire CD-ratio gap

This is worth stressing because the ₹1.25 lakh crore thought experiment can otherwise be misunderstood.

A bank should not maximise CD ratio mechanically.

Liquidity requirements, investment portfolios, overseas operations, stress scenarios and funding stability all matter.

PNB could create meaningful incremental earnings by closing only part of the current gap while keeping a conservative liquidity profile.

A three-percentage-point increase alone would already be economically meaningful

On a ₹17 lakh crore-plus deposit base, even a small increase in productive deployment represents tens of thousands of crores of additional customer advances.

The opportunity therefore does not require a dramatic strategic shift.

It requires disciplined execution across retail, MSME, agriculture and selected corporate lending.

PNB's granular books are already growing faster than the bank average

Core retail advances increased 17.5%.

Vehicle loans grew 34.4%.

MSME advances increased 19.8%.

Agriculture priority-sector credit rose 16.4%.

This indicates the bank is already moving some of the unused funding into granular products rather than relying solely on corporate balance-sheet expansion.

Indian Bank also concentrates heavily on granular RAM lending

RAM accounts for approximately 66% of domestic advances.

Retail grew 18.74% and MSME 17.03%.

Indian Bank therefore achieves its superior NIM partly through a portfolio that contains significant granular lending rather than a heavily low-yield corporate mix.

That portfolio design is one reason PNB cannot assume that simply increasing credit deployment will automatically lift NIM to Indian Bank's level.

Indian Bank's profitability premium is already embedded in the share price

August 28 valuation:

• Indian Bank P/E: 9.28x.
• Indian Bank P/B: 1.54x.
• PNB P/E: 6.00x.
• PNB P/B: 0.91x.

Indian Bank therefore costs roughly 55% more on earnings and almost 70% more on book value.

The market already knows Indian Bank is the more productive bank.

Indian Bank's 1.54x book valuation asks a different question

The market already accepts the quality.

Now the bank must preserve it.

If ROA falls toward 1%, NIM compresses materially or credit costs rise, the premium can contract even if the bank remains profitable.

A higher-quality stock can therefore carry lower operational risk while simultaneously carrying greater valuation risk.

What would make Indian Bank clearly worth the premium?

The strongest case is not another rerating. It is sustained book-value compounding.

If Indian Bank continues producing high-teens ROE, retains a meaningful share of earnings and keeps asset quality clean, book value can compound even if the P/B multiple never expands.

That is a fundamentally different return engine from PNB.

What would make PNB outperform despite remaining a weaker bank?

PNB does not need to become Indian Bank overnight.

Suppose it gradually achieves:

• NIM of 2.6%-2.7%.
• ROA of 1.15% or better.
• NII growth in high single digits.
• GNPA below 2.5%.
• Credit cost below 0.5%.
• A somewhat higher but still prudent CD ratio.

Those improvements could justify a higher P/B multiple without the bank ever matching Indian Bank's current 3.29% NIM.

The potential rerating comes from becoming better, not becoming best

This is why cheaper repaired PSU banks can sometimes outperform fundamentally stronger peers.

Indian Bank needs to remain excellent.

PNB merely needs to close part of the gap between current economics and the productivity already latent in its enormous deposit franchise.

Bull Run's market snapshot shows Indian Bank has already received stronger recognition

The one-year performance gap matches the fundamental narrative

Indian Bank's Bull Run snapshot showed a roughly 31% one-year gain versus PNB around 10%.

The market has rewarded Indian Bank's higher ROA, NIM and operating efficiency.

That does not tell us which stock performs better from here. It tells us which thesis has already received more market recognition.

The metric that matters most for Indian Bank

ROA durability.

The bank is already efficient, well provisioned and highly capitalised. Investors paying 1.5x book need evidence that the 1.3% ROA is a sustainable operating feature rather than a temporary high point in a benign credit cycle.

The metric that matters most for PNB

NII growth.

PNB has already fixed much of the balance-sheet problem. Net NPA is 0.28%, provision coverage exceeds 97%, capital is ample and deposit capacity is enormous.

If NII remains around 2% growth, the franchise will continue to look under-monetised.

If NII accelerates toward high single digits while asset quality holds, the investment narrative changes materially.

Indian Bank vs PNB FAQs

Which bank is larger?

PNB by roughly two times on deposits and advances.

Which has higher NIM?

Indian Bank at 3.29% globally versus PNB at 2.50%.

Which has higher ROA?

Indian Bank at 1.31% versus PNB at 1.04%.

Which has higher ROE?

Indian Bank at 19.48% versus PNB at 17.33%.

Which is growing loans faster?

Indian Bank slightly, at 13.89% versus PNB at 12.7%.

Which has the better CASA ratio?

Indian Bank, at approximately 39.73% domestically versus PNB at 36.7%.

Which has better asset quality?

Indian Bank currently has both lower GNPA and lower NNPA.

Which has greater funding headroom?

PNB because its credit-deposit ratio is only 73.8%, compared with Indian Bank at 81.06%.

Does PNB really have ₹1.25 lakh crore of unused loan capacity?

No fixed capacity figure should be interpreted that way. The ₹1.25 lakh crore number is only a mathematical thought experiment showing the difference if PNB's current deposit base were deployed at Indian Bank's CD ratio. Real lending capacity depends on liquidity, capital, borrower demand, risk appetite, regulation and asset quality.

Which stock is cheaper?

PNB on both late-August P/E and P/B.

Where can investors compare them on Bull Run?

Use the Indian Bank stock page, PNB stock page and Public Sector Bank sector page.

Research sources

• Bull Run — Indian Bank
• Bull Run — Punjab National Bank
• Bull Run — Public Sector Bank sector research
• Indian Bank official Q1 FY2027 results
• PNB official Q1 FY2027 financials and investor materials
• Indian Bank late-August valuation data
• PNB late-August valuation data