PNB vs Union Bank (2026): Deposits, ROA, NIM, NPAs & Which Is Better?
₹4.4 lakh crore more deposits. Only a slightly larger quarterly profit.
Punjab National Bank has a much larger funding franchise than Union Bank of India. Union still earns more profit from every ₹100 of assets.
PNB deposits stand at approximately ₹17.24 lakh crore.
Union Bank deposits are about ₹12.83 lakh crore.
That is a difference of more than ₹4.4 lakh crore—larger than the entire deposit base of several listed Indian banks.
Yet Q1 FY2027 standalone PAT was ₹5,253 crore at PNB and ₹5,332 crore at Union Bank.
The almost identical profits from radically different balance-sheet sizes expose the central issue immediately:
PNB owns more raw banking capacity. Union currently converts each unit of capacity into earnings much more efficiently.
The earnings-density formula
Think of the two banks through four stages rather than a conventional peer table.
PNB is stronger at stage one.
Union Bank currently performs better at stages three and four.
The investment question is whether PNB can close the efficiency gap before Union fixes its weaker deposit-growth problem.
PNB vs Union Bank: Q1 FY2027 comparison
| Metric | Punjab National Bank | Union Bank of India | Current Reading |
|---|---|---|---|
| Standalone PAT | ₹5,253 Cr | ₹5,332 Cr | Almost identical |
| Reported PAT growth | +213.6% | +29.6% | PNB distorted by tax-affected prior-year base |
| NII | ₹10,798 Cr | ₹10,037 Cr | PNB absolute |
| NII growth | +2.1% | +10.15% | Union |
| Total deposits | ₹17.24 lakh Cr | ₹12.83 lakh Cr | PNB |
| Deposit growth | +8.5% | +3.5% | PNB |
| Gross / global advances | ₹12.73 lakh Cr | ~₹10.96 lakh Cr | PNB |
| Advance growth | +12.7% | +12.5% | Essentially tied |
| Credit-deposit ratio | 73.8% | ~85% | PNB funding headroom |
| CASA ratio | 36.7% | 35.10% | PNB slightly |
| NIM | 2.50% global | 2.80% | Union |
| ROA | 1.04% | 1.36% | Union |
| ROE | 17.33% | 17.23% | Essentially tied |
| GNPA | 2.78% | 2.65% | Union slightly |
| NNPA | 0.28% | 0.47% | PNB |
| Provision coverage | 97.23% incl. technical write-offs | 95.05% | PNB |
| Credit cost | ~0.25% | 0.38% | PNB |
| Cost-to-income | ~50.31% | 45.34% | Union |
| Capital adequacy | 18.13% | 18.46% | Very close |
| 28 Aug 2026 market cap | ₹1,32,629 Cr | ₹1,41,642 Cr | Union slightly larger equity value |
| P/E | 6.00x | 6.86x | PNB cheaper |
| P/B | 0.91x | 1.08x | PNB cheaper |
PNB owns substantially more funding than it currently needs
A 73.8% credit-deposit ratio is the clearest evidence.
For every ₹100 of deposits, PNB has roughly ₹74 deployed into advances.
Union Bank's ratio is materially higher.
PNB therefore holds a larger buffer that can support future loan growth without requiring an equal rupee of incremental deposits for every rupee of new credit.
This is valuable optionality.
But unused deposits are not free
A bank still pays interest on deposits that are invested outside the core loan book.
Those funds may sit in securities or other assets earning lower spreads than well-priced loans.
That is why PNB can own ₹4.4 lakh crore more deposits than Union but earn essentially the same quarterly profit.
The franchise is bigger. Its current earnings density is lower.
PNB's future profitability can improve without dramatic deposit growth
This is the attractive part of the under-deployment story.
If PNB grows loans 12%-15% while deposits grow 8%-10%, the CD ratio rises gradually and more of the existing funding base becomes productive.
Done carefully, this can raise NII and ROA without creating funding stress.
Done carelessly, it can recreate the weak underwriting that caused the historical PSU-bank NPA cycle.
Union Bank is much further through the deployment process
Gross advances are roughly ₹10.96 lakh crore against deposits around ₹12.83 lakh crore.
This produces a much higher credit-deposit ratio.
Union therefore has less idle funding capacity but is extracting more earnings from the balance sheet today.
Union's 1.36% ROA is the most important number in this comparison
PNB is at 1.04%.
A 32-basis-point gap in ROA is substantial.
It means that, annualised, every ₹100 of Union assets currently produces around ₹1.36 of profit compared with approximately ₹1.04 at PNB.
That difference explains why Union can have a smaller balance sheet but almost identical PAT.
The higher ROA begins with margin
Union NIM is approximately 2.80% versus PNB global NIM of 2.50%.
Thirty basis points is meaningful across a trillion-rupee asset base.
PNB actually has a slightly higher CASA ratio, so the margin gap cannot be blamed simply on funding mix.
Asset mix, pricing and balance-sheet deployment matter too.
PNB's stronger CASA should theoretically produce more margin than it does
PNB CASA ratio is 36.7%.
Union is around 35.1%.
The difference is small, but directionally PNB has the advantage.
Yet Union earns the wider NIM.
This suggests Union's assets currently produce more spread per unit of funding.
Union improved CASA while deliberately shedding expensive deposits
Union's total deposit growth of 3.5% looks weak at first glance.
Management, however, has been reducing expensive bulk funding while improving the mix of CASA and retail liabilities.
This is why deposit quantity and deposit quality must be separated.
Union accepted slower funding growth to defend economics.
The strategy worked in Q1—but it cannot run forever
Advances grew approximately 12.5%.
Deposits grew only 3.5%.
A bank can intentionally shed expensive deposits for a few quarters.
It cannot compound double-digit loans indefinitely while deposits remain in low-single-digit growth.
Union's next liability challenge is therefore to grow good deposits, not merely remove bad ones.
PNB has no comparable quantity problem today
Deposit growth is 8.5%.
Loan growth is 12.7%.
The gap is manageable because the starting CD ratio is so low.
This gives PNB a much longer runway before liability growth becomes an immediate constraint.
Union's second ROA advantage is operating efficiency
Cost-to-income is approximately 45.34%.
PNB is closer to 50%.
That roughly five-percentage-point difference means Union retains more of each rupee of operating income before provisions and tax.
This matters enormously at scale.
Union generated nearly 30% PAT growth without explosive NII growth
NII increased about 10.15%.
Operating profit increased roughly 15.8%.
Operating expenses fell slightly.
Provisions declined materially.
That produced ₹5,332 crore of net profit, up 29.6%.
The quarter shows very strong operating leverage.
PNB's reported 214% PAT growth is much less informative
PNB's prior-year quarter contained a major one-time tax charge.
Therefore the current ₹5,253 crore profit creates a huge year-on-year percentage increase.
The recurring income engine was much more modest:
- NII +2.1%.
- Operating profit +6.2%.
This is still positive. It is not 214% operating growth.
The real PNB question is what replaces NPA-repair earnings
For several years, PSU banks could grow profit rapidly simply because old bad-loan provisions declined.
PNB has already achieved much of that cleanup.
NNPA is only 0.28%.
Provision coverage is approximately 97%.
Once provision improvement is largely exhausted, future earnings need to come from revenue.
That is where Union currently looks further ahead
NIM is higher.
ROA is higher.
Cost-to-income is lower.
NII growth is faster.
Union therefore looks more like a bank already monetising its repaired balance sheet.
PNB still looks like a bank moving from repair into monetisation.
Asset quality is much closer than the old reputations suggest
Union GNPA: 2.65%.
PNB GNPA: 2.78%.
Only thirteen basis points separate them.
A decade ago both institutions carried far more severe stressed-asset burdens.
Today, gross NPA no longer explains the profitability gap.
PNB wins the net-NPA comparison decisively
0.28% versus Union at 0.47%.
PNB's extremely high provision coverage has already absorbed most of the recognised credit risk.
This gives the bank a very clean residual balance sheet despite slightly higher gross NPA.
Provision coverage is also stronger at PNB
PNB is around 97.23% including technical write-offs.
Union is around 95.05%.
Both numbers are excellent.
At these levels, the important credit question shifts from old NPAs to the performance of loans being originated today.
PNB also has lower current credit cost
Roughly 0.25% versus Union at 0.38%.
That makes the ROA gap even more interesting.
PNB loses less to credit provisions and has slightly better CASA, but Union still produces 32 basis points more ROA.
The remaining explanation must therefore sit in asset yield, utilisation and operating efficiency.
Union's credit cost is still very low by historical standards
0.38% is not a negative credit signal.
It is simply higher than PNB's exceptionally low current figure.
Union's GNPA and NNPA are improving, provision coverage exceeds 95%, and credit cost declined year on year.
ROE removes much of Union's apparent profitability advantage
PNB ROE: 17.33%.
Union ROE: 17.23%.
They are effectively identical.
This happens because ROE depends not only on asset profitability but also on how much common equity supports the balance sheet.
Union carries a very strong capital cushion, which reduces leverage and can lower ROE even while ROA is excellent.
Total capital is strong at both banks
PNB reported 18.13% CRAR.
Union reported 18.46%.
Neither bank appears constrained from growing because of regulatory capital today.
That shifts the strategic constraint toward funding, profitability and risk appetite.
The capital cushion matters ahead of ECL accounting
Expected-credit-loss accounting pulls provisioning earlier in the life of a loan.
That can consume retained earnings and capital during transition.
Banks entering the regime with high regulatory buffers can absorb the change more comfortably while continuing to lend.
Both PNB and Union are comparatively well positioned on this measure.
The valuation gap says the market already believes Union is the better current bank
On August 28, 2026:
- PNB P/E: 6.00x.
- PNB P/B: 0.91x.
- Union P/E: 6.86x.
- Union P/B: 1.08x.
Union therefore costs roughly 14% more on earnings and roughly 19% more on book value.
The premium is not huge.
It is meaningful.
Why does Union deserve the premium today?
The clearest reasons are:
- 1.36% ROA versus 1.04%.
- 2.80% NIM versus 2.50% global at PNB.
- 45.34% cost-to-income versus roughly 50%.
- 10% NII growth versus 2%.
- Cleaner reported earnings growth.
Union currently earns more from each rupee of assets.
Why might PNB still be more asymmetric?
Because PNB has several improvement levers that Union has already partly captured.
PNB can:
- Raise credit deployment from a 73.8% CD ratio.
- Improve NIM through deposit repricing.
- Accelerate NII from the current weak base.
- Maintain extremely low credit cost.
- Move ROA above 1.1%.
If these occur together, the sub-1x book valuation can rerate quickly.
PNB's larger balance sheet creates more absolute upside from small efficiency gains
A ten-basis-point improvement in ROA across a very large asset base translates into a meaningful amount of additional profit.
This is one reason operational improvement in a huge under-earning bank can create substantial earnings growth without dramatic balance-sheet expansion.
Union's challenge is defending rather than discovering profitability
1.36% ROA is already strong.
45% cost-to-income is already good for a PSU bank.
NIM has already improved to 2.80%.
The challenge is preserving these metrics while fixing the liability-growth gap.
PNB's challenge is the opposite
The funding franchise exists.
Asset quality has largely been repaired.
Capital exists.
The missing ingredient is a stronger recurring revenue engine.
This is why NII growth is probably the single most important PNB metric over the next several quarters.
The digital transformation matters more for PNB because of its giant physical network
PNB has more than 10,000 domestic branches and over 54,000 touch points.
Digital transactions increased 24% year on year.
As routine servicing shifts online, the physical network can become more focused on:
- Loan origination.
- Deposits.
- MSME relationships.
- Government business.
- Cross-sell.
If branch productivity keeps improving, cost-to-income can move closer to Union's level.
Union's operational efficiency is already giving it that advantage
Union's lower cost ratio means management does not need the same revenue growth simply to produce incremental profit.
This is why two banks with similar NII can produce different ROA even when credit costs are both low.
Which bank has the better deposit franchise?
PNB on quantity and current funding headroom.
It owns ₹4.4 lakh crore more deposits, has slightly better CASA and a far lower CD ratio.
Union currently monetises the smaller liability base more effectively.
Which bank has the better profit engine?
Union Bank today.
The evidence is the 1.36% ROA, 2.80% NIM, faster NII growth and lower cost-to-income ratio.
Which bank has the cleaner residual bad-loan exposure?
PNB.
NNPA of 0.28% and roughly 97% provision coverage leave very little recognised stress unprovided.
Which bank has the better gross asset-quality level?
Union, but only narrowly.
2.65% GNPA versus 2.78%.
The difference is no longer large enough to drive the investment decision.
PNB risk and confirmation map
What can go wrong
- NII remains near low-single-digit growth.
- Loan deployment accelerates into weaker credit.
- CASA slips while deposit competition increases.
- Current ultra-low credit cost proves cyclical.
- Investors continue valuing PNB below book because ROA stays near 1%.
What would confirm the rerating
- NII growth moves into high single digits.
- Global NIM approaches 2.6%-2.7%.
- CD ratio rises gradually through quality lending.
- ROA moves above 1.1%.
- GNPA falls toward 2.5% or lower.
Union Bank risk and confirmation map
What can go wrong
- Deposit growth stays in low single digits.
- Funding cost rises as the CD ratio tightens.
- Operating-expense benefit reverses.
- ROA slips back toward 1%.
- The above-book valuation premium compresses.
What would confirm the quality premium
- Deposits return toward high-single-digit growth.
- CASA stays near 35% or higher.
- NIM remains around 2.8%.
- ROA stays near 1.3%+.
- Credit cost remains below 0.5%.
PNB vs Union Bank: current conclusion
Union Bank is currently the more efficient bank. Its smaller balance sheet produces almost the same profit as PNB, while NIM, NII growth, ROA and cost-to-income are all stronger.
PNB is currently the more under-utilised banking franchise. It owns substantially more deposits, has more funding headroom, lower net NPA, higher provision coverage and a cheaper valuation.
PNB vs Union Bank FAQs
Which bank is larger?
PNB, with approximately ₹17.24 lakh crore of deposits versus Union Bank around ₹12.83 lakh crore.
Which is growing loans faster?
They are almost tied: PNB around 12.7% versus Union Bank around 12.5%.
Which is growing deposits faster?
PNB, around 8.5% versus Union Bank around 3.5%.
Which has the better CASA ratio?
PNB slightly, at approximately 36.7% versus Union Bank around 35.1%.
Which has higher NIM?
Union Bank, around 2.80% versus PNB global NIM of 2.50%.
Which has higher ROA?
Union Bank at 1.36% versus PNB at 1.04%.
Which has higher ROE?
They are effectively tied: PNB at 17.33% and Union Bank at 17.23%.
Which has better gross NPA?
Union Bank slightly, 2.65% versus PNB at 2.78%.
Which has lower net NPA?
PNB, 0.28% versus Union Bank at 0.47%.
Which has lower credit cost?
PNB at roughly 0.25% versus Union Bank at 0.38%.
Which stock is cheaper?
PNB on both late-August P/E and P/B.
Where can investors compare them on Bull Run?
Use the PNB stock page, Union Bank stock page and Public Sector Bank sector page.
Research sources
Disclaimer
This article is educational and informational only. PNB's Q1 FY2027 reported PAT growth is materially affected by the tax-distorted Q1 FY2026 comparison and should not be treated as recurring profit growth. Union Bank's current profit growth also benefits from lower operating expenses and provisions, which may not repeat at the same rate indefinitely. PNB and Union Bank disclose some banking metrics using slightly different balance-sheet definitions; these are labelled where material. Current credit costs and NPA ratios remain unusually strong compared with historical PSU-bank cycles and can normalise. Market prices and valuation multiples are point-in-time observations from August 28, 2026. Nothing here recommends buying, selling or holding Punjab National Bank, Union Bank of India or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.