Synopsis: Five leading Indian banks, including SBI, ICICI Bank, and others reported lower net NPA ratios in FY26, reflecting improved asset quality, stronger recoveries, and enhanced financial performance.
Asset quality remains one of the most important indicators of a bank’s financial health, as lower non-performing assets reflect stronger credit underwriting, efficient recovery mechanisms, and improved balance-sheet strength. A declining Net NPA ratio also enhances profitability by reducing provisioning requirements and improving capital efficiency.
In FY26, several leading Indian banks reported a notable improvement in their asset quality, with Net NPA ratios declining compared to the previous year. The reduction was supported by stronger recoveries, lower slippages, and prudent risk management practices, highlighting the sector’s continued progress in strengthening its loan books.
Bandhan Bank Ltd
Bandhan Bank Limited is a private sector bank that evolved from one of India’s largest microfinance institutions. The bank has a strong presence in eastern and northeastern India and focuses on financial inclusion by serving underserved and rural customers.
With a market capitalisation of Rs. 32,937 cr, the shares of Bandhan Bank Ltd were trading at Rs. 204.10 per share, down from its previous close of Rs. 205.90 per share.
The company reported a Net Interest Income (NII) of Rs. 2,800 crore, reflecting growth of 1.4% year-on-year and 4.0% quarter-on-quarter. Total net revenue stood at Rs. 3,570 crore, up 3.2% YoY and 5.5% QoQ.
Operating profit was Rs. 1,440 crore, declining by 8.3% YoY while remaining broadly stable with a marginal 0.3% QoQ decrease. Profit After Tax (PAT) surged to Rs. 530 crore, registering a strong increase of 68.0% YoY and 159.2% QoQ. Asset quality continued to improve, with the Net Non-Performing Asset (NNPA) ratio declining to 1.0%, improving by 32 basis points YoY and 3 basis points QoQ.
Indian Overseas Bank (IOB)
Indian Overseas Bank is a government-owned public sector bank. It offers a wide range of banking services including retail banking, corporate lending, agriculture finance, and international banking. After significant improvements in asset quality and profitability in recent years, IOB has strengthened its financial position while continuing to support India’s credit growth.
With a market capitalisation of Rs. 63,431 cr, the shares of Indian Overseas Bank were trading at Rs. 32.94 per share, up from its previous close of Rs. 32.92 per share.
The bank’s asset quality improved significantly during FY 2025-26. Gross Non-Performing Assets (GNPA) declined by 17.5% YoY to Rs. 4,410 crore from Rs. 5,348 crore in FY 2024-25, while Net Non-Performing Assets (NNPA) decreased by 30.0% YoY to Rs. 638 crore from Rs. 912 crore.
As a result, the GNPA ratio improved to 1.42% from 2.14%, reflecting a reduction of 72 basis points, while the NNPA ratio declined to 0.21% from 0.37%, improving by 16 basis points year-on-year.
For FY 2025-26, the bank delivered a strong financial performance, supported by healthy growth in core earnings and profitability. Interest Income increased by 13.4% YoY to Rs. 31,896 crore, while Interest Expenses rose by 12.1% YoY to Rs. 19,322 crore. Consequently, Net Interest Income (NII) grew by 15.5% YoY to Rs. 12,574 crore. Non-Interest Income remained broadly stable at Rs. 5,636 crore, registering a modest 1.6% YoY increase.
Driven by the growth in NII, Operating Income rose by 10.8% YoY to Rs. 18,210 crore. Despite a 5.6% YoY increase in Operating Expenses to Rs. 8,184 crore, Operating Profit expanded by 15.4% YoY to Rs. 10,026 crore. Lower credit costs further supported earnings, with Total Provisions declining by 10.0% YoY to Rs. 3,758 crore. As a result, Net Profit surged by 56.2% YoY to Rs. 5,208 crore in FY 2025-26, compared with Rs. 3,335 crore in FY 2024-25.
State Bank of India (SBI)
State Bank of India is India’s largest bank by assets, deposits, branch network, and customer base. Majority-owned by the Government of India, SBI provides comprehensive banking and financial services across retail, corporate, treasury, insurance, and asset management segments.
With a market capitalisation of Rs. 9,05,523 cr, the shares of State Bank of India were trading at Rs. 980.40 per share, up from its previous close of Rs. 977.75 per share.
For FY 2025-26, the bank reported a steady improvement in profitability and balance sheet growth. Net Interest Income (NII) increased by 4.1% YoY to Rs. 1,73,120 crore from Rs. 1,66,340 crore in FY 2024-25. However, margins moderated, with the Net Interest Margin (NIM) for the whole bank declining by 17 basis points to 2.91%, while the domestic NIM fell by 18 basis points to 3.03%.
The bank’s operating performance remained strong, with Operating Profit rising 11.3% YoY to Rs. 1,23,015 crore. Net Profit grew by 12.9% YoY to Rs. 80,032 crore, reflecting healthy earnings growth despite margin pressures.
Asset quality continued to improve, with the Gross NPA ratio declining by 33 basis points to 1.49% and the Net NPA ratio improving by 8 basis points to 0.39% from 0.47%. Credit Cost remained largely stable at 0.37%, while the Provision Coverage Ratio (PCR) stood at 74.36% and 91.97% including AUCA, broadly in line with the previous year.
The bank also strengthened its capital position, with the Capital Adequacy Ratio improving by 115 basis points to 15.40%. On the balance sheet front, Gross Advances registered robust growth of 16.9% YoY to Rs. 49,32,627 crore, while Total Deposits increased by 11.0% YoY to Rs. 59,75,642 crore, supporting continued business expansion.
ICICI Bank Ltd
ICICI Bank Limited is one of India’s leading private sector banks, known for its strong retail franchise, digital banking capabilities, and diversified loan portfolio. The bank serves millions of customers through a wide network of branches, ATMs, and digital platforms.
With a market capitalisation of Rs. 8,92,741 cr, the shares of ICICI Bank Ltd were trading at Rs. 1245 per share, down from its previous close of Rs. 1,262.20 per share.
The bank’s asset quality improved further during the quarter, with the Net NPA ratio declining to 0.33% as of March 31, 2026, from 0.37% as of December 31, 2025. Gross NPA accretion remained under control, with net additions to gross NPAs at Rs. 1,174 crore in Q4 FY26 compared with Rs. 1,325 crore in Q4 FY25.
The Provision Coverage Ratio (PCR) strengthened to 75.8% as of March 31, 2026, up from 75.4% at the end of the previous quarter, reflecting a prudent provisioning approach and continued improvement in asset quality. NII increased from Rs. 81165 cr in FY25 to Rs. 88075 cr in FY26.
Punjab National Bank (PNB)
Punjab National Bank is one of India’s oldest and largest public sector banks. The bank offers a full range of banking products, including retail loans, corporate finance, MSME lending, and agricultural credit, and is an important participant in India’s public banking system.
With a market capitalisation of Rs. 1,22,112 cr, the shares of Punjab National Bank were trading at Rs. 106.25 per share, down from its previous close of Rs. 106.85 per share.
The bank reported a healthy improvement in its operating performance during FY 2025-26, with Operating Profit increasing by 9.2% YoY to Rs. 29,290 crore, compared with Rs. 26,831 crore in FY 2024-25. Net Profit rose modestly by 1.6% YoY to Rs. 16,904 crore from Rs. 16,630 crore in the previous year.
The profit growth was achieved despite the bank incurring an additional tax liability of Rs. 3,324 crore in the first quarter of FY 2025-26 following its transition from the old tax regime to the new tax regime, highlighting the resilience of its core operating performance.
The bank’s asset quality witnessed a notable improvement during the year. The Gross NPA (GNPA) ratio declined by 100 basis points YoY to 2.95% as of March 31, 2026, compared with 3.95% as of March 31, 2025. Similarly, the Net NPA (NNPA) ratio improved by 11 basis points YoY, falling to 0.29% from 0.40% in the corresponding period last year, reflecting sustained progress in asset quality and recovery efforts.
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