Improved Asset Quality Across Banks
Several major banks, including ICICI Bank, Federal Bank, Indian Bank, and Bank of India, have shown improved asset quality in the second quarter of FY26. Their gross and net non-performing asset (NPA) ratios dropped year-on-year, signaling stronger financial health and better credit management.
A loan becomes a non-performing asset when the borrower fails to pay the principal or interest for a certain period, meaning it no longer earns income for the bank. The Reserve Bank of India (RBI) defines NPAs as loans where payments are overdue and no longer generate returns for the lender.
ICICI Bank Leads with Strong Results
ICICI Bank reported a market cap of ₹9,82,711 crore and a 1.03 percent rise in stock price to ₹1,377.80. Its net interest income grew 9 percent year-on-year to ₹26,163.5 crore, and net profit rose by 3 percent to ₹14,318 crore in Q1 FY26. The bank’s gross NPA fell from 1.97 percent in Q2 FY25 to 1.58 percent in Q2 FY26, while net NPA improved to 0.39 percent from 0.42 percent.
Federal Bank also reported better performance, with its gross NPA declining from 2.09 percent to 1.83 percent and net NPA dropping from 0.57 percent to 0.48 percent. The bank’s net interest income grew over 5 percent to ₹2,495 crore, though net profit slipped by 8 percent to ₹1,019.4 crore.
Indian Bank showed a strong improvement in asset quality, with gross NPA falling from 3.48 percent to 2.6 percent and net NPA dropping from 0.27 percent to 0.16 percent. The bank’s net profit jumped by 11 percent to ₹3,040.5 crore, supported by a 6 percent rise in net interest income to ₹6,588.6 crore.
Bank of India also reduced its gross NPA to 2.54 percent from 4.41 percent and net NPA to 0.65 percent from 0.94 percent. Despite a 1.2 percent dip in net interest income to ₹5,992 crore, its net profit increased by over 5 percent to ₹2,525.6 crore.
The steady decline in NPAs across these banks reflects stronger credit discipline and effective recovery efforts.
