Bank of India earnings rose more than 25% year over year to ₹3,202 crore in the quarter ended September 30, 2026, as interest income strengthened and bad-loan ratios improved. In its October 23 earnings discussion, management maintained its FY27 lending and deposit growth targets, while outlining plans for expected credit loss provisions that had not yet begun.
Key Takeaways
- Quarterly net profit rose to ₹3,202 crore from ₹2,555 crore a year earlier.
- Bad-loan ratios improved, although net interest margin narrowed from the previous quarter.
- Management retained FY27 growth guidance and plans to begin expected credit loss provisioning after board approval.
Table of Contents
- Bank of India earnings benefit from stronger income
- Balance-sheet growth comes with funding pressure
- Lower bad-loan ratios do not eliminate provisioning needs
- FY27 growth targets remain unchanged
- Conclusion
Bank of India earnings benefit from stronger income
Net interest income increased more than 18% year over year to ₹7,007 crore from ₹5,912 crore. Non-interest income rose more than 24% to ₹2,770 crore from ₹2,220 crore, giving the bank growth across both major revenue streams.
Recoveries from written-off accounts reached ₹978 crore, up 190% year over year. Managing Director and Chief Executive Rajneesh Karnatak attributed the increase to two or three large account resolutions. Treasury and exchange transaction profit also increased 157% to ₹411 crore.
Those recoveries helped quarterly income, but their concentration in a few accounts makes the pace important to monitor. Karnatak expressed confidence that targeted resolution efforts could sustain the recovery run rate through the year; that remains a management expectation.
| Item | Details |
|---|---|
| Q2 FY27 operating profit | ₹5,089 crore, up 33% year over year |
| Domestic deposits at September 2026 | ₹9 lakh crore, up 23% year over year |
| Domestic gross advances at September 2026 | ₹7.04 lakh crore, up more than 17% year over year |
| Q2 FY27 credit cost | 0.12%, compared with 0.15% in the June quarter |
| Capital adequacy ratio at September 30 | 17.78%, compared with 16.69% a year earlier |
Balance-sheet growth comes with funding pressure
Global deposits increased more than 21% year over year to ₹10.37 lakh crore, while global gross advances grew more than 20% to ₹8.55 lakh crore. Combined global business reached ₹18.92 lakh crore.
Current and savings account deposits, known as CASA, increased to ₹3.07 lakh crore from ₹2.86 lakh crore. However, their share of deposits declined to 34.16%. Karnatak said bulk deposits had partly funded credit growth, explaining why the CASA balance could increase while its ratio fell.
Global net interest margin was 2.47%, up from 2.41% a year earlier but down five basis points from the June quarter. Management attributed a five-basis-point margin impact to foreign-currency non-resident deposit raising and noted further pressure could come from term-deposit repricing.
Lower bad-loan ratios do not eliminate provisioning needs
The gross nonperforming asset ratio improved 94 basis points year over year to 1.60%, while the net ratio declined 23 basis points to 0.42%. Provision coverage increased to 94.45% from 93.39%. The slippage ratio, however, edged up to 0.15% from 0.14%.
Karnatak said quarterly NPA provisions of more than ₹1,000 crore reflected existing income recognition, asset classification and provisioning requirements, rather than expected credit loss front-loading. The RBI's April 2025 provisioning framework explains that provisions depend on asset classification, time spent nonperforming and available security. That circular provides background to the accounting distinction, not verification of the bank's September 2026 figures.
Management said no expected credit loss provision had yet been made. The bank had engaged a consultant and was developing its models, with provisions planned across the third and fourth quarters of FY27 after board approval. Karnatak estimated an annual capital adequacy impact of about 0.5 percentage points over four years.
FY27 growth targets remain unchanged
Karnatak reaffirmed targets of 15%–16% global advances growth and 16%–17% global deposit growth for FY27. Both ranges are below the year-over-year growth reported at September, distinguishing the full-year outlook from the latest balance-sheet expansion.
Management cited a sanctioned but undisbursed credit pipeline of approximately ₹86,000–₹87,000 crore as support for lending growth. It also maintained a return-on-assets target above 1% for FY27.
Karnatak said the board had no current capital-raising plan. He also said there was no indication that the government, which held 73.8% of the bank, intended to reduce its stake further.
Conclusion
The next reporting period will show whether Bank of India can sustain income growth as deposits reprice. Its planned third-quarter start to expected credit loss provisioning remains subject to board approval, making that decision another development to watch.
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