Indian Banks’ Profits Rise 20% to 1.16 Trillion Rupees in Second Quarter
Key Facts
Net profit at India’s scheduled commercial banks rose 20.0% year on year to 1.16 trillion rupees in the second quarter of fiscal 2027, staying above 1 trillion rupees for the fourth consecutive quarter, according to a CareEdge Ratings report. The figure reflects strong growth in reported profit during the period. But the increase looks different when one-off items that affected the two comparison quarters are excluded. Adjusted growth was 15.7% year on year, while profit fell 4.5% from the previous quarter. The divergence puts reported performance in a more cautious context when assessing the path of profitability.
The annual comparison base was weak, with bank profits rising just 4.2% in the second quarter of fiscal 2026, according to CareEdge. This means part of the latest growth rate reflects comparison with a period that recorded only a limited increase. The gap between reported growth and growth excluding one-off items also highlights the impact of those items on the result. Profit growth, therefore, cannot be interpreted by looking at the annual rate alone. On a quarterly basis, the adjusted decline showed that profit fell from the previous quarter despite rising from a year earlier.
Profit growth varied between the two groups of banks: net profit at public banks rose 15.9% year on year, compared with 25.1% at private banks in the second quarter of fiscal 2027, the report said. CareEdge attributed the gap to provisions, linking the difference in profit growth also to how those provisions affected results. Public banks recorded growth below the sector’s reported average, while private banks exceeded it. The split offers a more detailed picture than the aggregate figure for both groups. The difference in profits alone does not establish a similar divergence in operating activity growth.
On profitability metrics, return on assets at scheduled commercial banks rose 7 basis points year on year to 1.39%, its highest level since the second quarter of fiscal 2025, according to CareEdge. Median return on equity was 13.6%, up 79 basis points year on year. However, excluding one-off items lowers annual profit growth to 15.7% and reveals a quarterly decline of 4.5%. The rise in return on assets thus coincided with the impact of those items on reported profit. Comparisons between the metrics remain tied to the period and basis specified in the report.
Reserve Bank of India data showed credit growth at scheduled commercial banks accelerating to 18.1% year on year through September 15, 2026, from 10.4% in the corresponding period a year earlier. In the bond market, Indian government bond yields eased through August before rising in September, the central bank said. It linked the increase to higher global yields, oil prices and expectations of monetary tightening. CareEdge, meanwhile, said banks’ treasury income fell sharply as bond yields rose during the quarter. These developments show how market conditions had differing effects on credit growth and investment portfolio income.
CareEdge forecast that profit growth would slow in the second half of fiscal 2027 as exceptional gains fade and treasury income potentially remains weak. It added that banks’ building of provisions ahead of the transition to expected credit loss rules could weigh on profit growth. In the broader context of government financing, the Indian government, in consultation with the Reserve Bank of India, announced a plan to borrow a total of 7.86 trillion rupees in the second half of fiscal 2026-2027. The borrowing is scheduled to be conducted through 23 weekly auctions. The auction schedule puts the government bond issuance path among the developments banks are monitoring in the second half.