How Did India’s Banking and Financial Sector Perform in Q2 FY26?
The second quarter of FY26 saw steady earnings from India’s financial sector. Banks reported stable margins and improved profitability, while NBFCs continued showing strong loan book growth. Asset quality remained largely under control, and credit growth momentum stayed intact despite macroeconomic headwinds.
AU Small Finance Bank Ltd.
| Metric | Value | YoY / QoQ |
|---|---|---|
| Gross Advances | ₹1,17,520 Cr | +22% YoY |
| Net Interest Income | ₹2,144 Cr | +9% QoQ |
| PAT | ₹561 Cr | Flat YoY |
| Gross NPA | 2.41% | Slight improvement QoQ |
| ROA | 1.4% | Flat QoQ |
AU Small Finance Bank delivered results in line with expectations. Loan growth remained robust and NIM held firm. Profitability was steady with healthy return ratios.
Bank of India Ltd.
Bank of India reported improved profitability led by lower provisions. Asset quality improved sharply with Gross NPA falling to 2.54% from 2.92% QoQ. Credit growth stood at 16% YoY with strong retail momentum.
| Metric | Value | YoY / QoQ |
|---|---|---|
| Advances | ₹6,95,660 Cr | +16% YoY |
| PAT | ₹2,555 Cr | +13% QoQ |
| Credit Cost | 0.3% | vs 0.7% YoY |
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DCB Bank Ltd. & Karur Vysya Bank Ltd.
Both mid-sized private lenders posted strong operating performance. DCB Bank beat estimates with better asset quality, while Karur Vysya Bank showed steady advances and ROA expansion to 1.8%.
| Bank | PAT (₹ Cr) | Gross NPA |
|---|---|---|
| DCB Bank | 184 | 2.91% |
| Karur Vysya Bank | 574 | 0.76% |
Fedbank Financial Services & Poonawalla Fincorp
Both NBFCs reported “OK” results with continued AUM growth and improved profitability. Fedbank’s AUM rose 14% YoY while Poonawalla’s loan book surged 68% YoY with lower NPAs, highlighting consistent execution in retail finance.
REC Ltd. & 360 One Wam Ltd.
Power sector lender REC maintained robust profitability with PAT at ₹4,425 Cr (+10.5% YoY). 360 One Wam saw revenue and AUM growth, reflecting strong wealth management momentum. Asset quality for both remains best-in-class with GNPA below 1.1%.
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Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that Q2 FY26 reinforced the resilience of the Indian financial ecosystem. PSU banks showed improved profitability on lower credit costs, while private banks and NBFCs continued expanding loan portfolios at healthy margins. Investors should maintain exposure to quality financials with stable NIMs and consistent ROA above 1.2%.
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Related Queries on Q2 Financial Results
- Which banks outperformed expectations in Q2 FY26?
- How did NBFCs like Poonawalla Fincorp and Fedbank perform this quarter?
- Is the improvement in asset quality sustainable for PSU banks?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
