Bank of India (BANKINDIA) Q2 FY27 Profit Rises 27% as Asset Quality Shines, But Margins Tighten
The state-owned lender posted strong year-on-year profit growth driven by robust credit expansion and lower credit costs, though its net profit margin slipped sequentially.
Bank of India's Q2 FY27 net profit rose 26.8% year-on-year to ₹3,202 crore, supported by a 14.6% revenue jump. While asset quality improved sharply, the net profit margin declined from the previous quarter.
For public sector banks, the story has been about balancing strong loan growth with the pressure on funding costs. Bank of India's second quarter shows it is winning on growth and asset quality, but the margin squeeze that has challenged the sector is still present. Profit rose 26.8% from a year ago to ₹3,202 crore, yet the net profit margin softened from the previous quarter.
The numbers tell a story of robust top-line expansion and improving efficiency. Revenue reached ₹21,229 crore, up 14.6% from last year and 5.6% from the June quarter. Profit followed a similar upward trajectory over the past year.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Period | Sep 2026 | Jun 2026 | Sep 2025 |
| Revenue (₹ Cr) | 21,228.87YoY +15% | 20,096.90 | 18,521.48 |
| Profit (₹ Cr) | 3,202.38YoY +27% | 3,138.46 | 2,525.64 |
| Net Profit Margin (%) | 15.1YoY +11% | 15.6 | 13.6 |
Why profit grew faster than revenue
Profit growth outpaced revenue thanks to two key drivers. First, core banking income was strong. According to the bank's investor presentation, Net Interest Income jumped 19% year-on-year to ₹7,007 crore. Non-interest income grew even faster at 25%.
Second, a cleaner balance sheet provided a significant tailwind. The bank's provision coverage ratio is now at 94.45%, as reported by CNBC-TV18. With gross NPAs falling to 1.60%, credit costs have eased, allowing more income to flow to the bottom line.
The cost of funding the growth
Despite the strong yearly gains, the net profit margin dipped 50 basis points from the first quarter. This points to the persistent pressure from funding costs as the bank fuels its loan book. Its global net interest margin, while up 6 basis points year-on-year to 2.47% per Taxguru, remains a focus.
The sequential margin compression suggests the cost of deposits is repricing faster than lending yields. This is a sector-wide theme, but Bank of India's 21% year-on-year expansion in global business intensifies the need for deposits.
A runway built on quality
The outlook hinges on whether this high-quality growth can be sustained without sacrificing margins. The bank's capital is robust with a 17.78% adequacy ratio, and its RAM (Retail, Agriculture, MSME) portfolio now makes up 58.6% of domestic advances, providing stable yields.
Management has guided for a full-year net interest margin between 2.55%-2.60%, as noted in its Q1 commentary. Hitting that target will require careful management of its deposit mix as competition for savings remains fierce.
Key Points
- Net profit grew 26.8% year-on-year to ₹3,202 crore, driven by a 19% rise in net interest income and a 25% jump in non-interest income.
- Asset quality improved markedly, with the gross NPA ratio falling to 1.60% and provision coverage rising to 94.45%, lowering credit costs.
- The net profit margin softened to 15.1% from 15.6% in Q1, reflecting ongoing pressure from deposit repricing amid strong credit growth.
- The bank's capital position remains strong with a 17.78% Capital Adequacy Ratio, supporting continued balance sheet expansion.
Hexa Perspective
The quarter solidifies Bank of India's operational turnaround, where growth is now coupled with pristine asset quality—a combination that was elusive for years. The margin dip is not a surprise but a reminder of the current banking cycle's constraints.
Investors are weighing a strong, high-quality earnings base against the sector's margin ceiling. The bank's ability to hold its guided NIM range while advancing at this pace will be the test for the coming quarters. For now, the improving credit cost story provides a clear buffer.
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