SYNOPSIS:
Several banks, including ICICI Bank, Federal Bank, Indian Bank, and Bank of India, reported improved asset quality in Q2 FY26, with both gross and net NPA ratios declining year-on-year.
An asset is classified as non-performing when it stops generating income for the bank. Previously, the classification of a non-performing asset (NPA) was based on the ‘past due’ concept, where a loan was considered an NPA if the interest or principal payment remained overdue for a specified period.
If a borrower, whether individual or corporate, fails to repay interest or principal, the loan no longer earns income for the bank and is treated as non-performing. To standardise this, the Reserve Bank of India (RBI) defines NPAs as loans or advances where payments are overdue and no longer bring in revenue for the lender.
Following are a few bank stocks that have shown a decline in their non-performing assets (NPA) ratio in Q2 FY26:
ICICI Bank Limited
With a market cap of Rs. 9,82,711 crores, the stock surged nearly 1.03 percent on BSE, rising to Rs. 1,377.80 on Friday. On the financial front, the bank’s net interest income (NII) surged by around 9 percent YoY to Rs. 26,163.5 crores, while the net profit increased marginally by nearly 3 percent YoY to Rs. 14,318 crores in Q1 FY26.
ICICI Bank reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling from 1.97 percent in Q2 FY25 to 1.58 percent in Q2 FY26. Net non-performing assets (NNPA) also improved, declining from 0.42 percent to 0.39 percent over the same period.
Federal Bank Limited
With a market cap of Rs. 56,802 crores, the stock surged nearly 1.9 percent on BSE, rising to Rs. 232.20 on Friday. On the financial front, the bank’s net interest income (NII) surged by over 5 percent YoY to Rs. 2,495 crores, while the net profit decreased by nearly 8 percent YoY to Rs. 1,019.4 crores in Q1 FY26.
Federal Bank reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling from 2.09 percent in Q2 FY25 to 1.83 percent in Q2 FY26. Net non-performing assets (NNPA) also improved, declining from 0.57 percent to 0.48 percent over the same period.
Indian Bank Limited
With a market cap of Rs. 1,12,013 crores, the stock surged nearly 3.2 percent on BSE, rising to Rs. 852.85 on Friday. On the financial front, the bank’s net interest income (NII) surged by around 6 percent YoY to Rs. 6,588.6 crores, while the net profit increased by nearly 11 percent YoY to Rs. 3,040.5 crores in Q1 FY26.
Indian Bank reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling from 3.48 percent in Q2 FY25 to 2.6 percent in Q2 FY26. Net non-performing assets (NNPA) also improved, declining from 0.27 percent to 0.16 percent over the same period.
Bank of India Limited
With a market cap of Rs. 61,529 crores, the stock fell nearly 0.82 percent on BSE, falling to Rs. 134.41 on Friday. On the financial front, the bank’s net interest income (NII) declined by around 1.2 percent YoY to Rs. 5,992 crores, while the net profit increased by over 5 percent YoY to Rs. 2,525.6 crores in Q1 FY26.
Bank of India reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling from 4.41 percent in Q2 FY25 to 2.54 percent in Q2 FY26. Net non-performing assets (NNPA) also improved, declining from 0.94 percent to 0.65 percent over the same period.
Written by Shivani Singh
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