Indian Bank, UCO Bank lead Q2 profit growth as treasury income slumps

Indian banks posted strong September-quarter profits on robust lending and core income, despite treasury losses from rising bond yields and cautious provisioning.

The state-owned Indian Bank reported a 14.7% year-on-year rise in second quarter at Rs 3462 crore against Rs Rs 3018 crore in the year ago period. Its operating profitstood 46.68% higher at 7090 crore against Rs 4837 crore in the same period last year. It has increased its provisions to Rs 2222 crore from Rs 739 crore, despite asset quality improvement, as it looks to build a buffer ahead of the transition to the credit loss framework, which will be implemented from April 1, 2027. It set aside Rs 1500 crore this quarter, taking the total buffer to Rs 2500 crore while the expected impact would be Rs 3500 crore, managing director Binod Kumar said. The bank's gross non-performing assets ratio improved to 1.16% at the end of September from 2.6% a year prior. Indian Bank booked Rs 123 crore mark to market losses but its treasury income stood higher on account of the one-off gain from the divestment in NSE.

UCO Bank reported a 27% year-on-year increase in net profit at Rs 786 crore in the quarter ended September 2026 against Rs 620 crore a year ago led by strong loan growth and an improvement in net interest margin. Total advances increased 25% to Rs 2.87 lakh crore led by a 27% growth in advances to the retail, agriculture and MSME sectors. Retail was the fastest growing segment with a growth of 30%. Net interest margins improved 10 basis points year on year to 3% during the quarter. Net interest income increased 14% year on year at Rs 2886 crore supporting profits. Its gross NPA declined 60 basis points year on year to 1.96%. The bank garnered $635 million through FCNR (B) deposits, CEO Rajendra Kumar Saboo said. The bank's treasury earnings for the second quarter came 72% lower at Rs 29 crore.

Private sector South Indian Bank posted a 21% rise in second quarter net profit at Rs 426 crore as compared with Rs 351 crore in the year ago period. Its operating profit stood 37% higher at Rs 732 crore against Rs 536 crore. The bank's treasury and forex earnings fell 38% at Rs 80 crore in the quarter against Rs 129 crore in the year ago period, capping the overall earnings growth. It gross advances grew 19% year-on-year to Rs 1.10 lakh crore at the end of September with gold loan portfolio expanding 41% to to Rs 26,603 crore. The bank's asset quality improved with gross non-performing assets ratio declining to 1.24% at the end of September from Rs 2.93% a year prior.

Karur Vysya Bank reported a 37% year-on-year growth in net profit at Rs 788 crore in the quarter ended September 2026 from Rs 574 crore a year ago due to strong loan growth while asset quality remained stable. Total advances increased 20% to Rs 1. 11 lakh crore. Net interest income increased by 18% to Rs 1,497 crore from Rs 1,261 crore. Net interest margin at 4.34% was higher than the 4.24% reported for the corresponding quarter of the previous year. The cost of deposits has decreased by 11 basis points to 5.49%. Gross non-performing assets (GNPA) decreased by 7 bps to 0.69% of gross advances as on September 30, 2026 from 0.76% as on September 30, 2025.