Indian banks just posted a strong 20% jump in net profit for Q2 FY2027, reaching ₹1.2 lakh crore.
This boost came from higher interest income and solid loan growth, with public sector banks (PSBs) getting an extra push from one-time gains of about ₹10,000 crore.
Notably, it's the fourth quarter in a row that banks have crossed the ₹1 lakh crore profit mark, even though rising bond yields have put pressure on treasury income.
Private banks lead after cutting provisions
Private sector banks led the way with a 25.1% profit increase, while PSBs saw profits rise by 15.9%.
The gap is mostly due to how each group handled provisions: PSBs set aside more funds for potential losses, while private banks actually reduced theirs as stress in microfinance and unsecured loans eased up.
Looking forward, though, profits might not grow as quickly since provisions could increase as banks build buffers ahead of the transition to ECL-based provisioning from April 1, 2027, and higher bond yields during the quarter sharply reduced treasury income.