Indian Bank, UCO Bank, and South Indian Bank Post Sharp Profit Jumps as Bad Loans Slide
Dalal Street’s banking sector witnessed strong operational traction on Thursday, October 15, 2026, as three prominent commercial lenders—state-owned Indian Bank and UCO Bank, alongside private sector player South Indian Bank—unveiled robust financial scorecards for the second quarter of FY 2026-27. All three financial institutions reported healthy year-on-year expansions in bottom-line profits and sustained momentum in core Net Interest Income (NII), driven by disciplined credit underwriting and consistent loan growth across retail, agricultural, and MSME segments. Crucially, the quarter reflected a synchronized improvement in asset quality, with gross and net non-performing asset (NPA) ratios declining across the board, signaling enhanced balance sheet resilience despite higher conservative provisioning buffers built by the public sector lenders.
State-Owned Lenders Shine: Indian Bank Nets ₹3,462 Crore as UCO Bank Profit Leaps 27%
Leading the state-owned banking pack, Chennai-based Indian Bank posted a 14.7% year-on-year increase in its second-quarter net profit to ₹3,462 crore, up from ₹3,018 crore recorded in the corresponding period of the previous fiscal year. The bank's core Net Interest Income surged 18% to ₹7,719 crore compared to ₹6,551 crore twelve months earlier, underscoring resilient lending margins even as quarterly provisions were bolstered to ₹2,222 crore against ₹1,195.7 crore in the prior quarter. Indian Bank's asset quality metrics strengthened further, with Gross NPAs dropping 25 basis points sequentially to 1.61% from 1.86%, while Net NPAs edged down to 0.14%. Meanwhile, Kolkata-headquartered UCO Bank delivered an impressive 26.8% year-on-year jump in net profit to ₹785.6 crore against ₹619.8 crore a year ago, accompanied by a 14% growth in NII to ₹2,886.4 crore from ₹2,533 crore. UCO Bank’s Gross NPA moderated to 1.96% from 2.08% sequentially, with Net NPA contracting to 0.18% from 0.25%, absorbing an increase in provisions to ₹807.6 crore compared to ₹234.6 crore in the prior quarter and ₹588 crore in Q2 FY26.
South Indian Bank’s 38% NII Surge: Net NPA Collapses to 0.09% in Private Banking Rebound
Private-sector lender South Indian Bank rounded out the positive earnings cycle with a breakout operational turnaround, lifting its second-quarter net profit to ₹426 crore from ₹351 crore in the year-ago period. The Thrissur-based lender experienced an aggressive 38% year-on-year surge in Net Interest Income, which expanded to ₹1,116 crore from ₹809 crore, reflecting accelerated loan disbursals and improved yield on advances across priority lending categories. The private bank registered an exceptional cleanup of its loan portfolio, slashing its Gross NPA to 1.24% from 1.38% in the preceding quarter, while its Net NPA experienced a dramatic contraction, tumbling from 0.26% down to a pristine 0.09%. The synchronised operational outperformance and declining bad loan ratios across these three banks position banking counters favorably on institutional watchlists as domestic credit demand maintains momentum into the peak festive cycle.
