MUMBAI — Punjab National Bank’s quarterly profit in India does not usually clear ₹5,000 crore. In Q1 FY27, it surged to ₹5,253 crore — a 214% jump from ₹1,674 crore a year earlier — driven almost entirely by the collapse in provisions as the bank’s most stubborn legacy bad loans moved toward resolution.
That number is the sharpest data point in a quarter that tells a broader story about India’s public-sector banks: the NPA crisis that consumed the sector through 2015–2020 has now, for most of the major lenders, materially resolved. State Bank of India’s gross NPA ratio reached 1.47% in Q1 FY27, the lowest in more than two decades. Canara Bank’s gross NPA fell to 1.57%. Even Bank of Baroda, whose headline profit collapsed 72% to ₹1,278 crore after a $600 million one-time settlement with NMC Healthcare, reported gross NPA of 1.99% — its cleanest book in years. Strip out the settlement charge and Bank of Baroda’s adjusted profit stood at approximately ₹5,528 crore.
SBI’s consolidated net profit reached ₹24,113 crore for April-June 2026, up 12.08% from ₹21,519 crore a year earlier. The standalone figure was ₹21,121 crore. Net interest income grew 8% year-on-year; the more consequential number was credit cost, which fell sharply as large-ticket IBC resolutions in steel and infrastructure completed. Gross advances stood at ₹49.92 lakh crore, edging toward the ₹50 lakh crore milestone.
| Bank | Net Profit (₹ cr) | YoY Growth | NII (₹ cr) | Gross NPA (%) | Net NPA (%) |
|---|---|---|---|---|---|
| State Bank of India | 21,121 | +10.2% | ~42,000 | 1.47 | 0.38 |
| Punjab National Bank | 5,253 | +214% | 10,798 | 2.78 | 0.28 |
| Canara Bank | 4,856 | +2.2% | 10,215 | 1.57 | ~0.4 |
| Bank of Baroda* | 1,278 | −72% (reported) | 12,524 | 1.99 | 0.50 |
| Source: BSE/NSE filings, company Q1 FY27 earnings releases. *Bank of Baroda’s reported profit includes a one-time $600M NMC Healthcare settlement charge; adjusted profit was approximately ₹5,528 crore. NIM = Net Interest Margin. Gross/Net NPA = Non-Performing Assets as % of gross/net advances. | |||||
PNB’s recovery is the most dramatic structural reversal in the group. Three years ago, the bank’s gross NPA ratio stood above 12%. By Q1 FY27, it had fallen to 2.78%, with net NPA at 0.28% — lower than several private-sector lenders. The provisioning cycle that depressed earnings for half a decade has now reversed: provisions fell 34% year-on-year in the quarter, translating directly into profit. PNB’s management projected the gross NPA ratio below 2.5% by the end of FY27 if current collection efficiency holds.
Canara Bank’s 2.2% profit growth looked modest against PNB’s surge, but the context matters. NII grew 13.85% to ₹10,215 crore, and advances expanded 18% year-on-year, suggesting the underlying credit engine is healthy. The profit constrained figure reflected investment in provisioning buffer rather than deteriorating asset quality: coverage ratio improved, not declined.
Bank of Baroda’s NMC Healthcare settlement — a legacy obligation from the UAE-based hospital operator that collapsed in 2020 — created a one-time charge that wiped out the headline profit number. Excluding it, the bank’s operating performance was strong: NII rose 9.5% to ₹12,524 crore, gross NPA fell to 1.99% from 2.24% a year earlier, and its international loan book continued growing at a rate that outpaced domestic corporate credit.
The macro catalyst that the Q1 numbers could not anticipate arrived on Wednesday. Brent crude settled at $71.85 following the Hormuz corridor arrangement brokered by Oman, eliminating the inflation scenario that had made a rate hike plausible. Interest-rate futures that priced a 15% probability of an October RBI hike as recently as last Friday collapsed to near zero. For PSU banks — whose loan books carry disproportionate weight in long-duration infrastructure and agriculture credit — a hold in October means deposit cost pressure eases into Q3 FY27 without any offsetting lending yield compression.
Foreign portfolio investors added $340 million to Indian equities on Wednesday, the largest single-day inflow since July 8, with the Nifty PSU Bank index rising 1.3% — outperforming the Nifty 50’s broader 0.4% advance. That flow reflects a view that PSU banks’ re-rating is not finished. The gap between price-to-book multiples of private and public-sector lenders remains wide — two to four times for private banks like HDFC and ICICI versus 0.8–1.2 times for PSU peers. Whether sustained NPA improvement and earnings compounding close that gap through FY27 is the investment thesis that Q1’s numbers, taken together, make incrementally more credible. What they do not resolve is the credit growth question: a sector that cleaned up its balance sheet still needs an accelerating loan book to compound earnings, and whether the crude-driven macro tailwind translates into capex demand by October is not something any bank’s quarterly filing can predict.
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