PSU Banks Quarterly Profit Report: Public sector banks in India recorded a combined profit of ₹49,456 crore in Q2 FY26. Learn about SBI’s contribution, IOB’s high growth, sector trends and key banking current affairs for competitive exam preparation.
PSU Banks Clock ₹49,456 Crore Profit in Q2 FY26
India’s public sector banks (PSBs) delivered another strong financial quarter in Q2 of FY26, posting a record aggregate net profit of ₹ 49,456 crore, marking a 9% year-on-year (YoY) growth from ₹ 45,547 crore in Q2 FY25.
Strong Lead by SBI
The largest contributor to this performance was State Bank of India (SBI), which alone provided 40% of the total profit, earning ₹ 20,160 crore during the quarter, up approximately 10% YoY. This underscores SBI’s dominant role among PSBs and its ability to drive the overall sector’s results.
Performance Across the Banks
Among the twelve PSBs:
- Indian Overseas Bank (IOB) stood out with the highest growth at 58%, posting a net profit of ₹ 1,226 crore.
- Central Bank of India recorded a 33% rise to ₹ 1,213 crore.
- Other banks also saw healthy gains: Bank of Maharashtra & Punjab & Sind Bank each rose ~23%, Canara Bank up 19%, Punjab National Bank up 14%, Indian Bank up 12%.
- On the flip side, a couple of banks posted declines: Bank of Baroda saw an 8% drop in profit (₹ 4,809 crore vs ₹ 5,238 crore last year) and Union Bank of India had a 10% fall (₹ 4,249 crore).
Half-Year Trends
For H1 FY26 (April–September), the PSBs crossed a major milestone: aggregate profits of ₹ 93,674 crore, compared to ₹ 85,520 crore in H1 FY25 — marking nearly 10% growth.This is the first time PSBs have crossed the ₹ 90,000 crore mark in a half-year period, indicating sustained recovery.
Reasons Behind the Upswing
Several factors are contributing to this robust performance:
- Improving asset quality with reduced provisioning and non-performing assets (NPAs) across many PSBs.
- Better operational efficiency and cost control measures being instituted in the PSB system.
- Growth in credit off-take and improved margins in certain segments supporting bottom-line gains.
- Strong leadership of large banks like SBI, which by pulling up the system helps improve consolidated performance.
Implications for the Banking Sector
This improved performance of PSBs is a positive signal for India’s banking sector and broader economy: stronger public banks mean more resilience in financial intermediation, better capacity to support growth, and less systemic risk. For students preparing for banking, civil services or public sector recruitment exams, this trend is an important pointer in the domain of banking & finance current affairs.
Why This News Is Important
Significance for Economic Health
The public sector banking system plays a foundational role in India’s financial architecture. The fact that PSBs together have posted a ₹ 49,456 crore profit in Q2 FY26 — up 9% YoY — signals improved health in a sector that has been grappling with high NPAs, governance issues and competition from private banks. A financially strong PSB sector can enhance credit flow to agriculture, MSMEs, infrastructure and retail segments, which are crucial for economic growth and employment generation.
Relevance for Government Exams & Policy Awareness
For aspirants of banking, railways, defence, civil services and teaching positions, awareness of the public banking sector’s performance is relevant since:
- Banking & finance form a regular component in general awareness sections of exams (e.g., IBPS, SSC, UPSC).
- A better‐performing PSB sector means fewer risks of recapitalisation burdens on the government, which in turn connects with fiscal policy and public sector implications.
- Understanding which banks are performing well helps in questions relating to current affairs, bank‐wise growth data, and sectoral trends.
Thus, knowledge of this development helps build a stronger understanding of the financial sector’s dynamics and improves one’s readiness for exam questions.
Historical Context
Public sector banks in India have undergone significant stress in the past decade. Following the global financial crisis and domestic slowdown, many PSBs reported mounting NPAs, weak capital adequacy, and low profitability. In FY18, PSBs collectively recorded negative or minimal profits, prompting large‐scale government recapitalisation, restructuring under the Insolvency and Bankruptcy Code (IBC) framework, and enhanced oversight by the Reserve Bank of India (RBI).
Subsequently, reforms such as consolidation (mergers of PSBs), improved governance norms, tighter risk management, and digitalisation have helped elevate their performance. For example, in FY24 PSBs recorded their highest-ever annual profit so far. The latest Q2 FY26 outcome — crossing the ₹ 90,000 crore mark in H1 and posting ~9% growth — thus reflects the fruits of sustained reform efforts and a strengthening macro‐economic environment.
Key Takeaways from “PSUs Banks Clock ₹49,456 Cr Profit in Q2 FY26”
| S.No | Key Takeaway |
|---|---|
| 1 | PSBs together earned ₹ 49,456 crore profit in Q2 FY26, up 9% YoY |
| 2 | SBI alone earned ₹ 20,160 crore in Q2 FY26 and contributed about 40% of total PSB profit. |
| 3 | IOB achieved the highest growth among PSBs at 58%, while some banks like Bank of Baroda and Union Bank reported profit declines. |
| 4 | For H1 FY26, PSBs’ cumulative profit was ₹ 93,674 crore — first time crossing ₹ 90,000 crore in half‐year. |
| 5 | The results reflect improving asset quality, operational efficiency and stronger credit dynamics in public sector banks. |
FAQs (Frequently Asked Questions)
1. What was the total profit reported by Public Sector Banks in Q2 FY26?
Public Sector Banks in India reported a combined profit of ₹49,456 crore in the second quarter (Q2) of the financial year 2025-26. This marks a 9% year-on-year increase compared to Q2 FY25.
2. Which public sector bank contributed the most to the total profit?
State Bank of India (SBI) contributed the highest share with a profit of ₹20,160 crore, which is about 40% of the total profit earned by all PSBs in the quarter.
3. Which PSB recorded the highest profit growth in Q2 FY26?
Indian Overseas Bank (IOB) recorded the highest profit growth at 58%, posting a net profit of ₹1,226 crore in Q2 FY26.
4. Why are PSB profits increasing in recent years?
Profit growth in PSBs is mainly due to improved asset quality, reduced Non-Performing Assets (NPAs), cost optimization, higher credit growth, and digital banking reforms.
5. Which banks reported profit decline in Q2 FY26 and why?
Bank of Baroda and Union Bank of India saw a decline in profits due to factors such as higher provisioning and lower operating margins compared to the previous year.
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