Detailed Narrative
Q2 FY26 Financial Performance Overview
Bank of India reported a Net Profit of Rs. 2,555 crore in Q2 FY26, marking an 8% increase year-on-year. For the half-year ended September 2025, net profit reached Rs. 4,800 crore, growing over 18% YoY. The operating profit for Q2 FY26 stood at Rs. 3,821 crore. Global business expanded by 11.83% YoY to Rs. 15,62,000 crore, reflecting robust growth across segments.
Significant Asset Quality Improvement
The bank demonstrated substantial improvement in asset quality, with the Gross NPA ratio reducing by 187 basis points to 2.54% and the Net NPA ratio improving by 29 basis points to 0.85% in Q2 FY26. The Provision Coverage Ratio (PCR) strengthened to 93.39% in September 2025, up from 92.22% in September 2024. The slippage ratio significantly improved to 0.14% in Q2 FY26 from 0.44% in Q2 FY25, and credit costs declined to 0.28% from 0.97% YoY.
Net Interest Margin (NIM) Dynamics and Outlook
Global NIM for Q2 FY26 stood at 2.41%, a decrease from 2.55% in Q1 FY26, primarily due to the full impact of the Repo rate cut on the asset side. Management indicated that the full repricing of term deposits on the liability side is expected to occur in Q3 FY26. Consequently, NIM is anticipated to start improving from Q4 FY26 onwards, with the half-yearly NIM for H1 FY26 at 2.48%.
Robust Credit and Deposit Growth
Domestic gross advances grew by 14.73% YoY to Rs. 5.97 lakh crore, with RAM (Retail, Agriculture, MSME) advances increasing by 17.02% to Rs. 3.40 lakh crore, constituting nearly 58% of total advances. Domestic deposits increased by 8.53% YoY to Rs. 7.30 lakh crore, and CASA grew to Rs. 2.86 lakh crore, maintaining a CASA ratio of 39.39%. The bank has a strong global pipeline of over Rs. 70,000 crore, with more than Rs. 50,000 crore from corporate credit.
Digital Transformation and Technology Investment
Bank of India launched BOI TradeEasy, a supply chain finance platform aimed at enhancing working capital access for MSMEs. The bank has allocated an IT budget of Rs. 2,000 crore for FY26, focusing on digital transformation and cybersecurity. Its digital loan book within RAM is approximately Rs. 1,20,000 crore, representing nearly 20% of its domestic loan book, with 20 products in Agriculture, Retail, and MSME segments now digitized.
Other Income and Funding Costs
Non-interest income for H1 FY26 increased by 15% YoY to Rs. 4,386 crore. A notable increase in miscellaneous other income in Q2 FY26 was attributed to PSLC sales of Rs. 124 crore and the reclassification and increase in penal charges. The cost of funds increased slightly quarter-on-quarter to 4.85% from 4.66% due to higher costs associated with Certificates of Deposit (CDs) and refinance, while the cost of deposits remained stable at 4.85%.
NBFC Exposure and Gold Loan Portfolio
The bank's global NBFC book stands at Rs. 93,000 crore, with over 99% of this portfolio rated BBB and above, indicating a high-quality book. Only Rs. 1,000 crore within the NBFC book is classified as NPA. The gold loan book is approximately Rs. 40,000 crore, with Loan-to-Value (LTV) ratios ranging from 65% to 75% for both Agri and Retail segments, reflecting prudent lending practices.
Capital Adequacy and ECL Transition
The Capital to Risk-weighted Assets Ratio (CRAR) improved to 16.69% as of September 2025, up from 16.63% in September 2024. Management estimates the ballpark impact of the Expected Credit Loss (ECL) transition on CRAR to be around 1%. The effective date for ECL implementation is April 1, 2027, with a five-year transition period provided to banks.