Bank stocks that reduced their NPA in Q1 to keep an eye on

An asset is classified as non-performing when it stops generating income for the bank. Previously, the classification of a non-performing asset (NPA) was based on the ‘past due’ concept, where a loan was considered an NPA if the interest or principal payment remained overdue for a specified period.

If a borrower, whether individual or corporate, fails to repay interest or principal, the loan no longer earns income for the bank and is treated as non-performing. To standardise this, the Reserve Bank of India (RBI) defines NPAs as loans or advances where payments are overdue and no longer bring in revenue for the lender.

Below are a few bank stocks that have shown a decline in their non-performing assets (NPA) ratio in Q1 FY26:

With a market cap of Rs. 7,732 crores, the stock surged nearly 1.4 percent on BSE, rising to Rs. 29.6 on Monday. On the financial front, the bank’s net interest income (NII) declined by around 4 percent YoY to Rs. 832.6 crores, while the net profit increased by nearly 10 percent YoY to Rs. 322 crores in Q1 FY26.

South Indian Bank reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling by 135 basis points, from 4.50 percent to 3.15 percent. Net non-performing assets (NNPA) also improved, declining by 76 basis points from 1.44 percent to 0.68 percent over the same period.

With a market cap of Rs. 15,539 crores, the stock surged nearly 1.5 percent on BSE, rising to Rs. 213 on Monday. On the financial front, the bank’s net interest income (NII) grew by around 15 percent YoY to Rs. 625.3 crores, while the net profit increased by nearly 16 percent YoY to Rs. 306 crores in Q1 FY26.

City Union Bank reported a reduction in Gross NPA to 2.99 percent in Q1 FY26, as against 3.88 percent recorded in Q1 FY25, while its Net NPA stood at 1.2 percent, down from 1.87 percent, over the same period.

With a market cap of Rs. 51,104 crores, the stock surged nearly 2 percent on BSE, rising to Rs. 112.65 on Monday. On the financial front, the bank’s net interest income (NII) declined by around 3 percent YoY to Rs. 6,146 crores, while the net profit increased by nearly 2 percent YoY to Rs. 1,764 crores in Q1 FY26.

Bank of India reported a reduction in Gross NPA to 2.92 percent in Q1 FY26, as against 3.27 percent in Q4 FY25 and 4.62 percent in Q1 FY25. Meanwhile, the bank’s Net NPA stood at 0.75 percent, down from 0.82 percent in Q4 FY25 and 0.99 percent in Q1 FY25.

With a market cap of Rs. 35,022 crores, the stock surged nearly 1 percent on BSE, rising to Rs. 28.3 on Monday. On the financial front, the bank’s net interest income (NII) grew by around 7 percent YoY to Rs. 2,403 crores, while the net profit increased by nearly 10 percent YoY to Rs. 607 crores in Q1 FY26.

UCO Bank reported a reduction in Gross NPA by 69 bps YoY to 2.63 percent in June 2025 from 3.32 percent reported in June 2024, whereas net NPA reduced by 33 bps YoY to 0.45 percent from 0.78 percent, over the same period.

Written by Shivani Singh

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