5 Bank stocks that reduced their net NPAs to up to 0.4% in Q3 to look out for

Synopsis: Several Indian banks, including Bank of India, Indian Overseas Bank, Yes Bank, Union Bank, and HDFC Bank, reported lower net NPAs in Q3FY26, supported by strong profit growth, higher net interest income, and improving asset quality.

In Q3FY26, several Indian banks demonstrated improving asset quality by reducing their net NPAs, reflecting better credit discipline, higher recoveries, stronger profitability, and a more stable banking environment across both public and private sector lenders. 

Non-Performing Assets (NPAs) are a key measure of a bank’s financial health and arise when loan repayments remain overdue for 90 days or more. High NPAs reduce interest income, increase provisioning, weaken capital, and constrain lending, making them closely tracked by investors and regulators.

Bank of India

Bank of India is a major public sector bank that provides a wide range of banking and financial services, including retail banking, corporate banking, loans, and international banking. The bank has a significant presence both in India and overseas.

With a market capitalisation of Rs. 75,756 cr, the shares of Bank of India closed at Rs. 166.40 per share, increasing 5.62% from its previous close of Rs. 157.55 per share. 

Net profit of the company increased 7.5% from Rs. 2,517 cr in Q3FY25 to Rs. 2,705 cr in Q3FY26. Net interest margin declined from 2.80% to 2.57% over the same period. Net NPA has gone down from 0.85% to 0.60%. Net interest income increased from Rs. 6,070 cr to Rs. 6,461 cr over the same period.

Indian Overseas Bank (IOB)

Indian Overseas Bank is a public sector bank known for its focus on international banking and trade finance. It offers services such as savings and current accounts, loans, and NRI banking, with branches in India and abroad.

With a market capitalisation of Rs. 66,974 cr, the shares of Indian Overseas Bank closed at Rs. 34.78 per share, increasing 0.96% from its previous close of Rs. 34.45 per share. 

Net profit rose by 56% from Rs. 874 cr to Rs. 1365 cr in Q3FY26. Net interest income also increased by 18% to Rs. 3,299 cr from Rs. 2,789 cr. Net NPA reduced from 0.42% to 0.24%. Net interest margin is almost flat at 3.32% from last year’s 3.33%. 

Yes Bank Ltd

Yes Bank is a private sector bank that provides a range of services including corporate and retail banking, wealth management, and investment banking. The bank emphasizes technology-driven solutions and digital banking services.

With a market capitalisation of Rs. 67,904 cr, the shares of Yes Bank Ltd closed at Rs. 21.64 per share, down from its previous close of Rs. 21.66 per share. 

Net profit of the company increased by 55.4% from Rs. 612 cr in Q3FY25 to Rs. 952 cr in Q3FY26. Net interest income also increased to Rs. 2,466 cr from Rs. 2,224 cr. Net NPA at 0.3% in Q3FY26 is down by 20 bps year on year. Net Interest Margin (NIM) improved to 2.6% in Q3 FY26, compared with 2.4% in Q3 FY25 and 2.5% in Q2 FY26.

Union Bank of India

Union Bank of India is a public sector bank that offers comprehensive banking services such as personal banking, corporate banking, loans, and digital services. The bank has a strong national presence with branches across India.

With a market capitalisation of Rs. 1,33,511 cr, the shares of Union Bank of India closed at Rs. 174.90 per share, increasing 1.36% from its previous close of Rs. 172.55 per share.

Net profit rose by 9% from Rs. 4,604 cr to Rs. 5,017 cr. Net interest income increased from Rs. 9,240 cr to Rs. 9,328 cr. Net NPA reduced from 0.82% to 0.51%. Net interest margin declined from 2.91% to 2.76% over the same period.

HDFC Bank Ltd

HDFC Bank is one of India’s largest private sector banks. It is known for its retail and wholesale banking services, including loans, credit cards, savings accounts, and digital banking. The bank is recognized for its customer service and technological innovations. With a market capitalisation of Rs. 14,14,458 cr, the shares of HDFC Bank Ltd closed at Rs. 919.40 per share, down from its previous close of Rs. 920.15 per share. 

On a year-on-year basis, Net profit increases by 12.2% from Rs. 17,600 cr to Rs. 19,800 cr. Net interest income rose from Rs. 30,600 cr to Rs. 32,600 cr. Net NPA reduced from 0.5% in Q3FY25 to 0.4% in Q3FY26. Net interest margin stands almost flat at 3.5% from 3.7% last year.

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