Banks in the Public Sector amass a record earning of Rs 44,218 crore in Q1 FY26, with SBI taking the lead.
Public sector banks (PSBs) in India have recorded a combined quarterly profit of Rs 44,218 crore in Q1 FY26, marking a new high and a year-on-year growth of 11%. This significant increase was primarily driven by higher treasury gains, led by the State Bank of India (SBI), which accounted for nearly 43% of the total profit with Rs 19,160 crore.
The sharp increase in treasury income, or other income, played a crucial role. This figure rose significantly to Rs 48,996 crore, up from Rs 34,416 crore in the same quarter last year. Banks like SBI and Bank of Baroda saw their treasury income grow by 55% and 88% respectively, as banks sold bond portfolios during the Reserve Bank of India’s open market operations, realizing gains on held-to-maturity (HTM) and available-for-sale (AFS) portfolios.
Growth in net interest income and improving asset quality also contributed to the profitability. Although interest income growth was sluggish and net interest margins (NIMs) were constrained overall, better asset quality and controlled operating costs across banks helped support profitability.
Significant profit growth in some smaller banks, such as Indian Overseas Bank (76% profit growth), Punjab & Sind Bank (48%), and Central Bank of India (32.8%), also added to the overall gains.
SBI, still the biggest lender in terms of size and profits in the public banking market of India, accounted for nearly half of the total PSB profits and reported a 12% increase in net profit compared to the previous year, affirming its leading role in driving sector profitability.
However, not all banks fared equally well. Punjab National Bank (PNB) experienced a sharp profit decline (48%) due to higher provisioning or weaker interest income.
In summary, the surge in treasury income from bond sales and associated gains was the major factor, supplemented by stable or improving asset quality, controlled costs, and strong performance from major banks like SBI and certain smaller peers. This promising start to the financial year bodes well for the resilience and recovery momentum of public sector lenders in India.
Investing in bond portfolios led to an increase in treasury income for banks like SBI and Bank of Baroda, with growth of 55% and 88% respectively, due to sales during the Reserve Bank of India’s open market operations.
The significant profit growth in some smaller banks, such as Indian Overseas Bank, Punjab & Sind Bank, and Central Bank of India, alongside improved asset quality and reduced operating costs, strengthened the resilience and recovery momentum of public sector lenders in India.
