Bank of India Credit Rating Update and FY26 Financial Performance

Profit After Tax hit Rs 10,527.15 Cr in FY26; Gross NPA reduced to 1.98%.

Reader Takeaway: Strong asset quality improvement and capital buffers drive rating affirmation; portfolio monitoring remains key for stability.

What just happened

Acuite Ratings & Research has reaffirmed the long-term credit ratings for Bank of India’s Basel III-compliant debt instruments. The agency assigned an ACUITE AA+ rating to the bank’s Basel III Additional Tier-I bonds (Rs 1,500 Cr) and an ACUITE AAA rating to its Basel III Tier-II bonds (Rs 2,000 Cr), both carrying a stable outlook. Simultaneously, the bank requested and received the withdrawal of ratings on three specific bond series totaling Rs 1,500 Cr.

Why this matters

The rating action validates the public sector lender's improved financial health. The bank reported a record standalone Profit After Tax (PAT) of Rs 10,527.15 Cr for FY26, up from Rs 9,219.02 Cr in the previous fiscal year. The improvement is underpinned by a robust Capital Adequacy Ratio of 18.01% and significantly lower slippages.

Key Drivers and Outlook

The bank’s asset quality has seen marked progress, with the Gross NPA ratio dropping to 1.98% from 3.27% in FY25. Net NPA also improved to 0.56%. The agency noted that proactive capital support from the Government of India remains a pillar of strength. Additionally, the bank maintains a stable liability franchise with a CASA ratio of 37.64%.

Risks to watch

Despite the positive trends, Acuite highlights that the performance of the bank's restructured portfolio and asset quality in softer buckets requires ongoing monitoring. Investors in Additional Tier-I (AT1) bonds should remain cognizant of inherent risk features, including potential discretionary coupon suspensions or principal loss absorption if the bank falls below specific capital thresholds.

Context metrics (FY26)

• Interest Income: Rs 75,161.27 Cr
• Capital Adequacy Ratio: 18.01%
• Gross NPA: 1.98%