Indian banks are expected to post improved profitability in the coming quarters, according to a report by The Economic Times citing findings from Systematix Research. The study highlights several factors that are likely to boost bank earnings, including strong advances growth, lower interest expenses amid an ongoing deposit repricing cycle, and the benefit of reduced Cash Reserve Ratio (CRR) requirements.
Systematix Research also noted that the normalisation of slippages in the unsecured lending segment and a decline in microfinance institution (MFI) delinquencies are set to support earnings recovery. As lending quality stabilises, banks are expected to see healthier asset performance and improved balance sheet resilience.
The report further anticipates that net interest margins (NIMs) will stabilise in the third quarter and could improve in the fourth quarter, provided there are no additional rate cuts by the Reserve Bank of India. Analysts believe this trend underscores a broader cycle of financial recovery within the sector, aided by prudent credit management and easing funding costs.
