Banks to report stable margins, improved Q3 profitability
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New Delhi: Indian banks are likely to report broadly stable net interest margins in the third quarter of FY26, while overall profitability is expected to improve year on year, a report said on Monday.
The report from Systematix Institutional Equities said that profitability will improve due to sustained sequential advances growth, higher fee income and lower credit costs.
The brokerage forecasted growth momentum in advances to sustain, arising from lower interest rates, benefits due to GST rate reduction and higher tax limits.
Further, it predicted net interest margins to see a dip in Q4 but improve from there on as cost of deposits is expected to trend lower with reprising of existing book and normalisation of unsecured segment slippages, resulting in lower credit cost.
"Although the yield on advances (YOA) continues to decline, the positive impact from prior term deposits’ (TD) rate reductions is expected to become evident this quarter onwards. Further, advantages from Cash Reserve Ratio (CRR) reductions, should help maintain steady margins," it said.
