look news india
Ahmedabad: Net income growth of banks listed on stock exchanges is expected to slow down to 10 percent annually in the second quarter of financial year 2025. Listed banks reported over 33 per cent year-on-year growth in net profit in Q2FY24 due to higher lending and lower credit costs, according to an analysis report. However, on a quarterly basis, the profits of banks may decline by about 1 percent.
After deducting interest expense from interest income, the bank's net interest income i.e. NII can increase by 8.8 percent annually. NII may increase by 1.7 per cent quarter-on-quarter due to increase in deposit costs compared to June 2024 quarter.
An ICRA expert said NII may come under pressure due to slow credit growth and rise in deposit costs and its net interest margin (NIM) may also decline. As lending rates have remained stable, deposit rates, especially for tenures of 1-2 years, have been increasing. This may put pressure on NIM and increase proliferation.
NIM declined 13 basis points year-on-year in Q1 2025 and 4 basis points from the previous quarter to 2.94 percent. The gap between loans and deposits in August was 2.96 percent. The slowdown in credit growth is partly due to the decline in high-yield unsecured loans.