According to S&P Global Market Intelligence, the second half of the current financial year (ending on March 2026) can see improvement in the net interest margin (NIM) of Indian banks. This relief will come at a time when the NIM was recorded by the Reserve Bank of India (RBI) after a 100 -basis policy rate cut.
The report said that four of the top six Indian banks faced a decline in net income in the first quarter of the current financial year (ended on 30 June). This includes government banks Bank of Baroda and Punjab National Bank and private sector HDFC Bank and Axis Bank. However, State Bank of India (SBI) recorded a net profit of ₹ 212.01 billion in the April-June quarter, an increase of 9.7% on an annual basis. At the same time, the net profit of ICICI Bank increased by 15.9% to ₹ 135.58 billion.
SBI has maintained an estimate of 3% NIM for FY26. The bank’s NIM was 2.77% in the first quarter of the current financial year, which was 2.99% in the same period last year. HDFC Bank’s margin declined from 4.06% to 3.49%, while PNB declined from 2.76% to 2.43%.
According to the report, some banks have seen a slight decline in asset quality and an increase in provisioning, but S&P believes that the asset quality of Indian banks will remain healthy due to structural reforms and strong economic possibilities.
Recently, S&P Global Ratings upgrade 10 Indian banks and said that India’s strong economic foundation would promote the growth of banking sector in the coming 2–3 years. The agency estimated that the Indian banks would maintain adequate asset quality, good profitability and strong capacity in the next 12–24 months, even though there are pressure in some sectors.
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