Archive · 6 Oct 2026
Indian Banks Seen Gaining Q2 FY27 Earnings Momentum
Systematix Research expects Indian banks to earn more in the second quarter of FY27 than they did a year earlier.
It says banks are lending more, which can help their earnings grow.
The report also expects banks to spend about the same or less on losses from borrowers who do not repay.
But banks may make less money from each loan because their funding costs and available cash are affecting margins.
The brokerage expects average margins to fall slightly compared with the previous quarter.
Deposits have also grown, helped by strong FCNR(B) flows.
The report says loan repayment problems should remain contained.
Fee income may help, while trading gains from government securities could moderate.
Overall, the report sees lending growth supporting earnings despite pressure on margins.
Systematix Research expects earnings growth across its banking coverage universe to reach 14.9% year-on-year in Q2 FY27, excluding IndusInd Bank.
Strong credit growth and stable or lower provisioning costs are expected to support earnings.
Average net interest margins are forecast to fall around 7 basis points sequentially, mainly due to higher liquidity and a greater share of term deposits.
Banking system advances grew 19% year-on-year in August 2026, while deposits rose 17.3% year-on-year as of September 15.
The brokerage expects asset quality to remain benign, with slippages stable or lower and credit costs broadly stable.
- Who
- Indian banks covered by Systematix Research.
- What
- The brokerage expects earnings momentum to improve in Q2 FY27, supported by credit growth and contained credit costs, with margins under pressure.
- When
- Q2 FY27; the report was published on October 6, 2026.
- Where
- India.
- Why
- Strong advances growth and contained asset quality are expected to support earnings, while increased liquidity and a changing deposit mix are expected to pressure margins.
- Expected earnings growth
- 14.9% year-on-year across the coverage universe, excluding IndusInd Bank
- Expected NIM movement
- Average NIMs forecast to decline around 7 basis points sequentially
- Advances growth
- 19% year-on-year in August 2026
- Services credit growth
- 24.3%
- Industrial credit growth
- 18.2%
- Deposit growth
- 17.3% year-on-year and 6.9% sequentially as of September 15, 2026
- Credit-deposit ratio
- Around 80.8%, down from 83.4% in June
- Publication date
- October 6, 2026