Archive · 1 Jul 2025
Banks Forecast Muted Earnings in Q1 FY26 Due to Weak Lending
A new report says banks might not do as well in the first part of the next financial year.
This is because banks are lending less money, and the money they make from interest is going down.
Also, fees they earn aren't as high as usual, and some loans might not be paid back.
Overall, the report predicts that banks won't make as much money as before.
Banks are expected to report muted earnings for Q1 FY26 due to weak loan growth.
System-wide loan growth slowed to 9.6% year-on-year, down from 11% the previous quarter.
Net interest margins (NIMs) are expected to contract by 8-25 basis points quarter-on-quarter.
Seasonally weak fee income and sticky operating expenses are expected to lead to flat core pre-provision operating profit (PPOP) growth.
Credit costs are likely to increase due to a seasonal rise in slippages.
- Who
- Banks
- What
- Banks are expected to report lower earnings in Q1 FY26 due to factors like weak loan growth and lower margins.
- When
- First quarter of FY26 (Q1 FY26)
- Where
- Not explicitly stated.
- Why
- Due to weak loan growth, lower margins, soft fee income, and higher slippages.
- Expected PAT Decline
- 2% YoY, 4% QoQ
- System Loan Growth YoY
- 9.6%
- Previous System Loan Growth YoY
- 11%
- NIM Contraction
- 8-25 basis points QoQ
- Average System Liquidity
- ₹2 trillion surplus in Q1
