India’s banks are expected to report softer earnings for the September quarter, as narrowing net interest margins and weak trading gains weigh on profitability. Analysts, however, see stability in core earnings and expect commentary to turn more constructive on growth and asset quality.
Axis Bank will be the first to announce September-quarter results on Oct. 15, kicking off an earnings season for the Indian banking sector.
Loan growth remained strong across most lenders during the quarter, supported by higher deposit mobilisation and an improvement in loan-to-deposit ratios. However, analysts expect profitability to be hit by margin pressure following the Reserve Bank of India’s earlier repo-rate cuts and reduced treasury income. Despite that, lower credit costs and easing slippages in agriculture and microfinance loans could lend stability to core earnings.
Analysts view the quarter as a near-term bottom, expecting earnings momentum to recover from the December quarter as funding costs stabilise and credit demand improves. Commentary on growth revival, net-interest-margin trends and asset quality will be closely watched as banks adjust to policy changes and liquidity measures.
