Banks' net profit likely fell 4% in Q4

Net profit of 19 listed banks likely declined 4 per cent year-on-year (Y-o-Y) during the quarter ended March (Q4FY25), mainly due to pressure on net interest margins (NIM) as a result of rate cut by the Reserve Bank of India (RBI), according to analyst estimates.

- ANUPREKSHA JAIN & ABHIJIT LELE

Additionally, loan growth is expected to have further slowed down amid low demand in certain secured products, stress in the unsecured segment, and a high cost to deposit (CD) ratio across the system. However, banks could have gained from softening of bond yields, boosting treasury income for Q4FY25.

According to Bloomberg estimates, private banks' net profit likely declined 5.3 per cent and state-owned banks' 2.5 per cent Y-o-Y.

According to analysts, banks' NIM might have contracted by 5-8 basis points (bps) Y-o-Y for Q4FY25. Elara Securities, in its quarterly preview, said NIM would be impacted due to continued repricing of the deposit book and sticky incremental deposit cost, impact of the RBI rate cut. At the same time, it could have benefitted from a cut in the cash reserve ratio (CRR).