Banks may see muted Q2 amid margin pressure

EARNINGS’ EXPECTATIONS

- KSHIPRA PETKAR

WITH BANKS GEARING up to announce their financial results for the second quarter, analysts say this could be their weakest quarter this earnings cycle, largely due to muted loan growth,compressednetinterest margins, weak core fee income and lower treasury gains.

“We expect overall profitability growth for PVBs (private sector banks) to remain subdued at around 2% yo-y, mainly due to moderate growth, margin contraction,and slightly elevated credit costs,” Emkay Global said ina report.

“PSBs should report healthy core operating performance as wellas contained credit cost,but weak treasury performance in view of sequential uptick in g-sec yields should limit profit growth at aggregate level to around 1.2% yo-y,’it added.