Treasury income boost for banks

HIGHER TREASURY INCOME, supported by a fall in bond yields during the January-March period, is likely to boost earnings of banks in the fourth quarter of the previous fiscal.

- SACHIN KUMAR

However, net interest margins (NIMS) are expected to shrink as the cost of funds remains elevated, with banks continuing to hike rates on deposits to mobilise funds to meet high credit growth.

"The decline in bond yields is expected to contribute to increase in banks' treasury income for the fourth quarter as they hold significant volume of government securities," head of treasury of a private sector bank told FE.

The yield on 10-year benchmark government security eased 26 bps year-on-year and 12 bps quarter-on-quarter in Q4 to settle at 7.06% on March 28, the last trading day of FY24. The price of the 10-year paper closed at ₹100.83, about 80 paise higher compared to the Q3 and about ₹1.20 paise higher over the yearago period.