Banks' net interest margins shrink

LEADING private sector banks —HDFC, ICICI and Axis, along with smaller ones like Yes Bank, RBL and AU Bank, the early-birds in the current earnings season have reported mixed numbers with varying profit growth.

- BENN KOCHUVEEDAN @ Mumbai

However, two sets of negative numbers—crimped margins and marginal cost but steady rise in provisions—muddies the waters for the sector.

While HDFC Bank and ICICI Bank have logged 12-16% jump in net income and improved RoAs, Axis Bank saw continued high credit costs that resulted in a 4% decline in net profit and RoA.

The worst across all of them is the decline in net interest margins to the tune of 7-17 bps sequentially but as anticipated given the feed through of RBI rate cuts. But again, Axis had the worst here with the largest NIM compression and hence weakest net interest income growth—the key number declined to 3.80% from 4.05% a year ago and from 3.97% in the previous quarter.