Indian banks are showing financial stability even as profit margins come under pressure after the RBI’s December 2025 repo rate cut, according to Systematix Institutional Equities. The report notes that lower lending rates have reduced banks’ interest income, dragging net interest margins, though slippages remain broadly controlled. Asset quality in January-March FY26 stayed stable across most banks, while deposit growth remained healthy and loan growth continued to hold up. Banks are also preparing for new ECL credit-loss rules.
Canara Bank reported a 10% dip in net profit last quarter, driven mainly by treasury losses. The lender says it will lean on core income to protect net interest margins while funding stays healthy. Management expects advances to grow 11-12% and deposits 9-10% this year, with asset quality holding up through a low slippage ratio.
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SBI shares slid more than 3% on Monday and have now dropped 10% across two sessions, even after the bank reported a 6% year-on-year rise in Q4 standalone net profit to Rs 19,684 crore. Net interest income grew 4% and provisions fell sharply, but softer net interest margins after the March-quarter update dented sentiment.
India’s earnings season is pointing to a recovery that is real, but not dramatic. FMCG is getting a rural demand lift, yet growth remains modest. PSU banks have cleaner balance sheets, but net interest margins are under quiet pressure. Power and EMS demand stays strong, though profit durability may hinge on raw material costs and intensifying competition.
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