Views on Banking sector outlook by Rakesh Vyas, Quest Investment Advisors
Below the Views on Banking sector outlook by Rakesh Vyas, Quest Investment Advisors
"Banks saw profit growth in FY25 primarily due to robust double-digit credit growth, stable Net Interest Margins (NIMs) supported by steady interest rates for most of the year, low credit costs, and a well-managed cost-to-income ratio. However, the recent CRR cuts may lead to some pressure on NIMs as the increased liquidity translates into the loan book, even though banks have responded by lowering both savings account and term deposit rates. The RBI's measures to enhance system liquidity are expected to support continued credit growth in FY26. As a result, despite potential margin compression, the banking sector is likely to achieve double-digit earnings growth in FY26, with asset quality remaining stable and showing no signs of significant deterioration so far."
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