State Bank of India (SBI) and its closest private sector rival HDFC Bank are set to report divergent profit growth for the quarter ending December 2024, estimates by analysts show.
State-run SBI could report profit after tax (PAT) growth upwards of 80% on the back of comparatively better deposit growth and lower wage costs, while HDFC Bank may report less than 7% rise in PAT amid muted loan and deposit growth across the banking sector.
Most banks are set to report lacklustre earnings growth for the December quarter due to slowing business as well as higher credit costs amid increasing stress in unsecured retail segments, analysts said. This would increase downward pressure on banks' net interest margins (NIM) and may bring down their net interest income (NII), they added.
«A few banks have already lowered their growth guidance while select large banks are also likely to report tepid full-year growth guidance owing to a high CD (credit-deposit) ratio and rising asset quality concerns,» said Nitin Aggarwal, head-BFSI at Motilal Oswal Securities.
«Slower economic activity may drive growth moderation in corporate and SME segments. CASA (current and saving accounts) accretion remains a challenge as depositors are locking in money at higher term deposit rates ahead of a potential reversal in the rate cycle,» he added.
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