Banks' Q2 profit likely to rise on credit growth

Benefiting from rise in lending rates, high credit off-take, and lower credit costs, banks are likely to report about 18 per cent rise in net interest income (NII) and 25.3 per cent in profit year-on-year (Y-o-Y) during the first quarter ended September 2023 (Q1FY24)

- ABHIJIT LELE

NII, a key earning source for lenders, may show higher growth for private banks (24.4 per cent Y-o-Y) compared to public sector banks (PSBS) (12.2 per cent) in Q2FY24, according to a Bloomberg analyst's estimates.

Nitin Aggarwal, research analyst, Motilal Oswal, said while the focus is on NII, there will be pressure on interest margins due to factors like repricing of deposits.

In the current interest-rate cycle, banks benefited from immediate increase in lending rates in Q2. Later, a rise in deposit rates came with a lag, creating pressure on margins.