Mumbai, July 10 (IANS). Public sector banks (PSB) may offer better income performance due to relatively low margin pressure and high treasury benefits in the first quarter of FY 26. This information was given in a report released on Thursday.
MK Global Financial Services has highlighted lethargy in the first quarter income session for private sector banks (PVBs), mainly due to sluggishness in debt hike and a steep decline in margins after major cuts in repo rate.
In contrast, the report states that public sector banks are expected to display better and strong income.
It said, “While most private banks are likely to report low profitability, MK ICICI Banks, Indian Bank, SBI and KVB recognize as positive outlairs.”
Meanwhile, SBI cards are expected to report an increase in the annual percentage rate (APR) and an increase in margin due to low funding costs.
“Corporate asset quality remains stable, so we do not expect to build important NPAs for public sector banks,” the report said.
Over the last three months, Bank Nifty has shown extensive market performance, which has support for better debt hikes operated by monetary and regulatory laxity, peak and attractive relative valuations in unsecured loans stress.
Credit card hike (CIF) slowed down to 9 percent on an annual basis, due to the decline in issuing new cards amid growing asset quality concerns.
However, due to seasonal favorable conditions, the increase in May 2025 increased slightly to 15 percent on an annual basis.
RBI Governor Sanjay Malhotra has taken an aggressive stance in the matter of relaxation of monetary policy. He has reduced the repo rate from 100 basis points to 5.5 percent and has also announced an additional reduction of 100 basis points in CRR, which will be effective from September to November and will come to a historic low of 3 percent. This step has been taken in an attempt to encourage development.
Despite these measures, MK believes that the debt growth will take time to catch speed. Meanwhile, the impact of low repo rate on floating-vet loans is expected to reduce the margin of banks in the first half. It will be partially compensated by banks by reducing interest rates on savings accounts.
-IANS
SKT/
