Banking Sector — Q1 FY25 Earnings Overview

Despite adding customers, deposit growth has lagged, and period-end numbers disappointed. If the trend persists, it could constrain loan growth and margins.

Intense competition in corporate and mortgage lending is pressuring yields, while deposit costs remain elevated, potentially compressing NIMs further.

Meeting small and marginal farmer PSL targets remains challenging due to limited availability of qualifying loans, potentially requiring costly PSLC purchases.

Intense competition for deposits could force the bank to raise rates, pressuring NIMs, though management has so far maintained discipline.

Recoveries from past NPA pools are slowing, which could lead to a gradual increase in credit costs from current low levels.