Financial Services Sector — Q2 FY25 Earnings Overview

Credit costs remain above long-term averages; management is cautiously optimistic but normalization may take longer if macro conditions worsen.

Delinquencies in personal loans and credit cards have risen over the past year; further increase could push overall credit costs above the current 40-50 bps range.

Cost of deposits rose 4 bps QoQ to 4.88%, and further marginal increases are expected, which could pressure NIM if loan yields do not keep pace.

Draft RBI circulars on LCR and AIF provisioning could impact liquidity requirements and capital adequacy; final guidelines are awaited.

Higher LCR (128%) and excess liquidity may depress near-term margins, though management views this as temporary.