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Jun 01, 2026
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Indian banks' profitability to ease this fiscal on lower treasury gains, ECL provisions: Crisil
The Indian banking industry's return on assets (RoA) is expected to slip 10-15 basis points to 1.1-1.2% this fiscal from around 1.3% last fiscal, Crisil Ratings said in a report, citing reduced treasury income and pre-emptive provisioning ahead of the expected credit loss (ECL) framework. Despite the moderation, RoA will remain well above the 20-year average of 0.8% and 10-year average of 0.6%, the ratings agency noted.
"The banking sector's net interest margin (NIM) is expected to hold steady at 2.9% this fiscal, after declining 20 basis points (bps) last fiscal," said Subha Sri Narayanan, Director, Crisil Ratings. "Outstanding deposit rates fell ~50 bps against a decrease of ~80 bps in lending rates last fiscal, following a cumulative repo rate cut of 125 bps. However, the cost of liabilities has likely bottomed out. As credit growth continues to outpace deposit growth, competition for deposits remains intense.
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