Banks – Apr-Jun’26 Earnings Preview – Better loan growth; FCNR deposits to support liquidity
Published on 07 Jul 2026
Banks under our coverage are likely to see a decent quarter since despite Q1 usually sees slightly lower loan growth QoQ, provisional numbers released by various banks suggest positive loan growth of 2.7% QoQ. This has been possible due to (1) better demand, (2) stretched working capital cycle, and (3) increasing inflation. NII growth would be better (+2.6% QoQ) than last quarter (1.5%) as Q4FY26 saw back-ended growth. Hence, calculated NIM might rise by 4bps QoQ to 3.10%. Deposit growth is expected to be 1.6% QoQ (+6.1% in Q4FY26). However, seasonality in terms of fees (partly offset by lower opex) and agri slippages might result in 13% QoQ higher provisions. Hence, core PAT may decline by 4.3% QoQ to INR698bn. SBI/AXSB/HDFCB may be positive outliers on core PPoP. Slippage ratio may increase QoQ by 34bps due to seasonality in agri. Bank PAT is expected to fall by 4.4% QoQ to INR781bn. Among our coverage universe, we prefer KMB, ICICIB & SBI. Commentary on FCNR deposits and likely stress, if any, from the US-Iran conflict would be key monitorables.
