More than concerns on asset quality, though, it was the earnings growth, at just 8% yoy, that was disappointing given it came off the muted base of Q3FY12. The bad news is that profits are unlikely to regain much momentumKotak Institutional Equities estimates earnings will grow at a compounded 9% between FY13-FY15. The main reason why profits will grow at a slower pace is because business is expected to be dull with fewer opportunities for banks to lend. Loan growth averaged 14.5% in the December 2012 quarter, but between April and January this year, non-food credit has grown a muted 7%. Although the yoy growth of 16% is far more robust, its way below the long-term average of 20%-plus. Since much of the business in recent years has been sourced from the infrastructure space, a near-empty project pipeline is fuelling fears of shrinking demand for project finance. Moreover, falling consumption spends suggest demand for retail loans too might drop off; in any case, they account for under a fifth of total loans. With a bit of lucka few projects taking off and capacity utilisation picking upbanks should be able to grow their books by about 13-14% in the next couple of years. However, even as they scramble for assets, banks will have to live with falling yieldsnet interest income grew at just 8% in Q3FY13 compared with 11% in Q2FY13 and 20% in Q4FY12, and SBIs net interest income actually fell 3% yoy in the December quarter. While the competition for business will put a lid on interest rates, banks will find it hard to lower interest rates on deposits given theyre hard to come bythe current run rate is sub-14% yoy. Indeed, the cheaper current account deposits are fast vanishing as companies are pushing up the cost of funds. Given the lack of lending opportunities though, banks might not really miss deposits too much.