Indian banks are expected to report subdued fourth quarter results. PSU banks are expected to report better earnings growth than their private counterparts, due in part to lower credit costs. Loan growth is expected to remain moderate while deposits could improve by a small percentage. Key brokerages believe that rate cuts will impact margins in 9MFY26 — although most private banks escaped its pressure in Q4FY25.
However the recent rate cut may have a more telling impact on NBFCs. “Credit costs for vehicle financiers will be significantly higher in this quarter than in Q4 of the previous fiscal years. Earnings are flat YoY for our NBFC coverage universe owing to sticky credit costs and lower NII growth. Excluding NBFCMFIs, we estimate ~5% YoY growth in PAT for our coverage universe,” Motilal Oswal added in their projectuons.
Bank Earnings preview: Growth outlook for Q4FY25?
ICICI Securities has estimated a wide differential in loan growth (between 5 and 15% YoY) and rangebound NII growth (between 6 and 7% YoY). NII growth is expected to be better for mid or small banks. It also estimated that Q4FY25 will see estimated loan growth at approximately 11.5% YoY (up by around 3% QoQ). The brokerage said it saw ‘muted credit growth QoQ for the MFI segment’.
ICICI Securities also estimated an NIM decline of 3–6bps QoQ for banks such as HDFC Bank, Axis Bank, and Yes Bank. Banks such as IIB, Bandhan and KVB are likely to see NIM receding by approximately 10bps QoQ. SBI and DCB may see flattish NIMs due to strong seasonality. The full impact of the repo rate cut should be visible in Q1FY26.
Motilal Oswal has indicated that bank NIMs are likely to have a “downward bias in the near-term while growth will be slower — particularly in unsecured loans”. Analysts estimated earnings growth of 0.5% YoY in Q4FY25, and an 11.8% CAGR over FY25-27. Motilal Oswal also expects earnings growth to bottom-out in FY26 followed by a gradual recovery next fiscal. It also estimated credit growth to sustain at approximately 12% YoY in FY26.
The Nuvama indicated that loan and deposit growth would look soft YoY — even as most banks may see pickup sequentially. The brokerage firm noted that system liquidity had improved through Q4FY25. Most banks are likely to post a quarter-on-quarter pickup while NIM falls by 2 to 4 bp. Slippage for non-MFI private banks will fall QoQ while remaining elevated for MFI lenders. Margin improvement is likely to be lower-than-expected for NBFCs as most continue to lower rates.
“While deposit growth could improve by 1–2% and equal loan growth given improving liquidity, loan growth would remain moderate at 12–13%. Rate cuts shall affect NIM in 9MFY26 though most private banks have escaped the rate cut pressure in Q4FY25,” the Nuvama report added.
Nuvama’s top banking picks ahead of Q4 earnings
Nuvama has given a ‘buy’ rating for Axis Bank, Bank of Baroda, Federal Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank and State Bank of India.
- Axis Bank – Axis Bank is expected to see its net interest margin remain at 3.93% for the final quarter of FY25. Quarter on quarter loan growth is expected to be 2.80%. The NII for the quarter is expected to be Rs 139.7 billion with PAT estimated at Rs 72.2 billion.
- HDFC Bank – HDFC Bank has been focusing on sustainable average deposit growth rather than chasing strong year end growth. It is expected to record a net interest margin of 3.40% in Q4FY25 with QoQ loan growth of 1.24%. The NII for the fourth quarter will be Rs 312.7 billion with PAT at Rs 170.5 billion.
- ICICI Bank – ICICI Bank is expected to post strong results — marginally improving its NIM (projected at 4.27% for Q4FY25) while slippage falls quarter on quarter. The QoQ loan growth is expected to rise incrementally to 3%. The NII for the quarter is expected to be Rs 208.4 billion with PAT estimated at Rs 123.5 billion. The bank is slated to release its results on April 19.
- Kotak Mahindra Bank – Kotak Mahindra Bank is expected to report a net interest margin of 4.89% with quarter on quarter loan growth of 4.51% (14.3% YoY) in Q4FY25. The bank is also likely to record net interest income of Rs 74.3 billion during the quarter — a 7.6% uptick YoY.
- State Bank of India – State Bank of India will likely sustain its high loan growth rate of approximately 14% but margins may become a key monitorable. State Bank of India is set to see a net interest margin of 2.98% in Q4FY25. The QoQ loan growth during the final quarter of FY25 is set to be 4% while the QoQ deposit growth will be 3%.The bank will also see NII rise incrementally during the final quarter of the financial year to stand at Rs 426.9 billion with a PAT of Rs 197.6 billion.
ICICI Securities’ top banking picks ahead of Q4 earnings
ICICI Securities has maintained its ‘Buy’ rating for HDFC Bank, Axis Bank, SBI, Bandhan, City Union Bank, Karur Vysya Bank, South Indian Bank, and DCB Bank. It also shared an ‘add’ rating for Federal and IDFCFB with increased target price.
- HDFC Bank – HDFC Bank is expected to report NII of Rs 3,09,410 million in Q4FY25 with PAT at Rs 1,65,074 million. The loan book estimate for Q4FY25 is Rs 26,078 billion — a QoQ change of 3.6%
- Axis Bank – Axis Bank is projected to record QoQ loan growth of 3.3% in the final quarter of FY25. The NII for Q4FY25 is expected to be Rs 1,38,169 million with PAT estimated at Rs 66,106 million.
- State Bank of India – State Bank of India is projected to record QoQ loan growth of 5.2% in Q4FY25. NII for Q4FY25 is expected to be Rs 4,32,460 million with PAT estimated at Rs 1,73,937 million.
Motilal Oswal’s top banking picks
Motilal Oswal has selected ICICI Bank, HDFC Bank, SBI Bank, and AU Small Finance Bank as its top picks.
When will the Q4 banking results be released?
Data available on the BSE website indicates that ICICI Bank and HDFC Bank will be the first to release their results on April 19. Other banks are expected to follow in the coming weeks. Stay tuned to the weekly earnings calendar and daily Q4 Earnings coverage on Financialexpress.com for all details.