Banks are expected to report double-digit growth in both advances and deposits in the December quarter, according to the provisional figures of 10 banks.
Punjab National Bank is expected to report a 10.1% year-on-year (Y-o-Y) growth in advances to Rs 11.68 lakh crore, while a 4.5% rise over the September quarter. While the deposit growth for the bank is seen at 8.3%, the global credit-deposit ratio of the bank is at 74.21% as on December 31.
Indian Bank and Bank of India too are expected to see a double-digit credit growth of 14.5% and 15.1%, respectively for the quarter ended December. While private banks lenders such as Tamilnad Mercantile Bank and CSB Bank are expected to continue to outperform peers on a Y-o-Y, with advances rising 16.3% and 28.7%, respectively.
Consumption Engine
Among the 10 banks that reported provisional business data, Union Bank of India saw the lowest growth in loans as well as deposits. The public sector bank is expected to see a 7.4% rise in its loans on a year-on-year basis. The CASA ratio is seen rising 139 bps on quarter to 33.95% as on December 31.
Meanwhile, South Indian Bank is expected to see a loan growth of 11.3% as on December 31. However, during the quarter ended March 31, the bank had technically written off an amount of Rs 900 crore. “Had it not been done (Rs 900 crore write-off), the Y-o-Y credit growth for the quarter ended December 2025 would have been 12.43%,” said the private bank in its exchange filing.
“Banks are shifting from low-yield to higher-yield loan segments, which will modestly improve their lending yields,” said Sanjay Agarwal, senior director, CareEdge Ratings. He further added, “Reduction in special deposit schemes by banks have helped control deposit costs so far, supporting slightly better net interest margins (NIMs). However, treasury income is expected to remain subdued in the quarter due to hardening of yields.”
Liabilities Challenge
Union Bank of India, Indian Bank and Bank of India reported their provisional figures for their retail, agriculture and MSME (RAM) book, which is also expected to report a double-digit growth.
“The December ended quarter has been largely good for the consumption economy, driven by GST reforms and festive season, enabling banks to achieve double-digit growth,” said Agarwal, who adds, “the GST uplift will now start tapering down from December end.”
On the liabilities side, deposit growth is expected to remain healthy. Out of the 10 banks, 7 banks are expected to see a double-digit growth in the reporting quarter. PNB (8.3% deposit growth), Union Bank of India (3.4%) and Punjab & Sind (9.3%) are the three banks that have estimated a single digit deposit growth. Meanwhile five banks reported their provisional CASA ratios as on December 31, of which Indian Bank and Punjab & Sind Bank saw a fall.
“Deposit growth largely remains sluggish across banks, though few of them may outperform by offering competitive rates. Garnering low-cost current account, savings account deposit will continue to be a challenge for banks,” Agarwal added.
