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India's Top Banks Post Modest Profit Gains Amid Economic Slowdown
30 Jul
Summary
- Combined net profit of India's top 9 private banks grew 2.7% in Q1 FY25
- Weak credit and deposit expansion hindered growth, treasury gains supported profits
- Stress seen across customer segments, especially middle-income and lower-income
In the first quarter of the 2024-25 fiscal year, India's top 9 private sector banks posted a combined net profit of ₹43,641 crore, marking a 2.7% growth from the previous year. This modest increase reflects the country's circumspect economic growth and tepid credit demand.
The earnings performance was hindered by sluggish credit and deposit expansion, with the core business momentum remaining weak. However, treasury gains played a significant role in supporting the banks' profitability during this period.
Analysts have noted that the financial results of these companies reflect stress across the board, particularly among the less resourced segments of the customer spectrum. The stress is more pronounced in the middle-income segment and at the bottom of the economic pyramid, with issues related to job creation and employment weighing on the overall economic landscape.
The subdued performances of banks like Axis Bank, Kotak Mahindra Bank, IndusInd Bank, RBL Bank, and IDFC First Bank dragged down the overall earnings of the private banking sector, which has traditionally been a favorite among overseas investors due to its strong valuation gains.
