India Ratings & Research (Ind‑Ra) expects a modest decline in banks’ profitability for fiscal year 2026 (FY26), even as credit growth remains healthy. This anticipated slowdown is attributed to narrowing net interest margins (NIMs) and elevated provisioning for loan losses.
- Return on Assets (RoA) is projected to fall from 1.38% in FY25 to 1.33% in FY26, highlighting margin pressures and higher risk costs despite robust lending activity.
- Private banks may be particularly affected due to their exposure to loans linked to external benchmarks, which are more sensitive to rate cuts.
Indian Masterminds
Ind‑Ra also forecasts credit growth of 13–13.5% in FY26, primarily fueled by industrial capital expenditure and public sector bank disbursements, even as retail and NBFC lending slow down.
Business Standard
Source (full link):
https://indianmasterminds.com/news/india-ratings-flags-profit-dip-for-banks-in-fy26-despite-strong-credit-growth-135030/
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