Business News | Profit of Public Sector Banks Expected to Decline by 0.6 Per Cent QoQ : Motilala Oswal
Get latest articles and stories on Business at LatestLY. As the earnings season for the second quarter of FY25 unfolds, public sector banks (PSBs) are expected to see a slight dip in profits compared to the previous quarter, according to a report by Motilal Oswal.
New Delhi [India], October 6 (ANI): As the earnings season for the second quarter of FY25 unfolds, public sector banks (PSBs) are expected to see a slight dip in profits compared to the previous quarter, according to a report by Motilal Oswal.
The report estimates that PSBs' Profit After Tax (PAT) will decline by 0.6 per cent quarter-on-quarter (QoQ), while showing a stronger year-on-year (YoY) growth of 17.2 per cent.
"We estimate PSBs to report moderate earnings growth of 17.2 pc YoY/ a decline of 0.6 pc QoQ in 2QFY25," the report stated.
The slower pace of growth can be attributed to flat net interest margins (NIMs) and a slight increase in loan loss provisions (LLP). The Net Interest Income (NII) for PSBs is expected to grow by around 6 per cent YoY, although interest margins are likely to remain under pressure.
Despite these near-term challenges, the report suggests that public sector banks are on track to post a compound annual growth rate (CAGR) of 15 per cent between FY24 and FY26, pointing to sustained long-term growth.
In the private sector banking space, the report forecasts mixed results for the same quarter. For private banks under the coverage, Pre-Provision Operating Profit (PPoP) is expected to grow by 12 per cent YoY and 1 per cent QoQ.
However, PAT growth is predicted to be more modest, increasing by 5 per cent YoY and 0.6 per cent QoQ.
"For our private bank coverage universe, we estimate a PPoP growth of 12 pc YoY/1 pc QoQ and a PAT growth of 5 pc YoY/0.6 pc QoQ in 2QFY25," the report added.
Looking ahead, private sector banks are expected to experience steady profitability growth, with earnings projected to grow at a CAGR of 12.4 per cent over FY24-FY26.
Overall, while both public and private sector banks may face moderate growth in the second quarter due to margin pressures and higher provisions, their long-term earnings prospects remain positive. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)