Banks' core earnings face heat from poor credit growth, low yields on loans

Their gross interest income shrank for second consecutive quarter in Q2FY22 while their core earnings, or pre-provisioning profit, were down 1.5% YoY

Banks continue to face heat from a slowdown in credit growth and a decline in yields on loans due to low interest rates.

The listed banks’ gross interest income shrank for a second consecutive quarter in Q2FY22 while their core earnings, or pre-provisioning profit, were down 1.5 per cent year-on-year (YoY) in the second quarter against 10.1 per cent YoY growth in the first quarter this financial year.

Banks, however, managed to post all-time high quarterly net profits in July-September owing to a continued decline in interest costs and lower provisioning for bad loans.

The banks’ combined interest expenses were down 6.2 per