Banks caught in a trap

The cost of deposits is on the rise, but banks can't raise interest rate on close to 60% of their loan books

The earnings season is over. Barring a few, most listed banks have recorded handsome net profits in the June quarter of the current financial year. Their combined net profit has risen 21.04 per cent on a year-on-year basis. For a few banks, bad loans as a percentage of total loans have risen, but that’s not alarming.
 

What are the two most critical parameters of banks’ earnings that give us a clue as to how long the good run will continue?

So far, all eyes had been on credit cost: The movement of bad loans and the provision coverage