Banks post profit gains, but NIM declines signal margin pressure

While the banking sector has improved its risk-management and underwriting skills to prevent bad loans, it needs to be innovative to mobilise deposits and keep the cost of money low

As the July-September quarter of 2024-2025 (FY25) comes to an end amid intense debate over whether the best is behind India’s banking industry, let’s look closely at some critical data.

 

The industry’s year-on-year (y-o-y) operating profit – or the operating profit of the September quarter of the current financial year (FY25) over the September quarter of the previous finance year (FY24) – is up by a handsome 20.27 per cent, from Rs 1.27 trillion to Rs 1.52 trillion (figures are rounded off). Beside all universal banks, this includes the earnings of nine small finance banks (SFBs). 

 

The State Bank of