Weak economic environment, rising non- performing assets and higher cost of funds will keep margins of banks under stress in the second quarter, say analysts. "Broadly, all banks are going to see pressure in the second quarter numbers because of higher provisioning levels due to incremental deterioration in business climate," Rikesh Parikh, vice-president, equities at Motilal Oswal Securities told PTI.
According to IDBI Capital analyst Jignesh Shial: "We expect provisioning cost to be higher for the public sector banks compared to private sector ones due to their higher slippages and higher restructuring." The Reserve Bank sees gross NPAs touching 3.8% at the end of the September quarter and closing the fiscal with 4.4%, up from 3.4% in the year ago period, while the recast loans will close the quarter at 6%.
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