Synopsis
- Net Interest Income (NII) of select Scheduled Commercial Banks (SCBs) grew by 8.1% year-on-year (y-o-y) to Rs.2.05 lakh crore in Q2FY25, driven by healthy business growth. This was partially offset by rising deposit costs and slower growth in yields on advances. Meanwhile, the Net Interest Margin (NIM) for SCBs decreased by 14 bps y-o-y to 2.90%, as the pace of increase in lending rates slowed, while the cost of deposits rose along with slower growth in CASA.
- Net Non-Performing Assets (NNPAs) of SCBs declined by 12.5% y-o-y. The NNPA ratio reached an all-time low of 0.6%, down from 0.8% in Q2FY24.
- The annualised credit costs for SCBs increased by 4 basis points y-o-y to 0.45% in Q2FY25. This rise is to be attributed to increasing delinquencies in the retail and microfinance sectors, as well as several regulatory provisions. The increase in credit costs is primarily driven by higher provisions at select private sector banks, which have raised their provisions from the microfinance business and unsecured lending business.
- Return on Assets (ROA, annualised) of SCBs increased by 8 bps y-o-y to 1.40% in Q2FY25, and inched up by 3 bps sequentially, driven by a rise in treasury incomes.
