Banks Q4 Preview: Rate Cuts To Keep Margins In Check, Says Motilal Oswal — HDFC Bank, SBI Among Top Picks

Among large private banks under the brokerages' coverage, HDFC Bank's growth is estimated to be at 5.5% YoY, ICICI at 9.2% YoY, Axis at 5.8% YoY, Kotak Mahindra Bank at 8.0% YoY, and Federal at 9.4% YoY. For IndusInd Bank, NII is expected to decline sharply by 33.7% YoY as bank factors in the impact from accounting discrepancy in prior period.

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Motilal Oswal Report

Credit growth outlook remains modest: Systemic credit growth slowed to ~11.1% in Q4 FY25 from 16.5% a year ago, amid slower demand in certain secured products, stress in the unsecured segment, and a high credit-deposit ratio across the system. With an incremental CD ratio at 87% and an outstanding CD ratio at elevated 80.5%, we expect credit growth to remain tepid at 12% in FY26E.

Deposit growth at 10.2% in Mar'25; CASA growth remains a challenge: Deposit growth for the system has been at 10.2% YoY while FY25YTD growth stands closer at 9.9% versus credit growth of 10.3%. With CASA accretion being a challenge and depositors preferring term deposits with higher rates, these factors could push CoF to the higher side and thus could hurt NIMs. With inflation being lower, we foresee two-three rounds of rate cuts in FY26, thus impacting yields especially in H1 FY26.

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