The Nifty Bank Index opened 0.61% weaker on Monday underperforming Nifty 50 which fell 0.42%, as subdued earnings from Kotak Mahindra Bank, IDFC First Bank, and Bank of Baroda cast a shadow over investor sentiment.
The trio of results revealed a common thread of margin compression, rising provisions, and deteriorating asset quality, factors that dragged the index lower in early trade.
Kotak Mahindra Bank Ltd. was the top losers on Monday's trade as the stock declined over 5% at intraday. Its earnings disappointed with a 7.6% sequential drop in net profit and a sharp rise in provisions, driven by stress in retail and microfinance segments. Its net interest margin fell to 4.65% from 4.97%, while fresh slippages surged to Rs 1,812 crore, raising concerns about asset quality.
IDFC First Bank also posted a weak quarter, with net profit plunging 32% year-on-year and provisions jumping 67%. NIM contracted by 24 basis points to 5.71%, and gross NPAs ticked up to 1.97%, signaling pressure on both profitability and asset health.
Bank of Baroda's stock declined 2.34% at intraday after it reported a marginal 1.9% rise in net profit, but saw its net interest income decline and asset quality metrics worsen slightly. The bank's gross NPA ratio rose to 2.28% from 2.26%, and NII fell 1% year-on-year.
The decline in Nifty Bank came after the index saw multiple all time highs in recent past driven by RBI rate cuts and increased liquidity for the banking sector as a while. But the index is facing growing pressure as earnings season kicked off with major banks including HDFC Bank Ltd. ICICI Bank Ltd. and Axis Bank Ltd. all reporting tepid first quarter earnings for financial year 2026.
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