Highlights
- Loan growth resilient; deposits rise on wholesale funding
- NIMs stable for private banks; PSU margins soften
- Asset quality steady; MSME risks amid geopolitical tensions
Banking & Finance Companies Q4 Quarterly Results Preview: Nuvama’s Q4FY26 Banking & Finance results preview has highlighted resilient loan growth supported by liquidity buffers and residual CRR benefits, while deposit growth has improved, largely driven by wholesale funding. The brokerage has added that NIMs are expected to remain range-bound for large private banks, with marginal declines for PSUs and possible expansion in mid-sized banks.
Treasury gains may moderate due to rising bond yields. Asset quality stays largely stable across segments, though the ongoing geopolitical tensions pose risks, especially in the MSME space, it added.
Nuvama on Banking & Finance – Q4FY26 Results Preview: Details
Loans resilient, deposit growth improves
Nuvama said that loan growth sustained the momentum supported by liquidity buffers and residual CRR benefits. Deposit growth also picked up majorly driven by wholesale funding which may curb CoF benefits during the quarter. Treasury gains are expected to moderate due to spike in bond yields. NIMs are likely to remain range bound for private banks, decline marginally for PSUs while mid-sized banks could report an expansion. Asset quality remains stable across most segments; however, the ongoing war could lead to some stress in the MSME segment.
Nuvama Top Stock Picks: Banking & Finance
HDFCB, ICICI Bank, AXIS, Federal, BoB (strong back-to-back growth), SBI, Shriram are top picks by Nuvama. Negative on KMB, LIC HF, CIFC.
Loan momentum intact; deposit growth improves
Banks that released BUs reported healthy loan growth (excluding IIB): private banks at 13% YoY and state-owned banks at 14.4% YoY. Among large banks, Axis and BoB continued to deliver strong performance, while AUSFB and RBL stood out within the mid-cap space. Deposit growth accelerated, primarily led by wholesale funding, which may limit CoF benefits in Q4FY26; however, strong CASA growth for HDFC (EOP), KMB (EOP), RBL, Bandhan, AU and Union came as a positive surprise.
NIM steady for private banks, declining for PSUs
The 25bp repo rate cut in Dec’25 is likely to be fully transmitted to lending yields in Q4. As a result, funding costs remain elevated, with most banks yet to reduce TD/SA rates post the rate cut. Large private banks like ICICI and HDFC are expected to report stable margins, whereas Axis Bank and KMB may see a decline. Mid-sized banks appear relatively better positioned, with AU, Bandhan, IDFC likely to report NIM expansion.
Asset quality stable; macro uncertainty remains a risk
Asset quality trends remain largely stable across segments; however, the ongoing war poses a potential risk, particularly to the MSME segment. On the other hand, asset quality is expected to improve in PL/MFI and CC segments for most lenders.
NBFC to report a mixed set
LTFH delivered strong business update, BAF missed slightly, while MMFS remained subdued. LTFH is expected to report strong Q4FY26 while CIFC could see healthy AUM growth along with improved credit costs. Muthoot will likely report strong earnings. Shriram may witness NIM compression with largely stable credit costs. For SBI Cards, credit costs could decline, with card spends expected to be steady.
ICICI remains key pick, supported by strong profitability profile. Nuvama sees the risk reward as unfavourable for CIFC, LTF and BAF.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
