As per a recent press report it is seen that decelerating credit demand, increased provision for bad debts and low margins due to tight monetary policies are likely to affect the bank profits of September quarter to fall. The weakening investment environment has caused serious impact in credit growth and reports said that this movement is likely to continue in the coming months. A report from Standard Charter said that the annual loan growth, which was 25 per cent last year, would be 18 per cent this year. This would continue to be the same in the FY13.
According to a report by Sharekhan the Net Interest Income would remain the same on quarter – on – quarter basis if there is slow growth in credit growth. The public sector banks are expected to report a quarter – on – quarter NII growth to be 2.9 per cent whereas the NII growth of private sector banks are expected to be at 3.5 per cent.
The report from IDBI Capital said that the provisions would increase as loans are restructured. However, a report from Standard Charter said that there would not be any high non-performing loans in the period of June – September.