Motilal Oswal sees India's banks turning a corner in H2 FY26

ICICI Bank

29/08/2025 07:20

** Motilal Oswal Securities says India's banks expected to see recovery in net interest margins in H2 FY26, setting the stage for stronger earnings

** Adds gradual deposit repricing, stronger loan growth, relief from recent cash reserve ratio cuts to drive rebound

** Forecasts 9% y/y profit growth in H2 vs 4% y/y profit drop in H1

** Says this marks shift from recent quarters, when treasury gains propped up earnings as lending margins shrank

** Notes falling funding costs after repo rate cuts should support margins, lift earnings further into FY27

** Sees broad-based recovery across banks; ICICI Bank ICBK.NS, HDFC Bank HDBK.NS, State Bank of India SBI its top picks

** Private banks .NIFPVTBNK, financials .NIFTYFIN rise 0.7%, 0.4%, respectively, leading Nifty 50 .NSEI 0.3% higher after muted start

 (Reporting by Bharath Rajeswaran in Bengaluru)

 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))