Indian banks' Q2FY27 earnings seen rising 11%; FCNR deposits may weigh on margins: Kotak
The Economic Times 8 hrs ago·6 Oct 2026, 6:25 am
Indian banks are expected to report stronger earnings for the second quarter of fiscal 2027, with net profit growth estimated at around 11%. This optimism is primarily driven by healthy credit growth and stable loan demand. However, investors should note that the sector faces a headwind from Foreign Currency Non-Resident (FCNR) deposits. These foreign currency liabilities often require banks to pay higher interest rates, which can compress net interest margins.
For investors, this earnings season will be a test of how well banks manage their interest costs. While the overall earnings outlook looks positive, the pressure on margins from FCNR deposits could limit the upside. Market participants should closely monitor the commentary from bank management regarding their strategies to mitigate this cost pressure.
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