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Indian private bank stocks gain as asset quality improves and rates stay steady
Karnataka Bank is up more than 15% in August so far, while several other private lenders have risen 1% to 9% amid better-than-expected Q1 results and multi-year low NPA levels.
Indian private banking stocks have drawn fresh buying interest, supported by stronger Q1FY27 earnings and improving credit quality, even as some lenders continue to face higher funding costs and margin pressure, LiveMint Markets reports.
Karnataka Bank has jumped more than 15% so far in August, with shares of DCB Bank, AU Small Finance Bank, City Union Bank, Kotak Mahindra Bank, IDFC First Bank, and Axis Bank up between 1% and 9% for the month. Two large names, ICICI Bank and HDFC Bank, are down about 1% and 3% respectively in August due to profit booking, according to LiveMint Markets.
The outlet cites a mix of factors behind the sector’s strength, including better-than-expected Q1 numbers for lenders such as ICICI Bank, Axis Bank, and IDFC First Bank, plus reported improvement in asset quality with NPAs at multi-year lows. It also points to foreign investor return and the RBI holding rates steady as positives for loan growth, with Ventura research head Vinit Bolinjkar saying India’s credit growth is running at 12% to 14% per year and private banks are well positioned to benefit from lending practices, technology, and a more retail-focused loan book.
LiveMint Markets also notes that experts highlight FCNR (B) mobilisation as a support for sustained credit growth, while some remain cautious on margins. INVAsset PMS business head Harshal Dasani said the private bank index is breaking out of a cup-and-handle pattern consistent with institutional accumulation, and added that NIM compression could persist another quarter or two as loan repricing moves faster than deposit repricing.