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Informist, Thursday, Jul. 9, 2026

 

By Kabir Sharma

 

MUMBAI – State-owned Indian Bank is expected to report steady earnings for the June quarter, with lower provisions and stable net interest margins likely to offset seasonal weakness in fee income and modest pressure from funding costs, according to brokerages. The bank is scheduled to declare its earnings Friday.

 

An average of estimates by seven brokerages pegs the lender's net profit for the first quarter of the financial year 2026-27 (Apr-Mar) at INR 32.65 billion, up 14% on year, while net interest income is seen at INR 72.82 billion, up just 10% on year. Systematix Shares and Stocks (India) Ltd. has the highest net profit estimate of INR 34.18 billion while Nuvama Wealth Management Ltd. has the lowest of INR 31.07 billion. For net interest income, Motilal Oswal Financial Services Ltd. has the highest estimate of INR 73.74 billion whereas Dolat Capital Market Pvt. Ltd. has the lowest estimate of INR 71.50 billion. 

 

In the March quarter, the bank had posted a net profit growth of just 5% to INR 31.03 billion due to a sharp jump in provisions. The bank's net interest income -- the difference between interest earned and interest expended -- had risen 11% on year to INR 71.10 billion for the March quarter. 

 

Most brokerages expect the bank to maintain its profitability through disciplined cost management and lower provisioning requirements even as fee income is likely to see some seasonal moderation. Motilal Oswal expects Indian Bank's business growth to remain healthy, with advances rising 13.7% on year and 2.4% sequentially, driven primarily by retail and micro loans and lending to small and medium enterprises. Systematix expects Indian Bank's loan growth during the quarter to outpace the industry's average.

 

According to provisional figures released by the bank, its gross advances rose 13.9% on year to INR 6.85 trillion as of Jun. 30 while its total deposits increased 13.3% to INR 8.43 trillion. Brokerages, however, expect a marginal compression in profitability from the core lending business and forecast a sequential decline in net interest margin as funding costs continue to exert pressure. Bucking the trend, Systematix believes yields on advances and the cost of deposits would have remained largely stable on a sequential basis, allowing the net interest margin to remain broadly unchanged. Indian Bank's net interest margin was compressed to 3.23% in the March quarter from 3.28% in the trailing quarter and from 3.37% in the March quarter of FY25. The bank had given a guidance of 3.10-3.25% for its net interest margin in FY27.

 

Systematix expects the bank's fee income to decline sequentially because of seasonal factors but believes this will be offset by lower operating expenses, supported by moderation in both employee expenses and other operating costs. Brokerages also expect loan slippages to decline compared to the March quarter and bad loan provisions to reduce meaningfully, and note that the bank had recognised an additional one-time provision of INR 3.1 billion in the preceding quarter. Lower credit costs are therefore expected to be one of the key drivers of earnings growth for the June quarter.

 

Most brokerages foresee either stable or improving asset quality, with lower provisioning emerging as a significant support to profitability after the elevated provisioning seen in the March quarter. While there are some differences among brokerages on expectations of slippages, analysts generally agree credit costs should remain benign.

 

Fresh slippages fell nearly 3% on year to INR 13.55 billion in the March quarter. The lender's net non-performing asset ratio was flat on quarter at 0.15% as of Mar. 31 but better than 0.19% a year ago. On the other hand, asset quality recovered on a gross basis, with the gross non-performing asset ratio falling to 1.98% at the end of March from 2.23% as of Dec. 31 and 3.09% as of Mar. 31, 2025.

 

Investors will watch the management's commentary on the sustainability of margins amid the evolving interest rate cycle, deposit mobilisation strategy, retail credit growth, and the outlook for recoveries and asset quality during the remainder of the financial year.

 

Indian Bank shares have fallen over 9% since its March quarter earnings were announced. Thursday, its stock closed at INR 793.15 apiece on the National Stock Exchange, up nearly 3% from Wednesday. Of the nine brokerage reports on the company available with Informist, seven have a "buy" recommendation on the stock with an average target price of INR 992 per share. This is over 25% higher than the current market price. One brokerage has a "hold" recommendation while one says "sell".

 

Following are the Apr-Jun earnings estimates, in INR billion, for Indian Bank from seven brokerages, in descending order by the net profit estimate:

 

Brokerage	Net Interest Income	Net Profit
Systematix Shares and Stocks (India) Ltd.	73.18	34.18
Anand Rathi Share and Stock Brokers Ltd.	73.73	33.71
Elara Securities (India) Pvt. Ltd.	71.81	33.40
Motilal Oswal Financial Services Ltd.	73.74	32.55
Dolat Capital Market Pvt. Ltd.	71.50	32.30
YES Securities (India) Ltd.	72.51	31.36
Nuvama Wealth Management Ltd.	73.25	31.07
Average	72.82	32.65

 

End

 

Edited by Himanshi Gupta

 

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