Indian Banks - Rates Transmission Continues; NIMs To Exhibit Positive Bias In Near Term: Motilal Oswal

Motilal Oswal Report

We note that the weighted average lending rates on fresh loans increased 17 basis points month-on-month and 135 bps since Apr-22, with public sector undertaking banks reporting a 28 bps month-on-month and a 149 bps increase since Apr-22.

Private Banks saw a modest increase of 6 bps month-on-month and 101 bps since Apr-22. Reserve Bank of India has cumulatively raised the repo rate by 225 bps since Apr-22 to 6.25%.

The WALR on outstanding loans rose 8 bps month-on-month and 71 bps since Apr-22 to 9.43% for the banking universe. The increase was higher at 11 bps/82 bps for private banks and modest at 5 bps/59 bps PSU banks.

Weighted average term deposit cost for the banking system rose 13 bps month-on-month and 59 bps since Apr-22 to 5.62%, led by a 13 bps month-on-month and 59 bps increase since Apr-22 for private banks versus a 13 bps month-on-month and 51 bps increase since Apr-22 for PSU banks.

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