Indian banks seen posting modest Q3 profit growth; NIM trends diverge, says Citi

Citi forecasts a 5% year-on-year growth in net interest income and a 4% increase in profit after tax for Indian banks in Q3. Credit growth is expected to slow, with divergent trends in net interest margins. Margins are projected to expand for AU Small Finance Bank, HDFC Bank, Kotak Mahindra Bank, RBL Bank, and SBM Bank, remain flat for ICICI Bank and IDFC First Bank, and dip for Axis Bank and Yes Bank. Citi has a positive outlook on HDFC Bank and Kotak Mahindra Bank, but downgraded Federal Bank to neutral. The Nifty Bank Index is up 16.7% YTD, outperforming the Nifty 50's 10.8% gain.