Aggregate net profit for banks grew in single digit year-on-year in the March 2025 quarter for the first time in four years or 17 quarters led by lacklustre performance of private sector banks and lower profit reported by State Bank of India (SBI) amid single digit growth in net interest income and continued pressure on margins. RBI’s initiative to pump additional liquidity into the banking system from September and reduction in interest rates is expected to reduce pressure on margins in the coming quarters thereby supporting the bottom lines of banks.

For a sample of 29 banks, net profit rose by 4.9% year-on-year to Rs 93,828.3 crore. The government owned SBI, the country’s largest bank, reported a 9.9% drop in net profit at Rs 18,642.6 crore. Its share was 20% in the sample’s aggregate profit. The public sector banks at the aggregate level reported 13% growth in profit at Rs 48,403.4 crore. It was the lowest profit growth in 11 quarters or since June 2022 quarter when it had grown by 9.2%.

Private sector banks recorded a 2.5% drop in aggregate profit at Rs 45,424.9 crore. It was the first year-on-year drop in at least 13 quarters. The subdued performance also shrank the share of private sector banks in the total sample’s net profit to 48.4% from 52.1% a year ago. It was the lowest share in eight quarters.

The total sample’s net interest income (NII) increased at a 14-quarter low rate of 3.7% year-on-year to Rs 2.1 lakh crore. It was pulled down by the PSU banks which recorded 2.4% increase while the private sector banks showed 5.3% rise in NII.

Net interest margins (NIM) are under pressure for several quarters given the delayed downward revision in deposit rates to mirror the falling repo rates. In the March 2025 quarter, over two-third or 19 of the sample banks reported year-on-year fall in the net interest margins.