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BFSI: stable performance

ICICIdirect Research 17 Apr 2026 DISCLAIMER

We expect overall performance of the banking sector to remain steady, despite heightened volatility in macro environment. Q4 typically benefits from favourable seasonality, with year-end business momentum driving stronger advances and deposit growth, alongside higher recoveries and lower agri-led slippages, thereby supporting overall asset quality trends.

Systemic credit growth is expected to remain robust at ~14% YoY, with incremental acceleration driven by wholesale lending, working & strong traction in gold/MSME segments, while deposit growth continues to lag credit growth with seasonal uptick in CASA base.

NIM trajectory to remain divergent among lenders with benefits from seasonal CASA bump, further uptick in CD ratio and benefit in day count expected to be offset by elevated bulk deposit rates. NII growth expected to regain momentum at 8-9% YoY, post muted growth in previous quarters.

Hardening of yields (~40 bps QoQ) is expected to keep treasury performance weak, though majority of impact will be captured in AFS reserve surpassing P&L. Impact of regulation related to currency remains monitorable. With seasonal uptick in fee income and tight control on opex, profit growth is expected to remain in-line with credit growth at 12-14% YoY.

While slippages from MSME could witness marginal uptick, sharp improvement in MFI segment along with stable trend in credit card & PL and seasonal improvement in agri-segment, is expected to result in improvement in slippages. Thus, overall credit cost to remain benign and GNPA/ NNPA ratio steady.

For AMC companies, industry AUM is broadly flattish QoQ at ~Rs 81.5 lakh cr for Q4FY26 despite the sharp fall in equity markets as flows remain resilient esp. on SIP side with consistent monthly run-rate of ~Rs 30,000 cr.     

Stocks Preferred – Kotak Mahindra Bank, HDFC AMC, L&T Finance, South Indian Bank

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