The Net Interest Margins (NIM) of private banks remained under pressure during the fourth quarter, impacted by rising cost of funds amid tight liquidity.
Lenders, including HDFC Bank, ICICI Bank, Yes Bank, IDFC Bank and RBL Bank have reported 5 to 50 basis points year-on-year decline in NIM in the fourth quarter.
With demand of loans staying strong, HDFC Bank, ICICI Bank and several other lenders raised interest on fixed deposits by up to 10 bps in February to mobilise deposits amid tight liquidity.
“NIM compression in private sector banks is primarily driven by two key factors.
“Firstly, deposit rates on a weighted average basis have increased more than lending rates in…
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