The Bank Nifty is trading near lifetime highs, reflecting the fortunes of lenders that extricated themselves from the quagmire of bad assets spawned by the last round of bankrolled capacity expansion. Yet, bank profitability, now at its highest in a decade, faces the risk of starting a downward journey yet again as the hunt for deposits compels lenders to pay more to savers, narrowing net interest margins (NIM).
Over the past few weeks, lenders such as HDFC Bank, ICICI Bank and State Bank of India (SBI) have raised their deposit rates by up to a percentage point to garner more deposits so that they can lend to borrowers across segments — institutional, retail or small-business owners.
Source:
Economic Times
