Business
Private banks report Q2 NIM squeeze from FCNR deposits
Business Standard·
HDFC Bank, ICICI Bank and Axis Bank reported sequential net interest margin declines in Q2FY27 as FCNR(B) deposits weighed on earnings. HDFC Bank's NIM fell 10 basis points to 3.16 percent. ICICI Bank's NIM fell 18 basis points to 4.18 percent. Axis Bank's NIM fell 10 basis points to 3.36 percent from the prior quarter.
Prism
What It Means For You
- Depositors and borrowers will see banks cite FCNR(B) inflows when explaining Q2 margin dips.
- ICICI executives said the full margin hit may show in the December quarter.
- Axis Bank still pointed to NIM guidance of 3.8 percent.
What's Happening
- Business Standard linked the squeeze to RBI's concessional FCNR(B) swap window.
- HDFC Bank MD Sashidhar Jagdishan said margins faced asset repricing pressure earlier.
- ICICI Bank mobilised $17.88 billion in gross FCNR(B) deposits, the report said.
How Margins Moved
- Axis used some funds late in the September quarter to retire costlier non-retail deposits.
- ICICI said the deposits offer stable funding for three to five years.
- All three lenders said deployment of the foreign deposits is expected to lift margins later.
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