New Delhi: The banking sector, which took the market by surprise with robust growth in the third quarter of this fiscal, is likely to face tough days ahead on slowdown in lending growth and declining margins, analysts say.
Despite the better-than expected performance of banks in the third quarter this fiscal, analysts predict difficult times in coming days providing various reasons, which could put pressure on their earnings.
“While Q3 FY 2009 results have been a positive surprise from bottom line perspective, there are tough challenges ahead,” leading brokerage firm Sharekhan said in a latest report.
Another brokerage firm Motilal Oswal also expects the conditions for public sector banks to deteriorate in the next fiscal.
“We expect margins to decline for PSU banks in FY10, fee income growth to moderate and Non-Performing Assets (NPA) costs to rise,” a latest report by Motilal Oswal stated.