Bank Q3 Results Analyzed by Elara Securities

Elara Securities has looked closely at what banks are likely to report in the October to December period (Q3FY26). They think things will generally be better for Indian banks and financial companies. Specifically, big banks like the Public Sector Banks and the leading Private Banks are expected to show strong results. However, some smaller banks might not do quite as well.

Key Points

• Overall loan growth expected: Over 11% for Q3.
• Private banks favored: ICICI & SBI recommended.
• Mid-sized banks: Karur Vysya & AU Small Finance Bank favored.
• NIMs cautious: Watch for changes in profit margins.
• Deposit growth slow: Soft trends expected.
• Asset quality improving: Steady recovery anticipated.

The brokerage believes the second half of the year (2026) will be better, with things getting steadily improved. This will support the banks. They also think things might change a bit for the following year (2027), especially concerning profits and how much banks make on loans.

Here’s what Elara Securities is expecting to see in bank results: Banks are showing a good increase in lending, with overall loan growth above 11%, according to the Reserve Bank of India. This means most banks should be lending more money. However, the money people are putting into their banks – called deposits – hasn’t grown as quickly.

Elara Securities also thinks that banks’ profits from lending (called Net Interest Margins or NIMs) might get a little better during this time. But they’re a bit worried about how these profits might change later on. Funding costs are a concern, because not many people are putting money into their savings accounts.

Several factors are causing this. Competition from big banks is keeping interest rates low. The difference between interest rates on loans and government bonds is also creating problems. Plus, there’s a chance interest rates might go down, or rules about how much money banks need to have set aside for emergencies might change. These changes could all impact how much money banks make.

As for the quality of loans, things are generally getting better. Banks are collecting money from borrowers more easily. They expect some loans in the farming sector to slip a bit during the rainy season, but personal loans are expected to do better. Small finance banks and non-banking financial institutions are also showing signs of improvement, especially with smaller loans under ₹10 lakh.

Analysts will be paying close attention to how banks are managing their loans, particularly those under ₹10 lakh. This is important for smaller banks and companies that lend money. It’s really important to watch this category closely.

Banks’ profit margins will be the key focus of discussions during Q3 results.