The credit-deposit (CD) ratio of scheduled commercial banks reached 81.75%—the highest level recorded since 2000-01—on 31 December 2025. Usually, a high CD ratio is a positive indicator as it means that banks are deploying funds efficiently in loans. CD ratios rise when credit is booming, and economic activity is picking up. Yet, in the past, the Reserve Bank of India (RBI) has warned banks about excessively high CD ratios, though it does not recommend an ideal level. Are CD ratios too high, and why does it ...

Core Insights - The bank reported a 48% year-on-year increase in net profit to Rs 503 crore for Q3 FY26, compared to Rs 339 crore in the same period last year [8] - Net interest income (NII) grew by 12% year-on-year to Rs 5,492.4 crore, up from Rs 4,902 crore in the corresponding quarter a year ago [8] - The bank's asset quality showed improvement, with gross non-performing assets (NPAs) ratio decreasing to 1.69% from 1.86% in the previous quarter and 1.94% a year ago [8][7] Financial Performance - Gross NPAs declined to Rs 4,614 crore from Rs 4,841 crore in the previous quarter, while net NPAs rose slightly to Rs 1,427 crore from Rs 1,345.4 crore sequentially [2][8] - Provisions for the quarter decreased by 3.7% sequentially to Rs 1,398 crore from Rs 1,452 crore, indicating an improvement in overall asset quality [5][8] - The bank's net interest margin (NIM) fell to 5.76% from 6% in the same period last year [9] Loan Growth and Segments - Nearly 89% of the year-on-year growth in loans and advances was driven by expansion in mortgage loans, vehicle loans, consumer loans, business banking, and wholesale loans, reflecting broad-based momentum across key lending segments [4][8] - The credit card portfolio expanded, with cards in force reaching 4.3 million during Q3 FY26 [5][8] - The wealth management business experienced a 31% year-on-year growth, with assets under management increasing to Rs 58,957 crore [5][8] Management Commentary - The Managing Director and CEO, V Vaidyanathan, noted strong business momentum across core segments, including lending, deposits, wealth management, and transaction banking [6][8] - He highlighted the improvement in asset quality and anticipated a further decline in the cost of funds due to recent revisions in savings rates, which is expected to support the bank's lending expansion [7][8]

Core Insights - The banking sector is experiencing robust loan growth, with RBI data indicating a nearly 12% year-on-year increase and a 4.5% quarter-on-quarter rise in banking system advances as of mid-December 2025 [1][21] - Key segments driving this growth include micro and small enterprises, services, and retail loans, with industrial credit also picking up significantly [2][21] - Despite steady loan growth, deposit growth is lagging, with system-level deposits increasing by 9.7% year-on-year, resulting in a credit-deposit ratio exceeding 81% [6][21] Loan Growth - Loan growth is expected to be around 11.6% year-on-year for the coverage universe in Q3, with banks like HDFC Bank, Axis Bank, and ICICI Bank anticipated to outperform the sector average [21] - Retail, MSME, and services loans are expected to lead the credit growth momentum, particularly among mid-sized and small finance banks [5][21] Deposit Trends - Deposit growth remains a pressure point for the sector, with banks increasingly relying on certificates of deposit and selective rate hikes to mobilize deposits [6][7] - Elara Capital notes that slower growth in low-cost deposits and higher credit-deposit ratios may limit the benefits of liability repricing in FY27 [7][21] Margin Stability - Net interest margins (NIMs) are projected to remain stable in Q3, aided by CRR cuts and deposit repricing, with most banks expected to see only marginal movements [9][10] - YES Securities anticipates a mild sequential decline in NIMs, clustering around a 5-basis-point drop, although loan spreads have improved due to sharper cuts in deposit rates [11][21] Fee Income and Operating Expenses - Fee income is expected to improve sequentially in Q3, driven by higher loan disbursements and stable business momentum, which should help offset weaker treasury income [12][21] - Operating expenses are likely to remain flat sequentially, as previous wage revisions and seasonal cost increases have been absorbed [12][21] Asset Quality - Asset quality is stabilizing, with a reduction in stress in unsecured lending, particularly in microfinance, and slippages expected to remain stable [13][21] - Provisions are expected to decline for several banks, reflecting better collections and lower incremental stress [14][21] Profitability Outlook - Q3 is anticipated to mark a turning point for earnings, with year-on-year profitability expected to improve for most banks, reversing the contraction seen in Q2 [15][21] - JM Financial estimates a net interest income growth of about 4.7% year-on-year, with large banks like HDFC Bank and ICICI Bank expected to deliver strong return ratios [16][21] Key Trends - Three clear themes for Q3 include sustained growth led by retail and MSME loans, stabilizing margins with repricing benefits, and improving asset quality reducing downside risks to earnings [18][21] - Investor focus is likely to remain on banks with strong balance sheets and diversified loan books as Q3 results are released [19][21]

Financial Performance - Profit before tax excluding treasury increased by 91% year-over-year to ₹ 16164 billion in Q2-2026[7] - Profit after tax grew by 52% year-over-year to ₹ 12359 billion in Q2-2026[7] - Core operating profit increased by 65% year-over-year to ₹ 17078 billion in Q2-2026[7] - Net interest income grew by 74% from Q2-2025 to ₹ 21529 billion in Q2-2026[13] - Non-interest income increased by 132% from Q2-2025 to ₹ 7356 billion in Q2-2026[13] Deposits and Loans - Average deposits grew by 91% year-over-year in Q2-2026[7] - Domestic loans grew by 106% year-over-year and 33% quarter-over-quarter[7] - Retail loans grew by 66% year-over-year and 26% quarter-over-quarter[7] - Business banking portfolio grew by 248% year-over-year and 65% quarter-over-quarter[7] - Period end total deposits grew by 77% year-over-year and 03% quarter-over-quarter at Sep 30 2025[7] Asset Quality - Net additions to gross NPAs were ₹ 1386 billion in Q2-2026 compared to ₹ 3034 billion in Q1-2026[9] - Provisions were ₹ 914 billion in Q2-2026 compared to ₹ 1815 billion in Q1-2026[9] - Net NPA ratio was 039% at Sep 30 2025[9]

Core Insights - Wells Fargo reported strong third-quarter results, exceeding analyst expectations and driving stock performance up by over 8% [1][2] Financial Performance - Total revenue for the third quarter reached over $21.4 billion, a 5% increase compared to the same quarter in 2024 [2] - GAAP net income rose by 9% year over year to nearly $5.6 billion, translating to a per-share profitability of $1.66 [2] Banking Metrics - Average loans increased by 2% to just under $929 billion, while average deposits saw a slight decline to almost $1.34 trillion [3] - Both revenue and profitability figures surpassed consensus analyst estimates, which were slightly above $21.1 billion for total revenue and $1.55 per share for profitability [3] Revenue Drivers - The bank's improvements were primarily attributed to a rise in fee-based income from commercial and consumer operations [4] - Additional contributions came from higher vehicle loan originations and an increase in total client assets within its wealth and investment management business [4]