From The Economic Times · Joel Rebello · · 1m 10s
Private Banks' Margins Drop as FCNR Deposits Raise Costs
Private banks' net interest margins fall as FCNR (B) deposits increase funding costs.
In brief
Private banks' net interest margins fall as FCNR (B) deposits increase funding costs. Private banks saw year-on-year net interest margin drops due to FCNR (B) deposits, with ICICI, HDFC, and Axis Bank affected. Originally reported by The Economic Times.
Private banks' margins fall
Large private sector banks saw year-on-year drop in net interest margins as FCNR (B) deposits raised funding costs.
ICICI Bank's margin impact
ICICI Bank's net interest margins dropped 12 basis points to 4.18% from 4.30% a year ago due to FCNR (B) deposits.
HDFC Bank's margin impact
HDFC Bank's net interest margins fell to 3.16% from 3.27% a year ago after collecting $11.5 billion in FCNR (B) deposits.
Axis Bank's margin impact
Axis Bank saw net interest margins drop 34 basis points to 3.46% from 3.80% a year ago after collecting $10.62 billion in FCNR (B) deposits.
Analysts explain impact
Analysts say FCNR (B) deposits increased funding costs and lowered margins due to high leverage and low returns abroad.
What happens next
HDFC Bank expects continued pressure on net interest margins as FCNR (B) deposits' full impact unfolds.
Here's the gist
Private banks saw year-on-year net interest margin drops due to FCNR (B) deposits, with ICICI, HDFC, and Axis Bank affected.
