Net interest margin of banks jumps 46bps to 3.3%

MUMBAI: Banks’ net interest margin (

NIM

), a key profitability gauge, grew 46 basis points (100bps = 1 percentage point) to 3.3% in January-March quarter, driven by slower deposit rate resetting, a study showed.
This has helped lenders register a 29.5% increase in their net interest income (NII) during the period, according to an analysis of the banks’ balance sheets by

Care Ratings

.

NII

, which is the money that banks earn from lending and paying to depositors, rose to Rs 1.8 lakh crore in Q4FY23 due to healthy loan growth and a higher yield on advances as against the year-ago period, it said.
The anticipated rise in deposit rates, which is expected to be a lag effect, is likely to be counterbalanced by the withdrawal of the Rs 2,000 banknotes in May this year, it added. The NIM of private sector lenders stood at 4%, which was more than 43bps, and that of public sector lenders at 2.9%, up 46bps. agencies