Bank Q2 Results: The eyes of stock market investors are fixed on the quarterly results of companies. This time the picture of the banking sector looks very interesting. On one hand the country’s banks have received huge amounts from abroad, but on the other hand their earning speed is slowing down a bit. According to experts, interest income of banks included in Nifty 50 can be seen to increase by 11.5 percent. Despite this, the total profit margin may be limited to only 10 percent. This is happening because the pressure in the bond market has affected banks’ investment income. However, the good news is that there is no new threat of bad loans (NPAs).

Money came into the treasury by tearing down the roof

Recently the Reserve Bank of India launched a Special Scheme (FCNR). Its purpose was to attract money from abroad. This scheme has done more wonders than expected. This has brought a huge amount of more than 127 billion dollars into the country’s banking system. People were taking a lot of loans for a long time, but the pace of depositing money in banks was slow. Now with the arrival of these foreign funds, the speed of depositing money in banks has suddenly increased. If the figures are to be believed, there has been a huge jump in deposits of 15.8 percent year-on-year.

Why is earnings sluggish even after receiving money?

Now the biggest question arises that when the banks have so much money then why their earning speed is decreasing. The answer to this is very simple. Banks have to pay interest on the money that has come into the banks from abroad. Unless banks distribute this money in the form of loans to common people or companies, this money is a kind of burden on the bank. A Kotak Securities report says that it takes some time for these foreign funds to be distributed as loans in the market. Due to this, there will be some pressure on banks’ margins for some time.

The condition of banks will improve in future

Even though there is a slight slowdown in the profitability of banks at present, the future picture is very good. The report of Global Financial Services shows that there will be a good improvement in the earnings of banks in the second half of the year. As banks begin to distribute this new money to the market in the form of loans, their earnings wheels will begin to spin faster. Apart from this, the banks which have already disbursed loans at floating rates will also directly benefit from the increase in interest rates.

Private banks ahead in profit race

Big private banks can earn huge profits in coming days. It is estimated that Axis Bank’s earnings could grow by a maximum of 41 percent. This is followed by Kotak Mahindra Bank whose profit is expected to grow by 29 percent. If we talk about SBI, the country’s largest state-owned bank, its profit may also increase by around 11.2 percent. Not only banks, but other loan disbursing companies (NBFCs) are also set to do well. There is a huge demand for loans in the market, due to which the business of these companies can increase up to 20 percent.