PSBs facing another muted quarter due to NPA provisioning, funding costs

While NPA ageing and mark-to-market losses will keep provisioning elevated, high funding cost and slower credit growth will impact topline

After every quarter of disappointing performance in the past, investors had hoped that the worst may be behind for bad loan-ridden public-sector banks (PSBs). But, it seems they may have to wait for another quarter, at least. Despite some expected moderation in slippages, the September 2018 quarter (Q2) is also expected to be relatively muted thanks to sustained provisioning pain and high funding costs. Thus, overall earnings, as compared to the year-ago period, are expected to remain under pressure in Q2 with many PSBs seen reporting losses. Some banks, though, could see sequential improvement.  

"PSU banks are expected to