Private banks stumble on agriculture, microfinance slippages in Q3

Credit cost for most of the lenders increased due to higher provisions, mainly for unsecured retail loans

Elevated slippages in agriculture and microfinance portfolios impacted the profitability of private banks during the October-December quarter (Q3) of 2024-25, leading to a sequential decline in net profits. Margins also came under pressure due to these higher slippages. 

The net profit of 12 private banks rose 7.4 per cent year-on-year (Y-o-Y) to Rs 42,550 crore but fell 1.4 per cent quarter-on-quarter (Q-o-Q). 

“Increased stress in agriculture and microfinance portfolios, slower growth, and higher provisions weighed on bank profitability this quarter. However, the stress in microfinance is expected to normalise by the fourth quarter,” said Anand Dama, senior analyst of BFSI