With banks gearing up to announce their financial results for the second quarter, analysts predict this to be their weakest quarter of the earnings cycle. This is largely due to muted loan growth, compressed net interest margins, weak core fee income and lower treasury gains, reports said.

“We expect overall profitability growth for PVBs (private sector banks ) to remain subdued at ~2% YoY, mainly due to moderate growth, margin contraction, and slightly elevated credit costs,” Emkay Global said in a pre-earnings report. “PSBs should report healthy core operating performance as well as contained credit cost, but weak treasury performance in view of sequential uptick in g-sec yields should limit profit growth at aggregate level to ~1.2% YoY,” it said.

Why banks face a margin & profit s

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