Indian banks face a Q2 paradox: FCNR boosts loan growth but margins shrink

Indian banks are heading into the Q2 earnings season with strong loan growth, helped by FCNR(B) deposit inflows, but margins are likely to remain under pressure. Analysts expect healthy earnings growth on lower credit costs and stable asset quality, while favouring large private banks such as HDFC Bank, ICICI Bank and Kotak Mahindra Bank.