Small Private Banks Set For A Comeback? NIM Recovery, Credit Growth & Strong Consumption Demand

Small private sector banks are attracting attention as consumption strengthens and pressure on net interest margins could ease. Asit Bhandarkar, Senior Fund Manager - Equity, JM Financial AMC, explains why small private banks may benefit from the upcoming festival season, with their lending businesses closely linked to individual consumption. After several quarters of NIM compression, the worst could be behind the sector, with margins potentially improving in the second half of the year. Strong credit growth, reasonable valuations and stable asset quality are also supporting the outlook. The broader financial services sector remains a key area of interest as investors assess the recovery potential in small private banks.