Bank Margins Resilient in Q3FY26 Despite Loan-Deposit Gap: IIFL Capital

• Indian banks' Net Interest Margins (NIMs) expected to hold up in Q3FY26, defying loan growth outpacing deposit growth, says IIFL Capital.
• CRR cut and higher Loan-to-Deposit Ratios (LDRs) are key factors supporting margin resilience this quarter.
• Most banks may see 2-10 basis points NIM expansion in Q3FY26; RBI's LCR focus allows elevated LDRs near-term.
• IIFL Capital prefers large private banks (Axis Bank, ICICI Bank, RBL Bank, Kotak Mahindra Bank) over PSUs, with SBI as an exception.
• Retail and MSME loan books show healthy 17-18% growth with stable asset quality, though some stress points exist.

Why It Matters: Indian banks' NIMs are set to remain strong in Q3FY26, driven by CRR cut and LDRs, despite deposit challenges.