Performance of Banks in Q4FY25: Moving into a Challenging Territory

Several private and public sector banks have released their Q4FY25 financial results, with most reporting strong performance. However, a few have experienced slippages in asset quality. Additionally, the yield on advances has declined over the past year, while the cost of funds has risen, impacting profitability for some lenders. This article delves into the overall performance of banks in Q4FY25.

Private Sector Banks

HDFC Bank

HDFC Bank’s Net Interest Income rose by 10.3% year-on-year. Despite a 9.4% decline in Total Income, PAT for the quarter grew by 6.7% compared to Q4FY24. Provisions and Contingencies were reduced to ₹3,193 crore from ₹13,512 crore in Q4FY24, which included an unusually high floating provision of ₹10,900 crore. The bank’s asset quality improved, with Gross NPA at 1.33% and Net NPA at 0.43%. Although these figures are unfavourable compared to Q4FY24, they show improvement on a QoQ basis (Gross NPA was 1.42% and Net NPA was 0.46% in Q3FY25). Excluding Agri loans, Gross NPA stood at 1.13% at FY25’s end.

Average advances in Q4FY25 were ₹26,955 billion, up 7.3% from Q4FY24. Average deposits in Q4FY25 were ₹25,280 crore, a 15.8% increase over Q4FY24.

The Net Interest Margin (NIM) for Q4FY25 was 3.46%, while the Return on Assets (RoA) stood at 1.9%. The Capital Adequacy ratio at the end of the quarter was 19.55%, indicating an improvement compared to Q4FY24. The bank consistently maintained a CASA ratio of 35%, which aligns with its usual range.

As of March 31, 2025, the bank operated a network of 9,455 branches, having added 312 branches during the quarter. Furthermore, the bank successfully acquired 4 million net new customers over the financial year. The board of HDFC BAnk has recommended a dividend of ₹22 per equity share.

ICICI Bank

ICICI Bank delivered a strong financial performance in Q4FY25, continuing its growth trajectory with steady improvements across key metrics.

• Net Interest Income (NII): Increased by 11% year-on-year, reflecting robust loan growth and efficient interest rate management.
• Operating Profit: Expanded by 14%, demonstrating the bank’s ability to maintain profitability while managing costs effectively.
• PAT (Profit After Tax): ₹12,630 crore, marking an 18% increase compared to Q4FY24, showcasing improved earnings.
• Fee Income: Grew to ₹5,306 crore, highlighting strong momentum in non-interest revenue streams.

Asset Quality Improvement:

ICICI Bank continued to enhance its asset quality, reducing non-performing assets across the board:

• Gross NPA: Declined from 1.96% in Q3FY24 to 1.67% in Q4FY25, indicating better loan performance.
• Net NPA: Improved from 0.42% in the previous quarter to 0.39%, further reinforcing the bank’s healthy credit profile.

The bank’s consistent growth in core earnings alongside improved asset quality reflects its ability to navigate market challenges effectively while sustaining profitability. The results reaffirm ICICI Bank’s strong positioning in the Indian banking sector with its steady expansion and operational efficiency.

The Net Interest Margin for the quarter was 4.41%, up 10 basis points from Q4FY24. The bank’s RoE was 18.2%, slightly lower than the previous quarter. The average CASA ratio in Q4FY25 was 38.4%, consistent with the range maintained by the bank. As of March 31, 2025, the RoA was 2.52% and the Capital Adequacy ratio was 16.55%.

The bank set aside provisions of ₹891 crore, which was slightly higher than Q4FY24, though in line with expectations.

The retail loan book expanded by 8.9% in FY25, driven by strong growth in Mortgages and Credit Cards, which rose by 11% and 11.7%, respectively. ICICI Bank continued expanding its branch network, adding 141 new branches during the quarter. As of Q4FY25, the bank’s total branch count stood at 6,983, reflecting its growing physical presence.

Axis Bank

India’s third-largest private sector bank, reported a mixed performance in Q4FY25, with steady revenue growth but mounting cost pressures affecting profitability.

Financial Performance – Modest Growth with Profitability Challenges

• Net Interest Income (NII): ₹13,410.5 crore, marking a 5.5% YoY increase, indicating steady loan book expansion.
• PAT: ₹7,117.5 crore, experiencing a marginal decline of 0.2% YoY, reflecting profitability constraints.
• Total Income: Up 5.7% YoY, showing stable revenue expansion.
• Operating Profit: Grew by 2.1% YoY, signaling moderate efficiency gains.
• Net Interest Margin (NIM): 3.97%, down 9 basis points YoY, as funding costs continue to rise.

Escalating Cost Pressures

• Cost of Funds: Rising consistently across quarters:
  • 5.43% in Q4FY24
  • 5.46% in Q3FY25
  • 5.50% in Q4FY25
• Cost of Deposits: Increased from 5.06% in Q4FY24 to 5.19% in Q4FY25, reflecting higher deposit rates.
• CASA Ratio: Dropped below 40%, standing at 39.3% at the end of FY25, signaling a shift in deposit mix toward higher-cost instruments.
• Cost of Assets: Stable at 2.46%, down 9 basis points YoY and 2 basis points QoQ.

Asset Quality – Significant Improvement Over Time

• Capital Adequacy Ratio (Basel III): 17.07%, higher than FY24, reinforcing strong capital buffers.
• Gross & Net NPA Trends:
  • Gross NPA: 1.28%, improving from 1.43% YoY.
  • Net NPA: 0.33%, marginally higher than 0.31% in Q4FY24.
  • Absolute figures: Gross NPA stood at ₹14,490.1 crore, Net NPA at ₹3,685.5 crore.
• Fresh Slippages: ₹4,805 crore in Q4FY25, lower than ₹5,432 crore in Q3FY25, showing some reduction in new stress additions.
• Provision Coverage Ratio (PCR): 75% at the end of Q4FY25, slightly lower than Q3FY25, indicating a marginal decrease in provisioning buffer.

Branch Expansion & Customer Reach Branch Network: 170 new branches were added in Q4FY25, bringing the total count to 5,876 branches as of March 31, 2025.

Kotak Mahindra Bank

Kotak Mahindra Bank reported a challenging quarter, delivering a mixed financial performance in Q4FY25. While certain key metrics showed growth, others declined year-on-year, reflecting the bank’s evolving strategy and market conditions.

Financial Performance

• Net Interest Income (NII): Rose to ₹7,283.6 crore, up from ₹6,909.4 crore in Q4FY24.
• Net Interest Margin (NIM): Declined by 31 basis points, settling at 4.97%.
• Total Income: Increased by 9.3% YoY, reaching ₹16,712.2 crore.
• PAT: Dropped by 14.1% YoY, amounting to ₹3,551.7 crore.

Provisioning & Capital Position

• Provisions & Contingencies: Increased to ₹909.4 crore, marking a ₹645.7 crore rise over Q4FY24.
• Return on Assets (RoA): Came in at 2.19%, 78 basis points lower than Q4FY24.
• Return on Equity (RoE): Declined from 16.85% in Q4FY24 to 12.90%, reflecting reduced profitability.
• Capital Adequacy Ratio (Basel III): Improved from 20.55% in Q4FY24 to 22.25%, highlighting strong capital buffers.

Asset Quality & Loan Book

• Gross NPA: Increased to ₹6,133 crore, showing some deterioration in quality.
• Net NPA: Rose to ₹1,323.4 crore.
• Provision Coverage Ratio: Strengthened to 78%, up from 76% in Q4FY24 and 73% in Q3FY25.
• Net Advances: Grew by 3% QoQ, though corporate lending declined by 4% QoQ.

The bank is adopting a cautious approach to retail microcredit, with advances to this segment falling by 19% QoQ and 33% YoY. The share of unsecured retail advances in net advances declined from 11.8% in March 2024 to 10.5% in March 2025, indicating a strategic shift to reduce risk exposure.

Deposit Trends & CASA Ratio

• CASA Deposits: Increased quarter-on-quarter, rising from ₹200,411 crore in Q3FY25 to ₹214,417 crore.
• Current Account (CA) Deposits: Grew by 9%, while Savings Account (SA) Deposits declined by 2% YoY, a trend observed across multiple banks.
• CASA Ratio: Fell to 43%, 250 basis points lower than Q4FY24.

Branch Expansion & Regional Focus

Kotak Mahindra Bank continued expanding its presence, adding 80 new branches during the quarter. As of March 31, 2025, the total branch count stood at 2,148, with most branches located in metro areas (46%), followed by urban regions (22%).

Geographically, the bank maintains a balanced focus on Western, Northern, and Southern India, while largely avoiding expansion in the Eastern region.

Bandhan Bank

Bandhan Bank reported mixed financial performance in Q4FY25. While PAT surged by 482% year-on-year, largely due to significantly lower provisions compared to Q4FY24, the bank’s operating profit took a hit due to weaker Net Interest Income (NII).

• Net Interest Income: Declined by 3.6% YoY to ₹2,756 crore
• Total Income: Increased by 14.6% to ₹9,035 crore

Asset Quality Concerns:
The bank’s asset quality deteriorated, both on a year-on-year and quarter-on-quarter basis:

• Gross NPA: Rose to ₹6,435.6 crore
• Net NPA: Increased to ₹1,692.9 crore
• In percentage terms, the Gross NPA level has now exceeded that of the weakest public sector banks, raising concerns over loan book health.

At the end of Q4FY25, Bandhan Bank’s gross advances stood at ₹136,990 crore, reflecting a 9.8% increase over Q4FY24.

Among various lending segments:

• The Emerging Entrepreneurs Business (EEB) – Group accounted for 26.3% of the total loans and advances, maintaining its dominant share.
• The Small Business and Agri Loan (SBAL) segment contributed 14.9%.

The combined share of EEB (Group) and SBAL has declined from 49.9% in Q4FY24 to 41.2% in Q4FY25, as the bank strategically reduces its exposure to high-risk unsecured loans, reflecting a shift in risk management and lending strategy.

During Q4FY25, Bandhan Bank experienced a decline in yield on advances, which fell from 13.8% in Q4FY24 to 13.1%. At the same time, the cost of funds rose, increasing from 6.9% to 7.2%, putting pressure on profitability.

As a result, the Net Interest Margin (NIM) contracted by 90 basis points, dropping from 7.6% in Q4FY24 to 6.7%. Despite these shifts, the capital adequacy ratio remained strong, standing at 18.71% at the end of the quarter.

Bandhan Bank’s Return on Assets (ROA) stood at 5.2%, while Return on Equity (ROE) came in at 0.7% for Q4FY25. Both figures showed significant improvement compared to the previous year, reflecting enhanced financial efficiency and better profitability metrics.

Bandhan Bank’s CASA ratio stood at 31.4% in Q4FY25, reflecting a decline from 37.1% in Q4FY24, indicating a shift in deposit composition. As of March 31, 2025, total deposits amounted to ₹151,210 crore, with CASA deposits contributing ₹47,440 crore.

Bandhan Bank expanded its branch network in Q4FY25 by adding 12 new branches, reinforcing its presence across key markets. By the end of the quarter, the bank operated 1,715 branches and 4,954 banking units, strengthening its outreach.

The bank’s distribution remains heavily concentrated in the eastern region of India, followed by the central region.

IDFC First Bank

IDFC First Bank reported a mixed financial performance in Q4FY25, with steady income growth but significant profitability pressures due to higher provisions and asset quality concerns.

Financial Performance – Strong Revenue, But Profitability Declines

• Net Interest Income (NII): Expanded by 9.8% YoY, reflecting stable loan book growth.
• Total Income: Increased by 14.7%, signaling healthy revenue momentum.
• Operating Profit: Up 8.9% YoY, with Core Operating Profit (excluding MFI business) surging by 20.6% YoY.
• PAT: Dropped sharply by 58% YoY to ₹308.1 crore, primarily due to elevated provisioning levels.

Asset Quality & Provisioning – MFI Business Weighs on Performance

• Provisions & Contingencies: ₹1,450.5 crore, a sharp increase, reinforcing the bank’s cautious approach to risk management.
• Gross & Net NPA: Improved in percentage terms but increased in absolute figures both YoY and QoQ, reflecting underlying stress in loan portfolios.
• MFI Business Challenges:
  • Fresh slippages led to Gross NPA rising to 7.71% and Net NPA to 1.86%, up from 4.45% and 1.11% in Q3FY25.
  • The MFI business has faced asset quality deterioration over multiple quarters, prompting strategic adjustments.

Scaling Down MFI Exposure

• The bank reduced its MFI loan book, cutting its share from 6.6% in March 2024 to 4% in Q4FY25.
• In absolute terms, the MFI portfolio shrank from ₹13,344 crore to ₹9,571 crore, signaling a deliberate shift toward lower-risk lending.

Capital Adequacy & Profitability Metrics

• Capital Adequacy Ratio (Basel III): 15.48% as of March 31, 2025, down 63 basis points YoY.
• ROA: Annualized at 0.36%, lower than Q4FY24, reflecting profitability constraints.
• Cost of Funds: Increased YoY to 6.51%, while the cost of deposits remained stable at 6.38%.
• Comparatively, IDFC First Bank’s cost of funds and deposits remain higher than industry peers, impacting its margin efficiency.

Deposit Growth & CASA Ratio

• Total Customer Deposits: ₹242,543 crore, with CASA deposits at ₹118,237 crore.
• CASA Ratio: 46.9% as of March 31, 2025, slightly lower than 47.2% in March 2024, showing a shift in deposit mix.

Branch Expansion & Customer Growth

• Branch Network: Expanded with 31 new branches, bringing the total to 1,002 branches by the end of FY25.
• Customer Base: Grew by 2 million, reaching 37.5 million customers.

Public Sector Banks

State Bank of India

India’s largest bank, State Bank of India (SBI), reported a mixed set of financial results for Q4FY25, showing moderate revenue growth alongside higher provisions and asset quality improvements.

Financial Performance

• Net Interest Income (NII): ₹42,774.6 crore, marking a 2.7% YoY increase.
• Operating Profit: ₹31,286 crore, up 8.8% YoY.
• PAT: Declined by 10%, reflecting profitability pressures.

Capital & Profitability Metrics

• Provisions: SBI made provisions 4 times higher than in Q4FY24, signaling conservative risk management.
• Capital Adequacy Ratio: 14.25%, up by 122 basis points QoQ, but 3 basis points lower YoY.
• Return on Assets (ROA): 1.12%, down by 24 basis points YoY, indicating lower earnings efficiency.

Asset Quality – Strong Improvement

SBI made significant strides in asset quality improvement during the quarter:

• Gross NPA: Dropped to 1.82%, down from 2.07% in Q3FY25, reflecting better loan recoveries.
• Net NPA: Reduced to ₹19,666.92 crore, showing healthy provisioning efforts.
• Total Provisions: ₹6,441.7 crore, much higher than ₹1,609.8 crore in Q3FY25, reinforcing risk mitigation strategies.
• Provision Coverage Ratio (PCR): Declined by 16 basis points QoQ and 60 basis points YoY.
• Fresh Slippages: ₹4,222 crore, indicating new stress additions in the portfolio.

Network Expansion & Presence

• Branches: SBI had 22,937 branches across India, with a strong presence in rural areas.
• ATMs/ADWNs: 63,791 machines, primarily located in urban regions, reflecting a well-diversified reach.

Bank of Baroda

Bank of Baroda reported a lacklustre performance for the fourth quarter of FY25, with Net Interest Income (NII) falling 6.6% year-on-year to ₹11,019.6 crores. Total Income, however, rose 6.2% to ₹35,851.9 crore. The bank made provisions of ₹1,551.5 crore during the quarter, marginally higher than in Q4FY24.

The Net Interest Margin (NIM) declined to 3.02%, down 41 basis points from Q4FY24 and 8 basis points lower than Q3FY25, reflecting continued pressure on margins.

On the balance sheet front, Total Deposits grew 10.3% year-on-year to ₹14.72 lakh crore, while Total Advances increased by 11.4% to ₹12.3 lakh crore as of March 31, 2025.

Profitability metrics showed mixed trends:

• Return on Assets (RoA) stood at 1.16%, lower than 1.25% in Q4FY24 but slightly higher than 1.15% in Q3FY25.
• Return on Equity (RoE) fell by 334 basis points year-on-year to 17.49%, though it improved from 17.01% in the previous quarter.

In line with broader sectoral trends, the cost of deposits rose to 5.12% in Q4FY25 from 5.06% a year earlier. Simultaneously, the yield on advances dropped to 8.21% from 8.75% in Q4FY24.

Asset quality showed improvement:

• Gross NPA stood at ₹27,834.9 crore, down nearly ₹4,000 crore year-on-year.
• Net NPA decreased slightly to ₹6,994.2 crore.
• In percentage terms, both Gross and Net NPA ratios improved.

Fresh slippages during the quarter were ₹2,873 crore, primarily from the MSME segment. The bank wrote off ₹1,943 crore, slightly below Q4FY24 levels, and recovered ₹1,118 crore in bad loans. The Provision Coverage Ratio (PCR) stood at 77.34%, and the Capital Adequacy Ratio (CAR) improved to 17.19%, higher than the December 2024 level.

Regarding liabilities, CASA deposits grew by 6.4% year-on-year, with savings account (SA) deposits increasing by 4.8%. However, the domestic CASA ratio fell by 106 basis points to 39.97%.

In terms of loan composition:

• Retail loans accounted for 30.1% of total advances.
• Corporate loans comprised 40.1%.

Exposure to NBFCs reduced to 12.8% from 13.6% at the end of FY24.

IDBI Bank

IDBI Bank reported mixed Q4FY25 results. Net Interest Income dropped 11% year-on-year, while Total Income grew 15%, aided by Other Income of ₹2057 crore (₹896 crore in Q4FY24). RoA was 2.11% and RoE was 20.40%.  

Net Interest Margin declined by 91 basis points due to reduced Yield on Advances and increased Cost of Deposits and Cost of Funds.

Asset quality improved significantly: Gross NPA fell to 2.98% from 4.53%, Net NPA dropped to 0.15%, and Provision Coverage Ratio was high at 99.48%.

Yield on Advances decreased to 9.94% from 10.90% in Q4FY24. Cost of Deposits rose by 38 basis points, and Cost of Funds increased by 31 basis points.

Total Deposits grew 12% YoY, though Saving Deposits declined by 9%. CASA Deposits reached ₹144,497 crore, but the CASA ratio fell by 387 basis points. Gross Advances stood at ₹224,757 crore, and Net Advances rose 16% YoY to ₹218,399 crore.

UCO Bank

UCO Bank reported a stellar financial performance in Q4FY25, marking robust growth in profitability, asset quality improvement, and steady expansion in loans and deposits.

Financial Performance – Strong Growth Across Key Metrics

• Net Interest Income (NII): ₹26,984.9 crore, up 23.4% YoY, highlighting healthy lending momentum.
• PAT: ₹1,698.8 crore, increasing 24.1% YoY, signaling strong bottom-line growth.
• Total Income: Expanded by 16.5% YoY, reinforcing solid revenue generation.
• Operating Profit: Surged by 33.5% YoY, demonstrating efficient cost and operational management.
• Net Interest Margin (NIM): 3.08%, improving by 16 basis points YoY, showcasing better interest income efficiency.

Asset Quality & Provisioning – Significant Progress

• Provisions & Contingencies: ₹652.4 crore, higher than ₹525.8 crore in Q4FY24, but remained within a controlled range.
• Gross & Net NPA Improvement:
  • Gross NPA: ₹5,918.5 crore, down from ₹6,463.3 crore in Q4FY24.
  • Net NPA: ₹1,068.3 crore, lower than ₹1,621.6 crore in Q4FY24.
  • In percentage terms, Gross NPA dropped to 2.69%, while Net NPA improved to 0.50%, reflecting a sharp enhancement in loan book health.

Long-Term Transformation in Asset Quality

Over the past six years, UCO Bank has undergone a drastic transformation in asset quality:

• As of December 31, 2019:
  • Gross NPA was 19.45%, amounting to ₹22,139.7 crore.
  • Net NPA stood at 6.34%, totalling ₹6,199.7 crore.

Despite this positive turnaround, the bank continues to carry notable exposure to riskier asset classes, including Farm Credit and Micro Businesses, warranting vigilant risk assessment.

Capital Adequacy & Profitability Metrics

• Capital Adequacy Ratio (Basel III): 18.49%, among the strongest in the mid-sized banking sector, reinforcing financial resilience.
• Return on Assets (ROA): Annualized at 0.77%, demonstrating steady profitability.

Loan Growth & Deposits Expansion

• Gross Advances: ₹219,985 crore, registering 17.7% YoY growth.
• Total Deposits: ₹293,542 crore, growing by 11.6% YoY, reflecting continued deposit mobilization.
• CASA Ratio: 37.91%, marginally lower by 6 basis points QoQ, signaling a slight shift in deposit mix.

Branch Expansion & Network Growth Branch Network: 3,302 branches across India, with 39 new branches added during the quarter, reinforcing strong geographic reach.

Also Read: We have a detailed article on the performance of IT and ITES companies in Q4FY25.

References

• Q4FY25 investor presentation of HDFC Bank
• Q4FY25 investor presentation of ICICI Bank
• Q4FY25 investor presentation of IDBI Bank
• Q4FY25 investor presentation of Bandhan Bank
• Q4FY25 investor presentation of Kotak Mahindra Bank
• Q4FY25 investor presentation of State Bank of India
• Q4FY25 investor presentation of IDFC First Bank