All the three banks saw a drop in net interest margins (NIMs)-the difference between interest income a bank generates from its assets and the interest it pays out on its liabilities.
NIMs for Bank of India were at 2.41% in Q2FY26 from 2.81% in Q1FY25, for Central Bank of India, NIMs fell 52 basis points to 2.89% during the quarter, from 3.41%, while for Uco Bank NIMs stood at 2.90% from 3.10%. Pressure on NIMs is expected to reduce in the third quarter, bank officials said in the earnings call.
loans grow faster than deposits in q2 at Uco, CBI & BoI
The bank’s net interest income (NII) for Central Bank of India grew 3.7% to ₹3,283 crore, while it grew 10% to ₹ 2,533 crore for Uco bank over the year.
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For Bank of India, NII reduced by 1% to ₹5,912 crore and 2533 10%
Provisions too, saw a drop by 58% to ₹441 crore for Bank of India and by 54.2% to ₹573 crores. Uco Bank however saw an increase in provisions over the year by 19% to ₹993 crores. “The provisions made are forward looking and prudent,” said Ashwani Kumar, MD & CEO, Uco Bank in the earnings call.
Loan and deposit growth
Loan growth outpaced deposit growth in all the three banks. For Uco Bank, deposits grew at 16.5% to ₹2.3 lakh crore while loans grew 10.8% to ₹ 3.05 lakh crore. For Bank of India, loans grew 14% to ₹7.1 lakh crore while deposits grew 10% to ₹8.5 lakh crore.
For the Central Bank of India, loans grew 16.03% to ₹2.9 lakh crore and deposits grew 13.4% to ₹4.5 lakh crore.
How should a retail investor deal with Wednesday’s interest rate cut by the Federal Reserve and with the future rate cuts that seem to be on the horizon?
What I plan to do is nothing. Which may be what you should do too.
How can I say “do nothing” when the airwaves, print media, and the internet are filled with advice and suggestions — and warnings — about how to handle the Fed’s rate cut?
Let me show you why my wife and I aren’t planning to do anything about the rate cuts, which will reduce our interest income but not threaten our overall financial well-being. And why you may not want to do anything, either.
Here’s the deal. The Fed has cut the federal funds rate to between 4.5% and 4.75% from the former 5% to 5.25%. Fed Chairman Jerome Powell has made it clear that the Fed is planning at least one more rate cut this year.
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The Fed controls only this short-term rate, but lowering it puts downward pressure on longer-term rates as well. That’s great, of course, for many of us, making it easier and cheaper to borrow. But it’s not great for savers. That’s because the income they get on their savings is going to decline.
We have significant cash holdings, which we keep in low-cost, high-quality money market funds. Our income from those funds, which has risen nicely over the past few years, is going to decline. But such is life.
Some people advise you to lock up yields by switching cash into long-term bonds or long-term certificates of deposit, whose interest rates are fixed and won’t fall because of the Fed’s rate cuts.
However, there’s a problem with doing that.
Locking up yields by buying long-term bonds or CDs makes your money illiquid. This exposes you to some long-term risks, such as having to sell at a loss if rates rise — which they will sooner or later, trust me —or if you need the cash that you’ve locked up long-term.
Money market man? Federal Reserve Bank Chair Jerome Powell (Photo: Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)
By contrast, if you’ve done what we have done — put our surplus cash into well-regarded, low-cost money market funds — your income will go down when the Fed’s rate cuts work their way through the financial system. But you’ve still got liquidity, the ability to access your cash on demand, which is very important.
The one thing that I won’t do — and that you shouldn’t do, either — is to put my money into a bank savings account, which typically pays yields approaching zero. The rates on those accounts aren’t likely to fall much, if at all, because they’re already so low.
So if you’ve got $3,000 or more of cash sitting in a bank savings account but don’t have a money fund account, you’ll probably do well to open an account in a low-cost, high-quality fund.
To be sure, unlike bank accounts, money funds aren’t backed by the Federal Deposit Insurance Corp. But there are plenty of high-quality, conservatively run low-cost funds. It’s a very competitive business, with $6.68 trillion in assets, according to Crane Data. They are highly unlikely to fail.
The most important thing for you to do now is to stay calm and remember that if you end up doing nothing to cope with lower interest rates, you’ll have plenty of company. Including me.
Berkshire has since rallied and outperformed the S&P 500.
At Thursday’s market close, Berkshire was up 253% (15.6% a year) since we bought it. During that same period, the index fund has returned 242% (15.2% a year), according to Jeff DeMaso of the Independent Vanguard Adviser.
Score one for the Oracle of Omaha.
Allan Sloan, a contributor to Yahoo Finance, is a seven-time winner of the Loeb Award, business journalism’s highest honor.
