You had mentioned that compression in NIM affects top line but since the compression is due to a rise in deposit rates, wouldn't that help banks in lending more as they now have more deposit funds and consequently lead to a rise in top line. It will affect the bottom line though and not the top line as per my understanding. Please clarify.
Valid point, my point is more from a near-term perspective. Banks will surely have more headroom to lend it further but everything happens with a lag & there are more dynamics/factors involved here too. That is why many brokerages have cut their NII/top-line forecast for the current year due to greater-than-expected NIMs compression.
Yeah makes sense, even I looked up forecast reports right now and qoq growth is expected to be muted due to the reasons mentioned by you but yearly forecasts are positive. Thanks.
You had mentioned that compression in NIM affects top line but since the compression is due to a rise in deposit rates, wouldn't that help banks in lending more as they now have more deposit funds and consequently lead to a rise in top line. It will affect the bottom line though and not the top line as per my understanding. Please clarify.
Valid point, my point is more from a near-term perspective. Banks will surely have more headroom to lend it further but everything happens with a lag & there are more dynamics/factors involved here too. That is why many brokerages have cut their NII/top-line forecast for the current year due to greater-than-expected NIMs compression.
Yeah makes sense, even I looked up forecast reports right now and qoq growth is expected to be muted due to the reasons mentioned by you but yearly forecasts are positive. Thanks.