New Delhi, Dec. 3 -- Indian banks are set for a "decisive profitability inflection point" as net interest margins (NIMs) begin to recover after several quarters of compression, according to a latest sector report by Nomura.

Nomura said that the recently reported quarterly results indicate that "the downcycle for NIMs has bottomed out, and we expect NIMs to gradually improve led by a re-pricing of term deposits."

The brokerage expects margins to strengthen over the next two years. With rate-cycle pressures easing, Nomura wrote: "We expect NIMs to improve by approx 17bp over FY26-28F... While additional rate cuts may delay margin recovery, we expect re-pricing of term deposits and pick-up in growth in the higher-yielding assets to largely...