New Delhi, July 3 -- The net interest margins (NIMs) of banks in the country are expected to come under pressure in the first half of the financial year 2025-26 (H1FY26), according to a recent report by Motilal Oswal.

However, the report projects that the trend may improve in the second half of the year.

The report stated that the decline in NIMs during the first half will be driven by a reduction in benchmark interest rates, which is likely to lead to a compression in lending yields across banks.

It stated, "NIMs to decline sharply during 1H; expect trends to improve from 2H onward: With a reduction in benchmark rates, we estimate lending yields to compress across banks".

On the other hand, the funding costs for banks tend to adjust ...