New Delhi, April 9 -- India's financial sector is likely to see a mixed performance in the fourth quarter of FY26, with stronger deposit growth, improving asset quality, but pressure on margins and profitability, according to a report by PhillipCapital.

The report highlighted that deposit growth has emerged as a key positive surprise during the quarter, outpacing credit expansion and easing liquidity pressures in the system.

"Banking balance sheets are expected to witness healthy growth sequentially across both assets and liabilities, with liability franchises outperforming this quarter," the report said.

It added that loan growth (excluding HDFC Bank) rose about 5.1 per cent sequentially, while deposits increased at a sharper pace of ...