Mumbai, Aug. 12 -- Net interest margin (NIM) pressure on Indian banks may be close to easing, with margins likely to stabilise or improve slightly as banks shift towards lower-cost funding, Kotak Institutional Equities said in a report.

The brokerage expects banks to replace expensive wholesale deposits with more FCNR and retail deposits, which could reduce pressure on margins in the coming quarters. It also expects credit growth to slow from current levels as corporate loan demand returns to more normal levels.

The outlook comes after banks under Kotak's coverage posted a 14 per cent year-on-year rise in earnings in the first quarter of FY27. Net interest income grew 11 per cent, helped by strong loan growth, while provisions fell 32 p...