New Delhi, April 13 -- India's small finance banks (SFBs) are expected to report a strong performance in the fourth quarter of FY26, driven by robust loan growth, improving margins and easing credit costs, according to a report by Systematix Research.

The report noted that the March quarter is seasonally the strongest for the sector, with most SFBs already reporting over 20 per cent year-on-year growth in assets under management (AUM), reflecting sustained credit demand across segments.

"The impact of ongoing geopolitical tensions on SFBs is likely to be limited in 4QFY26 given the lag with which macro disruptions typically transmit to borrower cash flows," noted the report.

Net interest income (NII), pre-provision operating profit (PP...