New Delhi, Nov. 12 -- Indian banks are expected to see further improvement in interest income growth as a favourable loan mix and lower funding costs support margins, while asset quality is likely to remain stable, according to a report by Kotak Institutional Equities.

Banks under the brokerage's coverage recorded 20 per cent year-on-year (YoY) earnings growth in the second quarter of FY27, supported by higher operating profits and lower provisions, ANI reported, citing the report.

Net interest income (NII) rose around 15 per cent YoY, while operating profit increased by a similar rate. Provisions declined 25 per cent during the quarter.

Private banks reported earnings growth of around 25 per cent, compared with nearly 20 per cent for ...