New Delhi: Indian banks' strong financial performance in the fiscal year ended March 2025 has strengthened their standalone credit profiles and positioned the sector for continued growth, Fitch Ratings said on Monday.

The sector reported improved asset quality, stronger capital buffers and stable profitability despite the slowest sector loan growth in four years.

"We expect steady performance to continue, though sustaining sound core financial metrics that strengthen loss-absorption buffers and resilience to economic shocks relative to the previous cycle would support positive momentum for rated banks' standalone credit profiles," Fitch said.

The rating agency believes banks can sustain steady performance across most credit metrics in FY26, except for earnings due to cyclical pressures on margins and credit costs. "Indian banks' strong financial performances in the financial year ended March 2025 (FY25) support the standalone credit profiles of rated banks and position the sector for future growth," Fitch Ratings said in a statement.

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As per the net profit reported by public sector banks for 2024-25 (FY25) fiscal, cumulative profit rose to a record level of ₹1.78 lakh crore, 26 per cent growth over ₹1.41 lakh crore in FY24.

Market leader State Bank of India (SBI) alone contributed over 40 per cent of the total earnings, as per the published numbers on stock exchanges.

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