"The provisioning requirements will certainly go up as we will adhere to the norms more strictly than in the previous half year," Bank of Baroda chairman and managing director K Kannan said. The Reserve Bank has said that it will tighten provisioning norms this year despite the slowdown and corporates' inability to pay up bank loans in due time.

The tighter norms are likely to affect the bottomline of State Bank of India, Bank of India, Bank of Baroda, Dena Bank, Oriental Bank of Commerce, Global Trust Bank, IndusInd Bank, ICICI Banking Corporation and HDFC Bank.

"I expect profits to be flat as credit pick-up has been poor while deposits have been going up," ICICI Banking Corporation's senior executive vice-president PH Ravikumar said.

According to him, although provisioningwill be on the higher side, the half-year provisions will not be a representative picture. "March-end figures will be the true picture, and I expect gross non-performing assets to go up to 15 per cent from 13.7 per cent," he said.

Kannan said that interest income will be down as credit has not picked up as yet. However, income from investments will be considerably higher on account of deployment of large amount of funds in gilts. Analysts say that interest-rate margins will continue to be under pressure. "Some PSU banks will find margins coming down," an analyst at a leading brokerage house said.

Those with sizeable foreign operations like State Bank, Bank of India and Bank of Baroda are likely to gain as their overseas operations are expected to contribute sizeably to their bottomline on the back of a depreciating rupee in the past six months.Bankers have pointed out that those public sector banks who have gone public will have to make provisions for increased overheads. "The Indian Banks' Associationhas already kicked off the seventh bipartite wage negotiations with the trade unions. The new wage settlement will have a substantial bearing on the public sector banks' bottomline this fiscal," Kannan said.