Mumbai, Feb 3 (PTI) Sustaining a good run on the treasury front, banks are likely to post higher treasury gains in the fourth quarter on the back of falling yields on government securities, top officials have said.

"There is a likelihood of higher treasury gains by banks in the fourth quarter of the current financial year due to falling yields depending on the AFS (available-for-sale) portfolio of individual banks," State Bank of India Deputy Managing Director and Group Executive, Global Markets, P Pradeep Kumar told PTI.

According to officials, the gains may be higher in case of public sector banks, compared to their private sector peers, due to their higher SLR (statutory liquidity ratio) holdings.

G-Sec yields have fallen from December on the back of rate cut expectations by Reserve Bank of India.

Post the credit policy, wherein the RBI had reduced the repo rate and cash reserve ratio (CRR) by 25 basis points each, yields are likely to fall further in the near future due to probability of easing in liquidity, which remained well above the RBI''s comfort level of Rs 60,000 crore.

"Banks are likely to post higher treasury gain in the fourth quarter due to fall in yields," Indian Overseas Bank Executive Director A D M Chavali said.

They are also of the opinion that the gain would be more for public sector banks compared to private lenders.

"Normally, public sector banks hold excess SLR. So, that may be the case," Kumar of SBI said.