Even as Reserve Bank of India has restrained from tinkering with benchmark rates off late some of the leading banks have announced rate cuts. For, there has been a significant growth in net interest income (NII) during 2008-09 which is putting the banks in a comfortable position. A study by FE reveals that NII of 41 banks has increased 26.2% to Rs 1.05 lakh crore during 2008-09, from Rs 83,157 crore in 2007-08.
The highest increase in the NII was seen by IDBI Bank, as its NII increased from Rs 676 crore to Rs 1,326 crore. The interest income of IDBI Bank has increased by 44.6% during 2008-09, while its interest expenditure increased by 39.9% during the period.
For Yes Bank, the NII increased from Rs 330 crore to Rs 511 crore. IndusInd had a NII of Rs 301 crore during 2007-08, which rose to Rs 459 crore during 2008-09. SBI, the largest lender in the country, showed a growth of 22.6% in its NII during 2008-09.
Of the 25 public sector banks, eight banks showed more than 30% increase in NII during the study period.
On the other hand, of the 16 private sector banks, five banks – Axis Bank, Federal Bank, HDFC Bank, IndusInd Bank and Yes Bank – showed more than 40% increase in their NII during 2008-09.
Around 30% increase in NII was seen by ING Vysya Bank and South Ind Bank.
Among the 41 banks, the lowest increase in NII was witnessed by Catholic Bank. This can be explained from its performance. The interest income and interest expenditure of Catholic Bank increased 15.6% and 23.2%, respectively during the study period.
In 2008-09, the top five banks in terms of NII are SBI, ICICI Bank, HDFC Bank, PNB and Bank Of India. Among these, the highest increase in NII was registered in the case of HDFC Bank.
The interest income of ICICI Bank increased marginally by 0.9% and interest expenses of the bank decreased 3.2% during the study period.