Fee-based income declines for private banks, up in PSBs

Written by Pradip Kumar Dey | Mumbai, Aug 26 | Updated: Aug 27 2008, 06:02am hrs
For the first time, private sector banks have witnessed a decline in fee-based income, while public sector banks improved their performance in this segment in Q1.

Fee-based income of 26 public sector banks (PSBs) rose by 31.5% to Rs 7,031 crore during Q1 08, whereas, the fee-based income of 17 private banks decreased by 1.6% during the same period.

In the case of private sector banks, fee-based income to total income ratio at the aggregate level has fallen during Q1 08 compared to Q1 07. Whereas, PSBs fee-based income to total income ratio marginally increased during the same period.

But the ratio of fee-based income to total income was higher in the case of private sector banks compared to PSBs during both the time periods.

The aggregate total income of 17 private sector banks increased by 21.6% from Rs 18,794 crore in Q1 07 to Rs 22,863 crore recorded in Q1 08. However, their total fee based income decreased by 1.6% during the study period, impacting the ratio-fee based income to total income from 18.91% in April -June 2007 to 15.30% in Q1 08. It seems that the state-run banks focus on fee-based income in recent times have paid off. It has achieved 24.4% growth in total income during April-June 2008, and the fee-based income has also increased by 31.5% to Rs 7,031 crore during Q1 08, from Rs 5,347 crore during Q1 07. But the fee-based income to total income ratio increased from 10.12% to 10.69% during both the study periods.

Significant increase in the ratio was seen in the case of Bank of India. The fee-based income to total income ratio of the bank increased from 12.26% in Q1 07 to 13.77% in Q1 08. In SBI, the ratio increased from 9.31% to 14.84% in Q1 08.

Among private sector banks, Axis Bank showed significant improvement in the ratio. The fee based income to total income ratio rose from 19.59% in Q1 07, to 21.61% in Q1 08. But in the case of ICICI Bank, the ratio decreased from 21.02% to 16.31%.

One interesting thing is that all PSBs except nine showed a rise in fee based income during Q1, while 59% of private banks showed an increase in the fee based income during the same period.