Private banks growth in spread higher than PSBs in first half

Mumbai, Nov 14 | Updated: Nov 15 2005, 06:16am hrs
Private banks growth in spread (interest earned minus interest expanded) vis-a-vis public sector banks (PSBs) is significantly higher during April-Sept 2005 as compared to April-Sept 2004.

A study of growth in spread of 20 PSBs and 15 private sector banks during April-September 2005 and April-Sept 2004 reveals this. Between April-Sept 2005 and April-Sept 2004, interest spread, in the case of PSBs, rose by 15.45% to Rs 23,399 crore from Rs 20,268 crore. And in the case of private sector banks, interest spread increased by 26.66% to Rs 5,199 crore from Rs 4,105 crore.

Shahina Mukadam, head research, IDBI Capital said: Effective deployment of equity funds raised in 2004 has contributed to strong revenue growth in the H1 of the current year for private sector banks. Among the PSBs, the highest increase in the spread was in the case of Syndicate Bank, where it increased from Rs 764.38 crore to Rs 952.33 crore. On the other hand, interest expenditure decreased by 4.97% during the same period. In SBIs case the spread increased from Rs 6333.89 crore to Rs 7861.19 crore. In April-Sept 2005, SBI had a highest spread of Rs 7861.19 crore followed by PNB (Rs 2279.17 crore).

In April-Sept 2005, the increase of spread of private sector banks was higher compared to PSBs. Among the 15 private sector banks, four banks namely Kotak Mahindra Bank, HDFC Bank, ICICI Bank and UTI Bank showed more than 37% increase in their spread during H1. Except for two: IndusInd Bank (-15.04%) and Lakshmi Vilas Bank (-1.38%).

Significant increase in spread was observed in the case of Kotak Mahindra Bank. The lowest increase in spread was observed in the case of Karur Vysya Bank ( 4.24%). The interest income and interest expenditure increased by 5.42% and 6.33%, respectively during H1. In April-Sept 2004, ICICI Bank had a highest spread of Rs 1315.76 crore followed by HDFC Bank (Rs 824.36 crore).