Private banks pip public peers in Q3 earnings

The banking sector has had a good run for the quarter ended December 31, 2009. The net earnings of the private sector banks grew by 6.4% over the same period of the previous year, while earnings of their public sector peers were up by 1.3%.

A comparative analysis between 21 public sector banks operating in the country and ten major private banks shows the private ones performed better in terms of profitability during the December 2009 quarter as compared to December 2008.

In the case of private sector banks, net profit to total income ratio at the aggregate level showed an increase during the quarter under review compared with that of the previous year. And in the case of public sector banks, the net profit to total income ratio marginally decreased.

The aggregate total income of ten private sector banks has decreased from Rs 23,450 crore in the quarter ended December 2008 to Rs 20,568 crore in the December 2009 quarter. Their total net profit increased to Rs 2,912 crore in the quarter under reckoning from Rs 2,736 crore in the December 2008 quarter, increasing the net profit to total income ratio from 11.67% to 14.16% .

The highest increase in net profit for December 2009 quarter was reported by Kotak Mahindra Bank, followed by IndusInd Bank and HDFC Bank.

State-run banks, on the other hand, appeared less concerned about profitability. Their total income increased to Rs 73,070 crore during the December 2009 quarter from Rs 70,915 crore during the year-ago period. The net profit increased to Rs 9,245 crore during the latest quarter from Rs 9,123 crore in the corresponding period of the previous financial year. And the profitability ratio marginally decreased from 12.87% to 12.65%.

Among PSBs, the highest increase in net profit in Q3 was observed in the case of Canara Bank, followed by Uco Bank and Andhra Bank. A significant increase in the ratio was seen in the case of Canara Bank.The net profit to total income ratio of Canara Bank increased from 13.03% in December 2008 quarter to 19.25% in December 2009 quarter.

For Bank Of Baroda, the ratio increased significantly from 14.10% to 17.21% in December 2009. But in the case of Union Bank, the ratio significantly decreased from 18.38% to 14.21% during the above period. Top three PSBs in terms of profitability ratio in the third quarter are Canara Bank, Indian Bank and Bank Of Baroda.

Among private sector banks, Kotak Mahindra Bank showed significant increase in the ratio. The net profit to total income ratio of the bank increased from 7.79% in the December 2008 to 14.57% in December 2009 quarter. Similarly, in the case of IndusInd Bank, the ratio increased from 5.92% to 10.75% during Oct-Dec?09. For ICICI Bank also, the ratio increased from 12.29% to 14.18% during the study period. Top three private banks in terms of profitability ratio are Axis Bank, HDFC Bank and Yes Bank.