Private sector banks? average return on assets (RoA) is higher compared to that of nationalised banks and SBI & associated banks during 2009-10.
The net non performing assets (NPA) ratio is higher for SBI & associated banks compared to nationalised and private sector banks said a RBI study on the RoA of private sector banks, nationalised banks and SBI & associated banks during 2009-10.
ROA is an indicator of how profitable a bank is relative to its total assets.
RoA of nationalised banks decreased from 1.03% in 2008-09 to 1.00% in 2009-10, but the net NPA ratio increased from 0.68% to 0.91% in the same period. For SBI and associate group, RoA also decreased from 1.02% to 0.91% during 2009-10 while the net NPA ratio of the SBI group increased from 1.45% to 1.50%.
The highest decrease in the RoA was in the case of Bank Of India, it decreased from 1.49% in 2008-09 to 0.70% in 2009-10. This decline is due to lower profit performance of bank. During 2009-10, Bank Of India posted net profit of Rs 1,741 crore compared to Rs 3,007 crore during 2008-09. Decline in profit was due to pressure on margin on account of high cost of deposits and slow growth in other income.
For Dena Bank, the RoA decrease from 1.02% in 2008-09 to 1.01% in 2009-10. In SBI & Associates group, SBI had a ROA of 1.04% in 2008-09 which declined to 0.88% by 2009-10.
But the net NPA ratio of SBI decreased from 1.79% in 2008-09to 1.72% in 2009-10 .
In 2008-09, Axis Bank had a RoA of 1.44% while Dhanlaxmi Bank and ING Vysya Bank have RoA of 1.21% and 0.70%, respectively. But in 2009-10, Axis Bank had the highest RoA of 1.67% while ING Vysya Bank and Dhanlaxmi Bank have RoA of 0.80% and 0.35%, respectively.
Axis bank has highest ranking in banking RoA list during both the year. Asset growth of the bank was lower than the profit growth in 2009-10. The bank?s net profit growth was 38.5% during 2009-10 against 22.3% growth in assets. And the net NPA ratio of Axis bank was same as 0.40% during 2009-10 and 2008-09.
Among the private banks, five banks namely Catholic Syrian Bank, Dhanlaxmi Bank, Federal Bank , Karnataka Bank and South Ind Bank showed a decline in ROA during 2009-10.
