Private banks profitable, but PSBs more efficient in ?09-10

Public sector banks? (PSBs) productivity during the 2009-10 fiscal increased significantly compared with their private peers. In an analytical comparison between 39 banks (25 PSBs and 13 private sector banks), four denominators have been used to assess the productivity of the banks-business per employee, profit per employee, deposit per employee and incremental deposit per employee.

The study reveals that the PSBs scored over the private banks with respect to four parameters, whereas profit per employee of the private lenders was more than that of the PSBs. If the toppers of the two groups are compared, IDBI Bank scores over YES Bank with respect to deposit per employee, incremental deposit per employee and business per employee.

IDBI Bank has emerged as the most efficient PSB, scoring over 38 others in three denominators, namely business per employee, deposit per employee, incremental deposit per employee. The productivity ratios of the bank in terms of business, deposit, incremental and deposit stood at Rs 2,417 lakh, Rs 1,373 lakh, Rs 452 lakh, respectively. The figures for YES Bank were Rs 1,527 lakh, Rs 883 lakh and Rs 350 lakh, respectively. However, in terms of profit per employee, YES Bank (Rs 15 lakh) edged past IDBI (Rs 8 lakh).

Yogesh Agarwal, chairman & MD of IDBI Bank, said, ?The three year business plan as submitted by the bank has outlined that it would be raising Rs 10,000 crore and one third of which was likely to be raised during the current fiscal itself.?

The average business per employee of 25 PSBs has gone up to Rs 912 lakh in 2009-10 from Rs 792 lakh in 2008-09. While average deposit per employee rose to Rs 499 lakh from the year-ago Rs 426 lakh, average profit per employee increased to Rs 5.37 lakh from Rs 4.76 lakh during the study period. But the average incremental deposit per employee decreased from Rs 93 lakh to Rs 77 lakh.

On this basis of net profit per employee, The most important indicator for assessing the efficiency of a bank, the top three slots in 2009-10 were occupied by Corporation Bank, IDBI Bank and Indian Bank.

On the other hand, among the private banks, average business per employee of the private banks has increased to Rs 767 lakh in 2009-10 from Rs 679 lakh. While average deposit per employee rose to Rs 454 lakh, average incremental deposit per employee increased to Rs 47 lakh from Rs 42 lakh. The average profit per employee rose to Rs 7.62 lakh in 2009-10 from Rs 6.39 lakh. On the basis of profit per employee, YES Bank, Axis Bank and ICICI Bank were the forerunners.

From the analysis, it is clear that though the profitability ratios were higher for private banks, efficiency of PSBs has increased significantly in 2009-10.