PSBs beat private banks in third-quarter profit growth

Written by Pradip Kumar Dey | Mumbai | Updated: Feb 3 2009, 05:42am hrs
For the first time in recent times, the public sector banks (PSBs) have beaten private sector banks in recording higher growth in profit during the third quarter of 2008-09. In net profit, public sector banks showed an increase of 48.4% as against an increase of 25.4% for private banks during the period. Also, an interesting thing is that all the private sector banks except three showed an increase in the profitability ratio in October-December 2008, while 60% of PSBs showed an increase in the net profit to total income ratio during the same period.

A comparison between 15 PSBs operating in the country and 10 major private banks shows PSBs performed significantly better in terms of profitability during October-December 2008 as compared to October-December 2007.

In the case of private sector banks, net profit to total income ratio at the aggregate level showed a marginal increase during October-December 2008, against that of October-Decenber 2007, while in the case of PSBs, the ratio was much higher compared with private banks during October-December 2008. The aggregate total income of 10 private sector banks have increased by 23.2% from Rs 19,828 crore in October-December 2007 to Rs 24,431 crore in October-December 2008.

Their total net profit has increased by 25.4% to Rs 3,013 crore in October-December 2008 from Rs 2,402 crore recorded in October-December 2007, increasing the net profit to total income ratio marginally from 12.11% to 12.33%. Highest increase in net profit in October-December 2008 was registered in the case of Federal Bank followed by YES Bank and IndusInd Bank. State-run banks, on the other hand, appeared to have scored on profitability. They have achieved a 35.3% growth in total income during Q3, and the net profit has increased by 48.4% to Rs 7,317 crore during October-December 2008 from Rs 4,929 crore posted in October-December 2007. And the profitability ratio increased from 11.62% to 12.74% during the study period.

Among PSBs, the highest increase in net profit in Q3 was observed in the case of State Bank of Patiala followed by State Bank of Travancore and State Bank of Mysore. Significant increase in the ratio was seen in the case of Union Bank. The net profit to total income ratio of Union Bank increased from 13.01% in October-December 2007 to 18.38% in October-December 2008.

In State Bank of Travancore, the ratio increased significantly from 8.24% to 20.48% during the period. But in SBI, the ratio marginally decreased from 11.77% to 11.66% during the period. Top three PSBs in terms of profitability ratio in Q3 include State Bank Travancore, Union Bank and State Bank of Mysore.

Among the private banks, Federal Bank showed significant rise in the ratio. The net profit to total income ratio of the bank rose from 14.03% during 2007-08 to 19.58% recorded in Q3.

October-December 2008. Similarly, in the case of YES Bank, the ratio increased from 12.24% to 14.57% during the period.

In case of he country' second largest commercial bank ICICI Bank, the ratio increased from 11.90% to 12.29% during the study period.

Fee-based revenue enabled ICICI Bank to increase the profitability ratio in Q3.Top three private banks in terms of profitability ratio in October-December 2008 are Federal Bank, Karnataka Bank and YES Bank.