PSBs catch up with pvt banks in income growth

Written by Pradip Kumar Dey | Mumbai, Nov 3 | Updated: Nov 4 2008, 07:02am hrs
At a time when there is a huge concern about earnings growth slowing down, Indian commercial banks seem to be bucking the trend. According to a study carried out by FE, it is revealed that the aggregate earnings of the 23 public sector banks (PSBs) has increased by 28% in the second quarter of the current fiscal over the same period in the previous year. It is found in the survey that the net profit of 14 private sector banks has increased 20.9% to touch Rs 2,587 crore.

In fact, the PSBs seem to be catching up with the private sector banks in terms of income growth. The total income of 23 PSBs rose 27.5% to Rs 68,440 crore during July-September 2008, whereas the total income of 14 private banks increased 22.5% during the same period. In the case of PSBs, the net profit to total income ratio at the aggregate level showed a marginal increase during July-September 2008, against that of July-September 2007.

In the case of private banks, the net profit to total income ratio marginally decreased during the same period. However, the PSBs have to still catch up with the strong numbers put up by the private sector.

Their net profit to total income ratio grew from 10.92% in July-September 2007 to 10.96% in July-September2008. And the net profit to total income ratio decreased marginally from 11.19% to 11.04%, during the study period.

Significant increase in the ratio was seen in the case of Karur Vysya Bank. The net profit to total income ratio of Karur Vysya Bank increased from 14.01% in the previous year to 15.83% in July-September 2008. In the case of SBI, the ratio increased from 11.80% to 12.62% during July-September 2008.

SBI's total business growth of Rs 1.09 lakh crore during Q2FY09 is 102% as against the business growth of Rs 53,901 crore during Q2FY08. Its deposit growth in Q2FY09 is Rs 57,861 crore as against Rs 34,454 crore in Q2FY08, a growth of 67.9%. The bank's market share in deposits as on September 2008 at 16.11% (15.33% as on September 2007), an increase of 78 bps YOY. One interesting thing is that all PSBs except five showed a rise in net profit during July-September 2008, while all the private banks except one showed an increase in the net profit during the same period.