Private banks are not keen to increase lending rates for the time being. But public sector banks (PSBs) are worried to see their net interest income (NII) growth. Out of 27 PSBs, 40% PSBs saw their NII decline during 2007-08. Private banks’ growth in NII vis-?-vis public sector banks (PSBs) is higher during 2007-08 as compared to 2006-07.
A study of growth in NII of 27 PSBs and 11 private sector banks during 2007-08 and 2006-07 proves this point. Between 2007-08 and 2006-07, NII, in the case of PSBs, rose by 4.9% to Rs 64,206 crore from Rs 61,180 crore. The highest increase in the NII was in the case of Bank Of India. NII of the bank increased from Rs 3,440 crore to Rs 4,229 crore. This can be explained from its performance. The interest income of Bank Of India has increased by 38.3% during 2007-08. On the other hand, interest expenditure increased by 47.8% during the same period.
In Union Bank’s case, the NII increased from Rs 2,790 crore to Rs 3,086 crore. Bank Of Maharashtra had a NII of Rs 1,094 crore during 2006-07, which rose to Rs 1,228 crore during 2007-08. SBI, the largest PSB, showed a growth of 13% in its NII during 2007-08. Out of 27 PSBs, 11 banks showed a decline in NII during the study period.
During 2007-08, private sector banks had higher growth in NII compared to PSBs. Among the 11 private sector banks, three banks, namely; Yes Bank, Kotak Mahindra Bank, and Axis Bank showed more than 75% increase in their NII during 2007-08.
More than 50% increase in NII was seen in the case of HDFC Bank and DCB. The lowest increase in NII was witnessed in the case of South Ind Bank (7.2%). This can be explained from its performance. The interest income and interest expenditure of South Ind Bank increased by 34.1% and 50.2% respectively during 2007-08. In 2007-08, the highest NII was observed in the case of ICICI Bank (Rs 7,304 crore) followed by HDFC Bank (Rs 5,228 crore) and Axis Bank (Rs 2,585 crore).
The interest income and expenditure of ICICI Bank increased by 39.9% and 43.5% respectively during 2007-08. From the above analysis, it is clear that NII increased significantly in the case of private sector banks compared to PSBs during ’07-08.
