Return on PSBs total income declines sharply

Written by Pradip Kumar Dey | Mumbai, May 5 | Updated: May 6 2008, 06:14am hrs
Public Sector Banks (PSBs) average return on total income (net profit to total income) decreased significantly in fiscal 2007-08 when compared to the marginal decline of private banks.

A study of six major private sector banks and 19 PSBs during fiscal 2006-07 and 2007-08 showed that profit after tax (PAT), as a percentage of total income, decreased from 11.06% to 10.22% respectively among PSBs, while for private banks the decline was marginal from 11.31% in 2006-07 to 11.10% in the following year.

The highest decrease in the ratio, among PSBs. was in Oriental Bank of Commerce, where the return decreased sharply from 10.07% to 4.71%. Andhra Bank, fell from 14.30% to 11.82 %, while Indian Overseas Bank had a return on income of 13.70% in 2007-08 as against the previous year's 16.21%.

In 2006-07, Indian Overseas Bank had the highest ratio of 16.21% followed by Indian Bank with 15.14%, Andhra Bank (14.30%), Corporation Bank (13.42%) and State Bank of Hyderabad (with 12.81%).

In 2007-08, the highest return on total income was observed in the case of Indian Bank at16.22%, followed by Corporation Bank at 14.09%, Indian Overseas Bank (13.70%), Andhra Bank (11.82%) and State Bank of Hyderabad (10.96%).

Total income growth of Indian Overseas Bank was higher than the growth of net profit during 2007-08. The bank's net profit increased by 19.2% as against 41.1% growth in total income.

Among the six private banks, three banks, namely, HDFC Bank, ICICI Bank and Yes Bank showed a decline in return on total income during 2007-08. Significant decline, in return on total income, was observed in HDFC Bank (13.98% in 2006-07 to 12.83% in 2007-08).