The banking sector stocks in India are catching investors? fancy fast. At a time when global banks are struggling to stay afloat, Indian banks have started to gain on the bourses. The BSE Bankex has increased by 18.2% during the month of April 2009. And much of it can be attributed to the financial performance in the fourth quarter. This is also at a time when the corporate sector overall has seen a dip in profitability.
The return on total income (net profit as a percentage of total income) of 21 banks increased during the period between January?March 2009 as against the previous level in the corresponding period of last year, indicating an improvement in the performance of quoted banks. At the net level the profits have increased by 28.4% to Rs 6,662 crore during Jan-Mar 09 from the level of Rs 5,189 crore during Jan-Mar 08 , resulting in an increase in return on total income from 10.23% in Jan-Mar 08 to 10.78% in Jan-Mar 09. For the corporate sector, of the 379 companies that have declared results, net earnings have dipped by 4%.
Of the 21 quoted banks selected for this study, slightly more than 50% was found to have increased their efficiency during the fourth quarter. This study traces the trend of return on total income for 21 banks during Jan-Mar 09 as compared to Jan-Mar 08. In these numbers, India?s largest bank SBI has not been included as its results have not been declared yet. Aggregate income of 21 banks has increased by 22.5% to Rs 51,563 crore during January to March 2009 from the level of Rs 42,097 crore during the corresponding period of the previous year. Buoyant bond prices have seen the treasury incomes burgeon as well.
The other income of the above number of banks has increased by 18.7% to Rs 10,226 crore during Jan-Mar.?09.The net interest income (NII) of these banks also increased by 18.1% to Rs 14,419 crore from Rs 12,202 crore. An analyst from a rating agency said, ?Profits of many Indian banks grew in fourth quarter mainly on the back of higher net interest income supported by credit growth . Income was also supported by recovery from written-off accounts and fee based income. Loan loss provisions remained under control.?
Of these 21 banks, the top five according to increase in total income during Jan-Mar 09 are HDFC Bank, Axis Bank, Corporation Bank, IDBI Bank and Yes Bank.
Among the 21 banks, 11 banks have witnessed a fall in PAT to total income ratio, while the remaining banks have shown a higher ratio in Jan-Mar 09 compared with Jan-Mar 08. ICICI Bank, the largest private sector bank registered a decline in total income and net profit during the fourth quarter.
A significant improvement in Jan-Mar 09 was noticed in the case of Bank Of Baroda, Indian Bank, Vijaya Bank, Canara Bank and SB Of Indore. The net profit of Bank of Baroda increased by 172.3% to Rs 752.69 crore during Jan-Mar 09 from the level of Rs 276.44 crore during Jan-Mar 08. This is second highest increase among the 21 banks under study. On the other hand a significant fall was observed in the case of Bank Of India, ICICI Bank, SB of Mysore and SB Of Patiala. The top five banks in terms of PAT to total income ratio during Jan-Mar 09, so far, were Indian Bank, Bank of India, SB Of Travancore, Bank of Baroda and Axis Bank.
