A widening profit gap

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Mumbai | Updated: Nov 10, 2015 1:27 AM

Profits of 13 private sector banks for the three months to September have outstripped the combined profits of 25 public sector banks once again, reports Shayan Ghosh in Mumbai.

Profits of 13 private sector banks for the three months to September have outstripped the combined profits of 25 public sector banks once again, reports Shayan Ghosh in Mumbai. While the private lenders have reported a total profit after tax (standalone) of Rs 10,244 crore, their state-owned peers have managed to earn just Rs 7,346 crore, data from Capitaline show. In Q2FY15, public sector lenders had earned R533 crore less than private banks, but this time around higher provisioning, owing to the larger share of non-performing assets (NPAs), has resulted in a
larger gap of Rs 2,898 crore.

Public sector lender Bank of India posted a loss of Rs 1,126 crore in Q2FY16 — the highest among its peers — as its provisions at Rs 3,237 crore were more than three times on a year-on-year basis. Meanwhile, Bank of Baroda (BoB) saw its net profit fall 89% y-o-y in Q2FY16 thanks to provisions doubling. While BoB’s provisions stood at Rs 1,891 crore in Q2FY16, an increase of a whopping 113%, its gross NPA was up 143 basis points (bps) sequentially at 5.56%.
However, public sector lender State Bank of India (SBI) did well to report a 25% rise in net profit, mainly supported by other income. SBI chairman Arundhati Bhattacharya was cautiously optimistic about a recovery in the economy and the end of the NPA cycle. “I think we are beginning to view the end of this entire NPA cycle and I am more confident about the quality of assets going forward. The project pipeline mainly comprised renewable projects and brownfield but today I can say that the road sector has now got added to the new projects list,” Bhattacharya said after the lender announced its results for Q2FY16 last Friday.

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