Moneycontrol Bureau
As the earnings season draws to a close, third quarter numbers show that public sector banks are slowly becoming profitable again but are far from catching up with private lenders.
The aggregate net profit of 23 public sector banks in the third quarter was lower than that of Axis Bank, the country’s third largest private lender, according to a report in The Financial Express.
While Axis Bank clocked a net profit of Rs 579.57 crore for the three quarters ending December 31, 2016, 23 PSBs managed a combined profit of Rs 492.53 crore. The combined net profits of these PSBs was less than 1/20th of the Rs 9,978 crore recorded by 16 private sector banks put together.
A year ago, the Reserve Bank of India’s asset quality review required PSBs to make large provisions for impaired assets as part of the "deep surgery" prescribed by then central bank governor Raghuram Rajan. This has since spurred the most of these banks to profitablity. In the year-ago period, the same set of public-sector banks had recorded an aggregate net loss of Rs 10,419.25 crore.
Eight banks — IDBI Bank, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, UCO Bank, Bank of Maharashtra, State bank of Travancore and State Bank of Mysore — registered losses in the third quarter of FY17. In the third quarter of the previous financial year, ten of these banks had recorded losses.
According to a report in Mint, the net interest income rose around 12% for the private banks but marginally dropped for public sector banks in the third quarter, where deposits witnessed a massive surge after the government junked popular bank notes on November 8.
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