BUSINESS
Crunching Numbers: 12 PSBs end Sept quarter notching up Rs 25K+ cr net profit
The September quarter results of public sector banks (PSBs) seem to have brought cheer for the Indian banking sector with all the major 12 PSBs recording net profits worth Rs 25,685 crore during the period under review. On September 7, Finance Minister Nirmala Sitharaman had lauded all the 12 PSBs for their outstanding fiscal performance. In a series of tweets, she said that "the continuous efforts of our government for reducing the NPAs and further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 cr in Q2FY23".
Fund infusion, asset quality review measures helped script turnaround story
To recap, all the 12 PSBs combined, declared a net profit of Rs 25,685 crore in the quarter ended September 30 and the aggregate net profit for the first half of 2022-23 was Rs 40,991 crore. This was up by 50 per cent and 31.6 per cent, respectively, on a year-on-year basis. Let us now analyse some of the key reasons behind this financial turnaround achieved by PSBs after years of mounting non-performing assets (NPAs). Fund infusion in state-owned banks by the Government to the tune of Rs 3 lakh crore played a major role in improving their financials.
Happy days now, but challenging times ahead for public sector banks
The happy times for the government banks may not continue for much long as competition will soon emerge for deposits, and loans, which, in turn, would increase the cost of funds and reduce the margins, the experts added. Further maintaining good employee relations by the PSB management will also be a key factor. "The PSB's reported significant levels of profitability were aided by robust credit demand, arbitrage between rising lending rates and lagging deposit rates, lower credit costs due to reduced loan provisions, and reducing NPA (non-performing asset) levels," Saurabh Bhalerao, Associate Director - BFSI Research.
Gangbuster PSB profits not likely to set off divestment process: Experts
On November 7, Finance Minister Nirmala Sitharaman said 12 PSBs registered handsome net profits during Q2FY23 and also H1FY23. "The continuous efforts of our govt for reducing the NPAs & further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 cr in Q2FY23 & total Rs 40,991 cr in H1FY23, up by 50% & 31.6%, respectively (yoy)," Sitharaman said in a tweet.
Rising interest rates will help Indian banks post healthy profits in FY23: S&P
In a report on the Indian banking sector, S&P Global Market Intelligence said five of the six biggest banks by assets in India reported an increase in net income for the fiscal second quarter ended September 30, 2022. "Banks took advantage of the higher interest rate environment to bolster their net interest margins, while previous efforts to reduce their non-performing assets resulted in lesser loan loss provisions, their recently released earnings reports showed," the report notes.
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Zomato co-founder Mohit Gupta resigns
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