The Hindu Business Line : PSBs' profits take a beating in Q1

The drop in profits came even as interest income grew 14 per cent on the back of a robust loan growth. But there was a sharp decline of 21 per cent in other income. Banks were hit by depreciation in the value of investments in government securities or providing for the same.

Old private banks (barring a few exceptions such as Bank of Rajasthan and South Indian Bank) managed to keep their profit growth at about 7 per cent. They too suffered from the impact of lower treasury income and providing for depreciation in the value of securities.

The best performers in this quarter were the new private banks such as HDFC Bank, UTI Bank, and ICICI Bank. Their profits grew about 30 per cent riding on the back of a strong growth of 36 per cent in interest income as well as a sharp growth of 68 per cent in other income.

Growth in interest income on the back of growth in retail business, growth in fee income, maintenance of trading profits and low cost of funds helped these banks do well.

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