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N.S. Vageesh

Chennai, Oct 24 Private sector banks seem to have done better than public sector banks going by the first slew of results for the second quarter.

Results for five private banks and about 10 mid-sized and small public sector banks have come in so far. Results of all the big public sector banks including SBI, Punjab National Bank, Bank of Baroda, Bank of India and Canara Bank are expected in the next few days.

Private banks posted an average of 36 per cent growth in net profit riding on the back of a healthy 42 per cent increase in net interest income and a satisfactory growth of 36 per cent in other income.

Public sector banks, on the other hand, saw profits go up by 22 per cent in this period. But this pales in comparison to their performance in first quarter - when profits of all public sector banks had risen by 47 per cent on the back of relatively stable growth in interest income and other income.

The performance of public sector banks in the second quarter has been aided significantly by other income which rose an eye-popping 60 per cent. Relatively, their gains from lending seemed marginal with net interest income rising only 5 per cent.

For banks such as UCO, State Bank of Travancore and Vijaya Bank, net interest income actually declined when compared to the corresponding period in the previous year. When seen in relation to the performance of private banks, it appears that public sector banks have been hit by lower loan growth and not succeeded in controlling deposit costs.

The gains in other income for these banks seem to have come partly from cashing in on the stock market upswing during the last few months. IDBI Bank, for instance, saw its other income rise 142 per cent, driven by sale of some of its investments.

More Stories on : Private Banks | Public Sector Banks

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