The Hindu Business Line : Private banks keep up the good show in Q3

Twenty-six public-sector banks posted a 40 per cent growth in profits riding on a 54 per cent growth in other income, while 16 top private banks reported a 45 per cent growth in profits on the back of a handsome 46 per cent growth in net interest income and 42 per cent growth in other income.

In the second quarter, profit growth of public-sector banks had seen a slowdown to about 22 per cent compared to a 40 per cent growth in the first quarter. They seem to have recovered a bit of the lost ground in the third quarter. Noteworthy is the fact that net interest income for public-sector banks showed 11 per cent growth in the third quarter as compared to a flat performance in the preceding quarter. A slight pick-up in loans in the third quarter (festival season) may have helped some banks.

The performance of public-sector banks in the third quarter continued to be bolstered by other income. For many banks the gains came from sale of both bonds and stocks. Bank of Baroda and Bank of India were among the bigger gainers on these counts. There were also some gains from recovery of bad debts written off earlier. This helped banks such as Indian Bank and Bank of Baroda.

The picture on non-performing assets, however, was not uniformly rosy. Though NPAs are nowhere in the league that they were in a few years ago, there has been a slight deterioration in the case of some banks. ICICI Bank, for instance, saw its NPAs move up to 1.5 per cent compared to 1 per cent a year ago. The last quarter will probably see some improvement in net interest margins if the banks stick with their resolve not to resort to bulk deposits. There are, in fact, some reports that suggest banks may be asked to cut rates soon.

With deposits growing faster than loans right now, banks could possibly do this. Yet, past experience has been that the last quarter of the fiscal always sees a spike in bank loans.

Whether banks will want to cut rates when demand for loans is expected to go up remains to be seen.

Related Stories:
New private sector banks growing faster than the industry
Private banks do well in Q2
Banks’ net margins may come under pressure

More Stories on : Private Banks | Performance | Public Sector Banks

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