Top public sector banks have come out all guns blazing when it came to year-on-year bottom line growth in the just-ended March 2023 quarter, an analysis of results declared by these lenders showed. 

Led by banking major State Bank of India, which saw its Q4 profits surge 83 per cent to ₹ 16,695 crore, the large PSBs such as  Punjab National Bank, Bank of Baroda, and Canara Bank have all reported buoyant increases in year-on-year growth rates in Q4 profits.

For the fiscal year 2022-23, SBI recorded a profit of ₹ 50,232 crore, up from ₹ 31,675 crore in 2021-22. This is SBI’s, highest-ever quarterly and yearly profit.

While PNB’s Q4 profits grew 477 per cent to ₹ 1159 crore (₹201 crore),  Bank of Baroda’s net profit in the fourth quarter surged 168 per cent to ₹4,775 crore (₹ 1,779 crore). 

For the fourth quarter ended March 31, 2023, Canara Bank reported a net profit of ₹3,175 crore, up 91 per cent over a net profit of ₹1,666 crore in the same quarter last fiscal. 

The aggregate profits of 12 PSBs surpassed the ₹ 1 lakh crore mark (₹1.05 lakh crore mark, to be precise in 2022-23), data showed.

This growth occurred  after these 12 banks posted a net loss of ₹85,390 crore in 2017-18.

These 12 PSBs witnessed a 57 per cent increase in total profit compared to ₹66,539.98 crore earned in 2021-22.

PNB posted a 27 per cent decline in annual net profit from ₹3,457 crore in 2021-22 to ₹2,507 crore in the year ended March 2023.

The PSBs that reported an annual profit over excess ₹10,000 crore in 2022-23 are Canara Bank (₹10,604 crore) and Bank of Baroda (₹14,110 crore).


The main factors behind this strong performance of all PSBs, including large ones, are the decline in credit cost for banks and focused efforts to improve recoveries. Credit cost is different from “cost of funds”.  Credit cost is the cost incurred by a lender for providing credit to a borrower.  

“Major reason not only for our bank (PNB) but also for all public sector banks is credit costs have been reduced drastically. Gross NPA, Net NPA, aging provision has also reduced. This is reason why profitability has improved across the board”, Atul Kumar Goel, Managing Director & CEO, PNB, told businessline.

He highlighted that credit costs have been coming down quarter after quarter for PNB. In the case of PNB, the credit cost was 2.05 per cent in 2022-23, and for the current fiscal it is being estimated at 1.5-1.75 per cent, Goel said.

Goel also noted that PNB has substantially improved its underwriting standards over the last two years. Out of the total disbursement level of ₹ 5.18 lakh crore last one and a half years, the NPA amount has been a meagre ₹ 178 crore.

“Lot of initiatives have been taken by the bank (PNB) for improving asset quality. This is reason recovery is increasing and addition is declining. Last year was a good year for PNB. This year will be one of the best for us”, Goel added.

Srinath Sridharan, Policy Researcher, said, “Surely most of the banks have benefited from scaling their credit outreach in the past year, as well as managing their costs - especially the interest spread management and staff productivity”.

He said these have contributed to increased profitability, adding that the market would be keen to watch if they can maintain the growth and profitability momentum next few quarters as well.

Krishnan ASV, Lead - BFSI Analyst, HDFC Securities, said, “FY23 has emerged as a blockbuster year for PSBs with ROAs trending ~30-40bps higher through the year (Q1 through Q4). A lion’s share of the ROA reflation was driven by two parameters: Net Interest Margins (accounting for 80-90% of the reflation) and credit costs (<10% of the ROA reflation). Of these two major variables, we believe that the gains from Net Interest Margin (NIM) will partly reverse themselves through FY24 as deposit re-pricing continues to catch up with a lag. Also, despite a benign credit environment prevailing currently, PSBs may witness higher credit costs as they spruce up their balance sheet for the impending ECL norms - in select cases, we expect credit costs for PSBs may not sustain at such abnormally low levels.”.