Good show by banks, but challenges ahead

Overall, public-sector banks have put up a better show than private banks on most parameters

- TAMAL BANDYOPADHYAY

As the first quarter of the current financial year comes to a close next week, let's look at how listed private and public-sector banks (PSBs) have done in the last quarter of financial year 2024-25 (January-March 2025).

Barring seven private and just one public sector bank, all have recorded a rise in operating profits. Overall, the operating profit of listed banks (excluding small finance banks) was ₹1,55,704 crore in the March quarter, up 4.45 per cent from the year-ago quarter. While private banks' collective operating profit dropped 2.9 per cent, for PSBs, it rose 12.1 per cent. All figures are rounded off.

A similar trend is visible in net profit. After setting aside funds for provisions and contingencies, listed banks' overall net profit in the March quarter rose 4.35 per cent year-on-year, to ₹93,936 crore. Again, seven private banks and one PSB recorded a drop in net profit though not the same set that has seen a drop in operating profit. Private banks' net profit dropped 3.4 per cent, while PSBs' rose 12.9 per cent.

At least 12 banks saw a drop in provision and contingencies. Unlike in the past, the industry didn't need to allocate huge funds to address bad loans since there's no dramatic deterioration in the quality of assets. Overall, listed banks provided ₹31,367 crore in the March 2025 quarter versus ₹34,691 crore in March 2024—a drop of close to 10 per cent. While private banks lowered their spending on provision and contingencies during the period by 33 per cent, PSBs' provision rose by over 24 per cent.

Year-on-year, in absolute terms, gross non-performing assets (NPAs) of these banks dropped by 11.2 per cent to ₹4.17 trillion. While PSBs recorded a 16.5 per cent drop, private banks' gross NPAs rose by 2.5 per cent.