Financials Rule BT500

The banking and financial services sector powers one-third of BT500 earnings. Can it continue the momentum this year?

- BY ANAND ADHIKARI

₹5.8 LAKH CRORE—that's the combined profit of banks and financial services companies (including brokerages, asset management companies, and exchanges) in the BT500 list for FY25. No surprise then that the banking and financial services sector accounts for over 34% profit of India's top 500 companies. That is emblematic of the scale and strength of India's financial sector today. This year's BT500 study—a departure from earlier editions, which were based on market capitalisation—reveals many such interesting facts. But first, what explains such a high share in BT500 profits?

The answer lies in India's financial system being dominated by banks, which historically have been the sole mobilisers of household savings and providers of credit. India's high growth and strong macros have boosted the sector's performance over the years. The RBI, in a recent report, Trend and Progress of Banking in India 2023-24, highlighted some interesting facts: “Banks' profitability improved for the sixth consecutive year in FY24, while their gross nonperforming assets ratio reached its lowest level in 13 years, at 2.7%, as of end-March 2024.”

Other studies buttress the trend. Axis Securities, a subsidiary of Axis Bank Ltd, has done a study on rolling four-quarter profit for NSE 500, which crossed ₹15 lakh crore for the first time in Q4FY25. The financial sector's contribution has risen sharply, from 19% in Q2FY20 to over 37% in Q4FY25. “This has been driven by better asset quality and lower provisioning versus pre-Covid levels—a clear sign of a healthier banking system,” says Rajesh Palviya, SVP—Research, Axis Securities.