PSBs outperform private peers, again

The banking sector's good run continues, but there are challenges, both on asset and liabilities turf

- TAMAL BANDYOPADHYAY

Public sector banks (PSBs) seem to have made it a habit of putting up a better show than their private peers. After a good performance in the March quarter, they have outshone again in the first quarter of the current financial year (April-June).

Barring Punjab National Bank, year-on-year, every PSB has recorded an increase in net profit in the June quarter. The rise varies between 75.57 per cent (Indian Overseas Bank) and 1.87 per cent (Bank of Baroda).

In contrast, net profit has dipped for at least eight private banks. Among large private banks, Axis Bank Ltd's net profit dropped 3.79 per cent, while IndusInd Bank Ltd posted a 68.21 per cent fall.

Private banks' collective net profit dropped close to 3 per cent, while PSBs' rose 10.62 per cent.

In absolute terms, State Bank of India (SBI) led the charge, with a ₹19,160 crore net profit, followed by HDFC Bank Ltd (₹18,155 crore) and ICICI Bank Ltd (₹12,768 crore). The only other bank that recorded a net profit of at least ₹5,000 crore is Axis Bank (₹6,035 crore). All figures are rounded off.

Only one PSB (Union Bank of India) posted a drop in operating profit. Among private banks, six—led by IndusInd Bank—did so.

While the net profit of private banks as a group shrank in the June quarter, their operating profit rose handsomely, by a wider margin than PSBs'.

HDFC Bank led the show with a ₹35,734 crore operating profit, followed by SBI (₹30,544 crore). Two other banks posted an operating profit of over ₹10,000 crore: ICICI Bank (₹18,746 crore) and Axis Bank (₹11,515 crore).

Despite recording higher operating profit than PSBs, private banks lag behind when it comes to net profit because they have made far higher provisions than PSBs. Their collective provision in the June quarter zoomed to ₹27,661 crore from ₹9,844 crore. In contrast, PSBs' provision dropped to ₹15,918 crore from ₹17,004 crore.