Public sector banks (PSBs) delivered spectacular results in the first quarter ended June 2023. The banks earned a cumulative profit of Rs 34,774 crore.
According to quarterly figures released by public sector lenders, all 12 state-owned banks made a combined profit of Rs 15,306 crore during the April-June period of the previous fiscal.
The high-interest environment aided banks in earning a healthy net interest margin (NIM) during the quarter. The majority of banks have NIMs of more than 3 per cent.
During the quarter, the Bank of Maharashtra in Pune had the highest NIM of 3.86 per cent, followed by the Central Bank at 3.62 per cent and Indian Bank at 3.61 per cent.
Four lenders made a profit of more than 100 per cent in the first quarter. Punjab National Bank saw the biggest percentage growth, with a profit of Rs 1,255 crore compared to Rs 308 crore in the same quarter last year, a 307 per cent increase.
The State Bank of India saw its bottom line growth by 178 per cent to Rs 16,884 crore, and the Bank of India saw its profit increase by 176 per cent to Rs 1,551 crore.
SBI’s highest-ever quarterly profit of Rs 16,884 crore accounts for over half of the profit made by PSBs. SBI’s contribution was almost 50 per cent in FY23, when the combined profit of these banks was Rs 1.05 lakh crore.
Another five PSBs had growth ranging from 50 per cent to 100 per cent. This pack was led by Bank of Maharashtra, which increased its net profit by 95 per cent to Rs 882 crore. It was followed by Bank of Baroda, net profit increased by 88 per cent to Rs 4,070 crore, and UCO Bank’s net profit increased by 81 per cent to Rs 581 crore.
The only bank to report a loss in net profit among the 12 is Delhi-based Punjab & Sind Bank, which reported a 25 per cent dip to Rs 153 crore at the end of June 2023.
Several government initiatives have aided in the resurgence of PSBs. Non-performing assets in banks have fallen to a 10-year low of 3.9 per cent of total advances as a result of the 4R strategy of recognition, resolution, recapitalisation, and reforms. Simultaneously, banks recovered bad loans of over Rs 8.6 lakh crore in the previous eight fiscal years.
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As part of the policy, the government invested an unprecedented Rs 3,10,997 crore in PSB recapitalisation over the last five fiscal years (2016-17 to 2020-21). The recapitalisation programme gave much-needed assistance to the PSBs and saved them from defaulting.
The government’s reforms over the last eight years focused credit discipline, prudent lending, and enhanced governance. In addition, there was technological adoption, bank amalgamation, and general banker confidence.
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