In accordance with an analysis of key financial parameters of PSBs done by Bank Unions, the 12 Public sector banks (PSBs) have collectively doubled their net profit during FY22 to ∼Rs 66,539 crore, an increase of 110% over Rs 31,816 crore in FY21.
- This net profit by all PSBs is the first time in several years.
- However, despite the profit, PSBs lagged behind their private banks, which reported a net profit of over Rs 91,000 crore, 29% higher than previous year’s Rs 70,435 crore.
Main Factors behind PSBs profitability:
The key factors behind this profitability of PSBs is clean-up of bad loans and economies of scale after amalgamation of 10 state-owned banks, Easy liquidity provided by the Reserve Bank of India (RBI) and growth segments like retail loans, among others.
Key Points:
i.The State Bank of India (SBI) was marked with a highest net profit of Rs 31,675 crore – an increase of 55% over the previous year. It accounted for 47% of the total profits of the PSBs.
- SBI is followed by Bank of Baroda (BOB), with a net profit of Rs 7,272 crore, generating 10% of PSBs’ profits, followed by Canara Bank, which at Rs 5,678 crore (8%).
ii.The highest revenue growth was reported by BOB, followed by UCO Bank.
iii.Bank of Maharashtra has shown the highest improvement in deposits & advances and is the only PSB to have net non-performing assets (NPAs) below 1%.
- It has also recorded the highest growth in advances of 25%, driven by the retail segment, which grew 23%.
iv.The collective dividend of PSBs is over Rs 8,000 crore. The higher profits enable PSBs to contribute more toward dividends which is helpful for the Central Government.
- Point to be noted: In May 2022, RBI slashed dividend to the Central Government by 70% to Rs 30,307 crore for FY22 from Rs 99,122 crore in FY21.
v.With these kinds of net profits, PSBs can lend to industry at less risk which will result in economic recovery.
vi.Among net profits, Private banks were led by HDFC Bank (Rs 36,961 crore), ICICI Bank (Rs 23,339 crore), Axis Bank (Rs 13,025 crore), Kotak Mahindra Bank (Rs 8,572 crore), IndusInd Bank (Rs 4,611 crore) and Federal Bank (Rs 1889 crore).
vii.This was also a significant improvement over FY18, when only two of the 21 PSBs made a profit. Only two PSBs (Central Bank and Punjab & Sind Bank) declared losses in FY21, dragging down the overall net profit.
Recent Related News:
i.The Reserve Bank of India (RBI) issued a framework for Geo-tagging of Payment System Touch Points/acceptance infrastructure under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
ii.The World Bank (International Bank for Reconstruction and Development, IBRD) has created the world’s first kind of Wildlife Conservation Bond (WCB), also known as the “Rhino Bond,” in support of South Africa’s efforts to protect the endangered species.
About State Bank of India (SBI):
Chairman – Dinesh Kumar Khara
Establishment –1955
Headquarters– Mumbai, Maharashtra
