 "StatsGuru: 9-June-2014")
In some ways, the banking sector is looking up. As Table 1 shows, for the first time in a while deposit growth is higher than credit growth. Meanwhile, as Table 2 reveals, the stock markets have turned distinctly bullish on bank stocks. This has meant some big changes in market capitalisation, as shown in Table 3 - the State Bank of India has gained over 10 per cent last fortnight alone. Table 4 shows those banks that have gained the most and those that have lost the most over the past two years.
The persistent difference in how the market views public sector banks (PSBs) and private sector banks is captured by Table 5; private banks have consistently higher price-earnings ratios on average. One big reason surely must be their differing treatment of non-performing assets (NPAs), seen in Table 6. Private banks have brought them under control; PSBs have let them balloon. Table 7 shows how, partly as a consequence, private banks have steadily increased their return on assets while for PSBs the variable has gone the other way. Thus to keep in business, PSBs need a much higher net interest margin, as Table 8 demonstrates. And, according to Table 9, while public banks have kept profit per employee static, in private banks it has increased.
The persistent difference in how the market views public sector banks (PSBs) and private sector banks is captured by Table 5; private banks have consistently higher price-earnings ratios on average. One big reason surely must be their differing treatment of non-performing assets (NPAs), seen in Table 6. Private banks have brought them under control; PSBs have let them balloon. Table 7 shows how, partly as a consequence, private banks have steadily increased their return on assets while for PSBs the variable has gone the other way. Thus to keep in business, PSBs need a much higher net interest margin, as Table 8 demonstrates. And, according to Table 9, while public banks have kept profit per employee static, in private banks it has increased.