India's 30 listed banks have reported a 11.45 per cent rise in net interest income and a hefty 58.67 per cent jump in net profits for the quarter ended December 2001. This beats the performance of the manufacturing sector hollow.
Even if one excludes the State Bank of India (SBI), which is largely the driving factor in the overall impressive industry performance, the rise in interest income at 8.94 per cent and net profit growth of 30.70 per cent betters the manufacturing sector where a total of 1,350 companies reported a 3.03 per cent decline in sales and a 18.07 per cent decline in net profits, over the corresponding quarter of last year.
The aggregate interest income of 30 banks increased to Rs 18,998 crore in October-December 2001 from Rs 17,046 crore in October-December 2000. On account of a 46.2 per cent rise in other income, the total income of these banks increased by 14.92 per cent.
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The Delhi-based Oriental Bank of Commerce outperformed all other banks with a hefty 3,728 per cent rise in net profit at Rs 85.74 crore (Rs 2.24 crore). SBI with a net profit jump of 179 per cent was in the second place, followed by Vijay Bank (173 per cent) and Karnataka Bank (160 per cent).
Among other banks, Dena Bank reduced its losses to Rs 1.09 crore from a net loss of Rs 6.90 crore in the quarter ended in December 2000, while Centurion Bank lapsed into the red with a net loss of Rs 26.04 crore versus a net profit of Rs 10.69 crore in the corresponding quarter of last year.
The quarterly results reveal a further decline in spreads in the banking sector. This is because of the rise in interest expended was higher at 11.53 per cent than the rise in interest earned at 11.45 per cent.
Apart from SBI's contribution, the role played by other income too is significant in shoring up net profits of banks during the quarter ended December 2001. SBI's shares in the net profit of 30 banks increased to 33.62 per cent in the quarter ended December 2001 from 19.12 per cent, while share of other income in net profit was marginally down to 170 per cent from 184.51 per cent.
As a result, the net profit increased 58.67 per cent to Rs 1,826 crore from Rs 1,151 crore in the corresponding quarter of the previous year. The new private sector banks have done well in terms of growth in interest income and other income.
They also managed to reduce the cost of borrowings, as reflected in the 18.74 per cent rise in interest expenditure compared with a 21.81 per cent rise in interest income. Owing to higher provisions for tax, their net profits moved up by 2.35 per cent.
The old private sector banks are deep in trouble with growth in income in the single digit zone at 8.47 per cent. However, a hefty 186.91 per cent rise in other income helped them to report a 40.44 per cent rise in profits.
Thanks to SBI, again, the net profits of the public sector banks zoomed to 74.31 per cent even as interest earned and interest expenses kept pace, at 10.66 per cent each, while other income increased by 26.33 per cent.