Public sector banks' net dips after 3 years

After a gap of three years the net profit of public sector banks (PSB) has declined in FY05. Twenty six PSBs (18 nationalised banks and State Bank of India and its seven associate banks) have shown a 7.8 per cent decline in their aggregate net profit to Rs 15,241 crore.

In FY01, these banks recorded 14.9 per cent decline in net profit, while in FY04, their net profit growth was 34.5 per cent.

The fall in net profit of 26 PSBs has been due to a sharp decline in treasury profit and treasury income.

With four banks "" Bank of Baroda, State Bank of Bikaner and Jaipur, State Bank of Indore and Union Bank "" registering treasury losses in FY05, the treasury profit of 26 banks studied here declined by a hefty 59 per cent. The treasury income of these 26 banks has declined by 10.3 per cent.

Other income, the mainstay of the Indian banking industry, too declined in FY05. Of the 26 banks, all but three reported a drop in other income.

The aggregate other income declined by 16.8 per cent. State Bank of Saurashtra has the biggest drop in its other income (by 64.4 per cent), followed by State Bank of India (50.6 per cent) and Dena Bank (49.6 per cent). Out of the 26, 16 banks recorded a fall in net profit while 10 banks registered a growth in net profit.

State Bank of Saurashtra showed 76.8 per cent decline in net profit, followed by Dena Bank (down 73.5 per cent), Bank of India (66.3 per cent), Central Bank (42.2 per cent) and Bank of Maharashtra (41.8 per cent).

The ten banks which reported a rise in net profit were led by Punjab National Bank with 27.2 per cent rise in net profit to Rs 1,410 crore. The net profit of Indian Overseas Bank increased by 27 per cent, while State Bank of India posted a 16.9 per cent rise.