Record quarter growth for banks

Higher net interest income and lower provisioning have helped banks to post record net profit growth in the last five quarters.

The public sector undertaking (PSU) banks outperformed the private sector banks for the first time after a gap of five quarters on the back of robust net profit growth reported by the India's largest commercial bank State Bank of India (SBI).

The 30 public and private sector banks which declared their results for the quarter ended March 2007 have posted 37 per cent growth in net profit. This is the highest bottom line growth in the last five quarters. They had posted 42 per cent rise in net profit in the December 2005 quarter.

These 30 banks posted a combined net profit of Rs 6,428.47 crore in the March, 2007 quarter against Rs 4,704.64 crore in the quarter ended March 2006. Higher net interest income helped the banking sector to post higher net profit growth during the quarter.

The total net interest income of the 30 banks increased by 26 per cent to Rs 18,742.53 crore in the March, 2007 quarter against Rs 14,929.26 crore in the preceding quarter, while the provisioning and contingencies increased by 23 per cent compared with 48 per cent.

A 28 per cent loan growth in the Indian banking sector in the year end March 2007, following a 35 per cent average annual expansion in the previous two years benefited the banking sector. The banking sector has given loans to companies, individuals and farmers during the quarter.

The twenty PSU banks have posted a combined 42 per cent growth in net profit, compared with 22 per cent bottom line growth reported by the private sector banks. Twenty-one PSU banks recorded a combined net profit of Rs 4,878.43 crore in the March, 2007 quarter compared with Rs 3,437.34 crore in the corresponding quarter last year, while nine private sector banks posted a net profit of Rs 1,550 crore compared with Rs 1,267.30 crore.

SBI has posted a 75 per cent spurt in net profit to Rs 1,932.19 crore in the fourth quarter ended March 2007 compared with Rs 853.29 a year earlier.

The bank's interest and non-interest income rose 29.10 per cent to Rs 14,435.76 crore in March 2007 quarter as compared with Rs 11,186.10 crore in March 2006 quarter. Its provision and contingencies increased by 5.48 per cent to Rs 1,412.59 crore against Rs 1,339.14 crore in the previous year's quarter.

On the other hand, ICICI Bank has posted single digit growth in net profit. The private sector giant reported 4.45 per cent increase in net profit to Rs 825.12 crore in the March, 2007 quarter against Rs 789.93 crore in March, 2006 quarter despite a 54 per cent rise in the total income.

The higher provisions of Rs 876.34 crore during the quarter against Rs 354.53 crore in the previous year's quarter dented the net profit growth of the bank.

Five banks, Bank of Maharashtra, Vijaya Bank, UCO Bank, ING Vysya Bank and Bank of Rajasthan have turned into black during the quarter. State Bank of Bikaner and Jaipur, Syndicate Bank and YES Bank posted more than 100 per cent growth in net profit, while five other banks posted over 50 per cent growth in net profit.