Core income of banks declines

 According to the RBI report on Trend and Progress of Banking in India 2002-03, investments by banks have recorded a compounded annual growth rate of 20.7 per cent from 1997 to 2003.

 Earning advances- advances netted for non performing assets -- have increased at a lower rates of 18.6 per cent during the period.

 Income from investments have registered a higher compound annual growth rate of 17.4 per cent in the period 1996-97 to 2002-03, due to the change in asset pattern as compared with interest on advances at 10.2 per cent.

 According to the RBI, the steep decline in lending rates have contributed to the changing pattern of income.

 Trading profits accounted for around 7.7 per cent of the total income of banks and around 33 per cent of the operating profits in fiscal 2003. Profits from sale of investments were up by 39 per cent to Rs 13,245 crore in fiscal 2003.

 The ratio of trading profits in operating profits which varied between 3.5 to 16.1 per cent during 1996-97 to 2000-01 moved sharply to 32.6 per cent in fiscal 2003.

 Old private sector banks depended heavily on trading profit both in fiscal 2002 and fiscal 2003 with trading profit contributing over 50 per cent of the trading profits in both the years.

 Foreign banks which booked profits of over Rs 1000 crore from securities trading in fiscal 2002 fell to Rs 504 crore in fiscal 2003.

 The SBI group booked higher profit of Rs 2675 crore from securities trading as against Rs 1034 crore in fiscal 2002.