PSB profit growth fell in FY04

The combined net profit of public sector banks (PSBs) increased 34.6 per cent during 2003-04 to Rs 16,546 crore compared with a growth of 48 per cent during 2002-03 and a decline of 15.7 per cent during 2001.

A report by Icra Information, Grading and Research Services (Ingres) says the growth in profit was despite higher provisioning and contingencies which stood at Rs 22,928 crore in 2003-04, up 31.6 per cent.

SBI and its seven associates constituted almost one-third (Rs 5,619 crore) of the total profits of all PSU banks. The operating profit of PSU banks grew by 32.8 per cent to Rs 39,475 crore during the last fiscal, of which SBI and its arms accounted for Rs 14,364 crore.

"Provisions for NPAs and taxes increased during 2003-04, reflecting higher operating profits and tightening of prudential norms. Provisions for NPAs increased by 40.5 per cent to Rs 12,682 crore during 2003-04," it said. Net NPAs as a percentage of net advances declined to 2.89 per cent at Rs 18,141 crore in 2004 from 4.47 per cent (Rs 24,465 crore) in 2003, it added.

Gross NPAs declined to 7.79 per cent of loan advances at Rs 51,538 crore last fiscal from 9.36 per cent (Rs 54,090 crore) in 2002-03.

SBI and its associate banks reduced their net NPAs to less than the industry average at 2.72 per cent in 2003-04 from 4.13 per cent in 2002-03, while gross NPAs came down to 6.98 per cent last fiscal from 8.68 per cent.

The government's stake in public sector banks (PSBs), which stood at an aggregate 86.3 per cent, has declined following a spate of public offerings. The report also says the capital of PSBs has risen to Rs 14,676 crore against Rs 3,034 crore in 1990-91.

Capital adequacy ratio (CAR) of 26 PSBs was well above 11 per cent, while one bank missed the RBI-set 9 per cent target last fiscal. The aggregate CAR was, however, above the stipulated level.

"The trend of banks accessing the markets is expected to accelerate as government funding for recapitalisation decreases over the coming years," said the rating agency.

The net profit of 27 PSBs grew 35 per cent, while their bad assets fell below 3 per ce/nt during 2003-04, said the agency. State Bank of India topped the list with a net profit of Rs 3,681 crore, followed by Canara Bank (Rs 1,338 crore), Punjab National Bank (Rs 1,109 crore), Bank of India (Rs 1,008 crore) and Bank of Baroda (Rs 967 crore).