The high-interest regime helped banks to earn a good net interest margin (NIM) during the quarter. Most banks had recorded NIM of over 3 per cent.
During the first quarter, four lenders logged a profit of over 100 per cent. The highest percentage growth was recorded by Punjab National Bank, which earned a profit of Rs 1,255 crore against Rs 308 crore in the same quarter of the previous year, a growth of 307 per cent.
SBI’s highest-ever quarterly profit of Rs 16,884 crore is about 50 per cent of the total profit earned by PSBs. During FY23 too, SBI’s contribution was about 50 per cent, when the cumulative profit of these banks was Rs 1.05 lakh crore.
Another five PSBs posted growth between 50 and 100 per cent. This pack was led by Bank of Maharashtra, which clocked a 95 per cent rise in net profit at Rs 882 crore. It was followed by Bank of Baroda recording a growth of 88 per cent to Rs 4,070 crore and UCO Bank by 81 per cent to Rs 581 crore. The only bank out of 12 booked decline in net profit is Delhi-based Punjab & Sind Bank with a 25 per cent drop at Rs 153 crore at the end of June 2023.
Several measures taken by the government have helped in the revival of PSBs. As a result of 4R’s strategy of recognition, resolution, recapitalisation and reforms, non-performing assets of banks have come down to a 10-year low at 3.9 per cent of total advances. At the same time, banks recovered bad loans worth over Rs 8.6 lakh crore in the last eight financial years.
As part of the strategy, the government infused an unprecedented Rs 3,10,997 crore to recapitalise PSBs during the last five financial years — from 2016-17 to 2020-21. The recapitalisation programme provided much-needed support to the PSBs and prevented the possibility of any default on their part.
The reforms undertaken by the government over the last eight years addressed credit discipline, ensured responsible lending and improved governance. Besides, there was technology adoption, amalgamation of banks and the general confidence of bankers.