For the first quarter ending in June 2023, public sector banks (PSBs) once again shown outstanding performance by recording a profit that was more than twice that of the previous year at Rs 34,774 crore.
According to quarterly data released by public sector lenders, the 12 state-owned banks combined for a profit of Rs 15,306 crore between April and June of the previous fiscal year.
Banks were able to generate a healthy net interest margin (NIM) for the quarter because to the high interest rate environment. Most banks reported NIM figures of above 3%.
The Bank of Maharashtra, situated in Pune, had the highest NIM for the quarter, at 3.86 percent, followed by Central Bank and Indian Bank, both at 3.62 percent.
Four lenders reported first-quarter profits of more than 100%. Punjab National Bank saw the greatest growth rate, with a profit of Rs 1,255 crore compared to Rs 308 crore in the same quarter last year, an increase of 307%.
It was followed by the State Bank of India (SBI), which had a bottom line gain of 188% to Rs 16,884 crore, and the Bank of India, which saw a growth of 176% to a profit of Rs 1,551 crore.
About 50% of the entire profit made by PSBs came from SBI’s highest-ever quarterly profit of Rs 16,884 crore. SBI’s contribution in FY23, when these banks’ combined profit was Rs. 1.05 lakh crore, was roughly 50%.
Five other PSBs reported increases of 50% to 100%. Bank of Maharashtra topped this group, with a 95% increase in net profit at Rs 882 million. Following that, UCO Bank increased by 81 percent to Rs 581 crore and Bank of Baroda by 88% to Rs 4,070 crore.
The Delhi-based Punjab & Sind Bank, which saw its net profit plummet by 25% to Rs 153 crore at the end of June 2023, is the only bank out of 12 to have done so.
The government has taken a number of actions that have aided in the resurgence of PSBs. The 4R approach of recognition, resolution, recapitalization, and reforms has helped banks reduce their non-performing assets to a 10-year low of 3.9% of total loans. Banks also recovered bad loans of more than Rs. 8.6 lakh crore over the course of the previous eight fiscal years.
As part of the policy, during the 2016–17 and 2020–21 fiscal years, the government invested an unprecedented Rs 3,10,997 crore in PSB recapitalization. The recapitalization initiative gave the PSBs the much-needed backing they need and shielded them from any potential default.
The government has implemented measures that address credit discipline, assure responsible lending, and enhance governance. In addition, there were other factors including the use of technology, bank mergers, and bankers’ overall confidence.