The PSU banks continued to show a sustained improvement in the September quarter. At the aggregate level, the provisioning for bad loans or loan loss provisioning for the 12 listed PSU banks fell to Rs 16,552 crore compared with Rs 16,875 crore in the previous quarter and Rs 18,138 crore in the year-ago quarter. Barring the June 2023 quarter, the loan loss provisioning for the sample banks fell in each of the quarter since June 2022. The reading for the latest September quarter was significantly lower than Rs 24,324 crore in the March 2022 quarter.
Of the total sample of the PSU banks, majority of the banks, seven to be precise, reported a year-on-year drop in nonperforming asset (NPA) provisioning for the September quarter. State Bank of India, the country’s largest lender, showed 9.7% year-on-year decline in the loan loss provisioning at Rs 1,814.9 crore. For Punjab National Bank, the second largest PSU bank based on domestic advances, NPA provisioning fell by 15.1% to Rs 3,018.6 crore. Indian Bank reported the highest drop of 54% in provisioning at Rs 917 crore in the September quarter.
On the other hand, NPA provisioning of Central Bank of India increased by 80.2% year-on-year to Rs 1,928.6 crore while that of India Overseas Bank rose by 78.7% to Rs 1,120.5 crore.
The sample banks showed higher interest income at the aggregate level given the improving credit offtake. The sample’s net interest income increased by 13.5% to Rs 1 lakh crore in the September quarter. The pre-provision operating profit grew by 5.9% to Rs 62,917 crore. The net profit jumped by 31% to Rs 33,643 crore. On the sequential basis, net profit fell from Rs 34,417.9 crore in the June quarter. It was the second consecutive sequential drop. Net profit of banks has been under pressure given the shrinking net interest margin as banks have raised deposit rates to attract customers amid firm interest rates in the economy. The sample’s net profit peaked at Rs 34,482.4 crore in the March 2023 quarter from a low of over Rs 17100 crore in the December 2021 quarter.
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