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Synopsis

* Scheduled Commercial Banks’ (SCBs) net profit grew by 68.9% y-o-y to Rs. 0.73 lakh crore for Q1FY24 due to robust growth in Pre-Provisioning Operating Profit (PPOP) and lower provisions.

* Public Sector Banks (PSBs) reported strong net profit growth of 124.8% y-o-y to Rs. 0.34 lakh crore in Q1FY24.

* Private Sector Banks (PVBs) also posted a growth of 38.4% y-o-y to Rs. 0.39 lakh crore in the quarter.

* Return on Assets (RoA, annualised) of SCBs improved by 44 bps y-o-y to 1.31% in Q1FY24. However, banks faced marginal pressure on a sequential basis due to rising cost of deposits, reduction in low-cost CASA deposits and seasonality impact.

* SCBs were adequately capitalised in Q1FY24. PSBs’ median Common Equity Tier- 1 (CET-1) ratio expanded by 90 bps y-o-y to 12.3% in the quarter due to robust growth in profitability, while median CAR expanded by 100 bps y-o-y to 15.9% on account of profitability and bond issuances.

Net Profit Continues to Remain Elevated

Figure 1: PSBs’ Net Profit Trend (Rs. Lakh, Cr.)

Figure 2: PVBs’ Net Profit Trend (Rs. Lakh, Cr.)

* PSBs witnessed robust growth of 124.8% y-o-y in net profit to Rs. 0.34 lakh crore in the quarter due to PPOP growth and lower credit cost. PPOP grew by 53.1% y-o-y to Rs. 0.68 lakh crore in the quarter, driven by growth in NII and treasury income, while provisions dropped by 19.8% y-o-y in the same period.

* Large PSBs' net profit rose by 133.0% y-o-y while Other PSBs rose by 97.5%. In terms of sequential performance.

* PVBs’ net profit rose by 38.4% to Rs. 0.39 lakh crore in Q1FY24 on account of robust growth in PPOP. In terms of sequential growth, the net profit of PVBs marginally declined by 1.4% due to the seasonality impact, besides the credit costs also increased- in the same period.

Figure 3: Movement in PPOP and Provisions

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