Riding on higher interest income, 18 listed commercial banks that constitute Bankex, the Bombay Stock Exchange’s banking index, have collectively posted a 43.32% rise in their net profits in the April-June quarter. In absolute term, their aggregate net profit was Rs5,589.73 crore against Rs3,900.26 crore in the year-ago quarter.
There are 10 public sector and eight private banks in the Bankex basket.
Andhra Bank and Oriental Bank of Commerce were the last of the commercial banks among the 18 to announce their first-quarter results, on Monday.
Analysts said the performance of these banks does not come as a surprise.
“It is on expected lines. Most of the banks have improved their bottom line on higher interest income. The trend is likely to continue for the rest of the year unless the Reserve Bank of India makes a dramatic shift in its policy,” said a banking analyst with a domestic brokerage who did not wish to be named.
On Tuesday, the Reserve Bank of India (RBI) left its policy rates untouched buttightened liquidity by raising the cash reserve banks keep with it.
The stock market has re-rated bank stocks. Between April and 30 July, the Bankex has risen 30.92%—from 6,152.59 points to 8,055.14 points. It has outperformed the benchmark Sensex that rose 22.52% during this period, from 12,455.37 points to 15,260.91 points.
Interest income of these 18 listed banks has grown by 37.62% to Rs44,806.31crore in the April–June quarter. This is marginally less than their interest income in the previous quarter but much higher than that in the corresponding quarter of the previous year. In the January-March quarter, the interest income of these banks was up 40.25% year-on-year; in April-June 2006, it was up 20.43% year-on-year.
“One cannot compare the interest income of the April-June quarter with the January-March quarter as traditionally banks’ credit growth is the highest in the last quarter and hence interest income, too, is very high,” said the analyst.
The total income of these banks has risen 39.28% to Rs51,018.75 crore in the April–June quarter. In the corresponding quarter of the previous year, it grew by a mere 14.81% (year-on-year). It is also higher than the overall income posted by these banks in the January-March quarter.
Yes Bank Ltd is the top performer among these banks. On a low base, it has posted three-digit growth in total income, interest income, and adjusted net profit. Its interest income in the April–June quarter rose 191.44% to Rs272.53 crore; total income rose 169.33% to Rs348.49 crore; and adjusted net profit rose 113.27% to Rs36 crore. Kotak Mahindra Bank Ltd, another private sector bank, has seen its interest income grow 101.92% to Rs505.09 crore; its total income grew 93.94% to Rs594.45 crore. The bank’s adjusted net profit grew 99.41% to Rs47.68 crore.
Bank of Baroda’s adjusted net profit grew by 102.57% to Rs330.84 crore in the April-June quarter, the second highest among Bankex banks.