Banks net interest income rises 25.5% in Q3; Bank of Maharashtra outruns PSBs in loan growth, asset quality
2 min read 19 Feb 2023, 02:55 PM ISTLatest CARE Edge's report stated that overall scheduled commercial banks posted a robust growth of 18.5% YoY in advances. Public Sector Banks' (PSBs) net advances grew by 18.9% in the quarter whereas private banks rose by 17.9%.
PremiumPune-based Bank of Maharashtra (BOM) surpassed other public sector lenders in terms of loan growth percentage for the third quarter of FY23. With a growth of 21.67% in gross advances year-on-year in Q3FY23, BoM tops the list amidst state-owned banks. BoM was followed by the Union Bank of India. While the country's largest lender with a growth rate of 16.91% YoY in lending platforms held the fourth spot.
As per an analysis of the latest financial results of public sector banks showed, which PTI cited, BoM bank has maintained the top slot in credit growth in percentage terms consistently for the past 10 quarters despite COVID-19 pressures.
Union Bank followed with a growth rate of 19.80% in advances during Q3 of FY23.
While SBI registered a growth rate of 16.91%, holding the fourth spot in advances growth percentage. However, in value terms, SBI's total loan book is at ₹26,47,205 crore, which is more than 17 times higher than BOM's lending book of ₹1,56,962 crore.
Going forward, also in terms of Retail-Agriculture-MSME (RAM) loans, BoM posted the highest growth of 19.18%, followed by Punjab & Sind Bank with a growth rate of 19.07%, and Bank of Baroda with a growth of 18.85% on an annual basis.
In terms of asset quality, BoM and SBI were in the lowest quartile as far as gross non-performing assets (NPAs) and net NPAs were concerned. As of December 31, 2022, BoM and SBI's gross NPA came in at 2.94% and 3.14% respectively, while their net NPAs stood at 0.47% and 0.77% by end of the quarter.
Coming to deposits growth, here, Bank of Baroda topped the charts among public sector banks with a growth rate of 14.50%, followed by Union Bank of India which recorded an upside of 13.48% year-on-year. BoM was in the third spot in terms of deposit growth.
As per CARE Edge's latest report dated February 17th, net interest income (NIIs) of Scheduled Commercial Banks (SCBs) grew by 25.5% y-o-y to ₹1.78 lakh crore in Q3FY23 due to a healthy improvement in credit offtake, and a higher yield on advances.
Data further revealed, NII of public sector and private banks grew by 24.6% and 26.7% y-o-y, respectively, in Q3FY23. Private banks reported a higher NII growth as compared to PSBs, indicating their strong franchise with both depositors as well as borrowers.
In terms of gross advances, CARE Edge's report stated that overall scheduled commercial banks posted a robust growth of 18.5% YoY in advances. Public Sector Banks' (PSBs) net advances grew by 18.9% in the quarter whereas private banks rose by 17.9%.
Going ahead, CARE Edge's note said, "credit growth has generally been trending upward throughout FY23 and is expected to be in the mid-teens in FY23. RBI has increased the repo rate by 250 bps in FY23. The last hike of 25 bps (February 08, 2023) has not been reflected in the above numbers and is expected to reflect first in lending rates followed by the deposit rates. Deposit rates have already increased and are expected to rise further."
The rating agency's note further added, "banks which have been able to maintain a higher CASA, as well as EBLR-based floating loans, are expected to benefit and sustain the NIM in the current rising interest rate scenario. Overall, NIMs are expected to stabilise with a negative bias as lending rates would likely complete their rising cycle while liabilities would continue to be repriced."
