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Most of these banks have also reported drop in operating profit growth. While the overall operating profit of the industry rose by 17.41 per cent, public sector banks continued to be the worst performers. Their operating profit growth was a mere 9.53 per cent against 40 per cent growth in operating profit of private banks and 36 per cent in case of foreign banks. Even state-owned entities such as Bank of Baroda and Allahabad Bank, which have shown a substantial growth in their net profits from Rs 676 crore to Rs 827 crore and from Rs 542 crore to Rs 706 crore, respectively, have faltered on operating profits. Allahabad Bank’s operating profit dropped from Rs 1,073 crore to Rs 1,024 crore, while that of Bank of Baroda slipped from Rs 2,302 crore to Rs 2,032 crore.
Still these banks could show higher net profit by virtue of lower provisioning. Allahabad Bank had made a provision of Rs 269 crore in FY06 against Rs 476 crore in FY05. Similarly, Bank of Baroda allocated Rs 917 crore for provisioning, down from Rs 1,439 crore in FY05. Except for a few, most public sector banks have made lower provisioning in 2006. Had they raised their provisioning level, there would have been a further erosion in their net profit growth. On the asset side, the banking sector, as a whole, saw an increase of 18.66 per cent in 2005-06 with private and foreign banks’ assets growing by 31.5 per cent and that of public sector banks rising by 13.81 per cent. Two state-run banks – Bank of Baroda and Bank of India – joined the Rs 1,00,000 crore asset club, taking the tally to six from four in 2004-05. SBI tops the chart with Rs 4,59,883 crore, followed by ICICI Bank at Rs 2,51, 389, Punjab National Bank at Rs 145,267 crore, Canara Bank at Rs 132,822 crore, Bank of Baroda at Rs 113,392 crore and Bank of India with Rs 112,274 crore. In the private sector, HDFC Bank’s assets rose by 43 per cent to Rs73,506 crore and that of UTI Bank by 32 per cent to Rs 49,731 crore.
Among foreign banks, the largest player, Standard Chartered, increased its asset base by 20.50 per cent to Rs 48,182 crore, while both Citibank and HSBC saw over 34 per cent rise in their asset bases to Rs 45,437 crore and Rs 37,473 crore, respectively. The industry witnessed over 30 per cent growth in credit for the second successive year in 2005-06, with retail credit growing by over 50 per cent. Despite a slower growth of 18.1 per cent in deposits compared with 32.1 per cent rise in advances in 2005-06. Public sector banks sustained the enhanced credit demand by selling government securities. Among large banks, ICICI Bank posted the highest credit growth – close to 60 per cent – followed by Bank of Baroda at 38 per cent, while Indian Overseas, HDFC Bank and Central Bank clocked over 37 per cent growth each. Deposits continued to be the primary source of funds, accounting for 75.7 per cent of total funds, followed by borrowings (8.5 per cent), other liabilities (8 per cent) and reserves (7.9 per cent). Seventy-nine banks reported 18.72 per cent increase in interest income, weighed down by public sector banks. The other income of 79 banks rose 9.85 per cent against a decline of 12.25 per cent in 2004-05. Other income of private banks increased by 51.39 per cent and that of foreign banks by 34.85 per cent. In contrast, the other income of public sector banks fell by 6.39 per cent following a decline in treasury income. HOME Business Standard • November 2006 |
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