From return on assets to employee cost, private banks surpass PSBs

The gap in the overall performance between public sector and new-age private banks widened further in FY19. Return on assets and return on equity for the large state-run banks stood at 0.3 per cent and four per cent, respectively, while the same for medium-sized among them were both at negative 1.8 per cent and 31 per cent respectively. In comparison, for new-age private banks, the figures were at 1.1 per cent and 10 per cent.

A similar narrative was seen in the case of the cost to income ratio and net-interest margin, too, wherein state-run banks trailed their new-age rivals. Productivity of employees is another worrying factor — the cost per employee is the highest in large public sector banks and it is growing faster than the revenue per employee; the new private banks have contained cost per employee.