Interest Millstone For Private Banks

Jump in interest expenditure dragged down the aggregate net profit of six private sector banks by 37.03 per cent to Rs 104.73 crore in the fourth quarter of fiscal 2001.

The six banks which have announced their results are Global Trust Bank (GTB), ICICI Bank, HDFC Bank, IndusInd Bank, UTI Bank and IDBI Bank. Centurion and Bank of Punjab are yet to announce results.

Interest expenditure went up by 48.83 per cent to Rs 1,179.48 crore, while interest earned witnessed a 29.80 per cent jump to Rs 1588.91 crore.

Other income which contributes largely to these banks' bottomlines, rose marginally by 1.98 per cent to Rs 357.51 crore.

The performance of these banks during the period was dismal compared with the other three quarters of the fiscal.

Net profit in the third quarter was up 42.56 per cent, while it was up 32.34 per cent in the second quarter. In the first quarter, the aggregate bottomline had increased by 72.79 per cent.

Of the six banks, GTB posted a net loss of Rs 22.71 crore, while IndusInd posted a net profit of Rs 21.89 crore.

UTI Bank, though managed to increase revenues substantially (up 86.39 per cent), failed to attract low interest deposits. Interest expenditure of the bank jumped by 115.26 per cent, while net profit moved up by 1.82 per cent.

The figures of ICICI Bank surged with the help of low interest deposits. The net profit of ICICI Bank rose by 53.01 per cent on the back of a 42.09 per cent rise in interest income and a 10.79 per cent growth in other income. Interest expenditure of the bank rose by 30.82 per cent.

HDFC Bank's net surged by 57.79 per cent on account of a 27.64 per cent rise in other income. The bank, too, could not attract low cost deposits as interest expenditure (up 77.15 per cent) outsmarted interest earned (up 41.55 per cent).

The performance of the bank is not strictly comparable as the merged bank's figures for the previous quarter was only for the February 26 to March 31, 2000, period. HDFC Bank took over Times Bank in February 2000.