PSBs: Sustaining Q2 momentum for a year key to regaining lost faith

Q2 results suggest a trend of easing asset quality issues and the weight of merger behind them

There was pessimism this time last year, when the government decided to merge 10 public sector banks (PSBs) to four. Last year’s September quarter (Q2) results, when losses bulged for these banks, heightened the pessimism.

Cut to the present, the mergers seem to have been blessings for these banks. Indian Bank, Canara Bank and Punjab National Bank (PNB) have all declared Q2 results for FY21. And these show that after six quarters of weak net interest income (NII) growth, the banks posted healthy growth of 32 per cent, 29 per cent, and 96 per cent, respectively, in Q2. While the provisioning