Banks Ride High On Other Income In Q3

The financial results of 24 banks for the quarter ended December 2002 shows a 50.5 per cent growth in net profit on a modest 5.3 per cent rise in interest income. The soaring net profit, however, comes from a hefty 45 per cent rise in other income.

Banks also benefited from the series of deposit rate cuts in the past two years. Interest expenditure increased only marginally by 1.1 per cent quarter-on-quarter. Therefore, even though banks engaged in a series of high octane lending rate cuts, they managed to cut deposit rates enough to be able to cushion their margins.

 

The aggregate interest income of these 24 banks increased 5.3 per cent at Rs 20,084.49 crore over the corresponding quarter of 2001. Other income of the banks increased 45 per cent at Rs 4,272.82 crore, while their net profit jumped 50.5 per cent at Rs 2,715.59 crore. With the lower rate of interest on deposits, interest expenditure increased 1.1 per cent at Rs 13,285.71 crore.

The State Bank of India posted a lower growth rate in interest income and net profits compared to the entire banking sector. If one excludes SBI from the aggregates, the interest income of the remaining 23 banks moves up a tad higher at 6.6 per cent and net profit by a hefty 62 per cent.

SBI has recorded a modest 3.3 per cent rise in interest income, while its net profit has increased 28 per cent. Interestingly, SBI's interest costs increased 2.2 per cent, while that of the remaining banks moved up only 0.3 per cent.

Among the 24 banks, IDBI Bank tops in terms of growth in net profit. Its net profit increased 206.8 per cent from Rs 8.94 crore for the quarter ended December 2001 to Rs 27.43 crore for the quarter ended December 2002. Andhra Bank stood second with 140.9 per cent rise in net profit, followed by Punjab National Bank clocking a 133.1 per cent rise in net profit, Bank of Rajasthan (129.1 per cent), Canara Bank (82.6 per cent), Corporation Bank (66 per cent) and Bank of Baroda (60.9 per cent).