Synopsis:
- Net Interest Income (NII) of Scheduled Commercial Banks (SCBs) grew by 26.5% year-on-year (y-o-y) to Rs. 1.84 lakh crore in Q1FY24 due to healthy loan growth and a higher yield on advances over the year-ago period.
- The Net Interest Margin (NIM) of SCBs witnessed an improvement of 36 basis points (bps) y-o-y, reaching 3.27% in Q1FY24 due to faster repricing of loans, whereas deposit rates have not yet fully reflected the increased interest rates. In terms of sequential performance, it contracted by 2 bps due to a drop in the NIM of large PSBs. Though, NIM of Other PSBs and other PVBs expanded by 8 bps and 6 bps in the same period.
- SCBs reported a robust rise in advances at 16.7% y-o-y in Q1FY24 mainly driven by personal loans, NBFCs and MSMEs). SCBs witnessed a 13.5% y-o-y deposit growth, within this PVBs’ deposits rose by 17.4% y-o-y.
- SCBs Pre-Provisioning Operating Profit (PPOP) grew by 42.8% (y-o-y) due to growth in Net Interest Income (NII), growth in treasury income, a low base, and lower growth in Operating Expenses (opex).
- The cost-to-income ratio of SCBs reduced by 333 bps y-o-y to 47.7% in Q1FY24 due to higher growth in NII than opex and robust growth in PSBs’ treasury income and fee income of PVBs.
- Gross Non-Performing Assets (GNPAs) of SCBs reduced by 25.6% y-o-y to Rs. 5.32 lakh crore as of June 30, 2023, due to lower slippages, steady recoveries & upgrades and write-offs. The GNPA ratio of SCBs reduced to 3.7% as of June 30, 2023, from 5.7% over a year ago. Net Non-Performing Assets (NNPAs) of SCBs reduced by 34.7% y-o-y. The NNPA ratio of SCBs reduced to 0.9% from 1.6% in Q1FY23 which is an all-time low.
- Restructured assets (Ten PSBs + Six PVBs) as a percentage of net advances stood at 1.0% as of June 30, 2023, dropping by 60 bps over a year ago period. Meanwhile, SCBs credit cost (annualised) declined by 16 basis points (bps) y-o-y to 0.52% in Q1FY24.
- SCBs net profit grew by 68.9% y-o-y to Rs. 0.73 lakh crore for Q1FY24 due to robust growth in PPOP and lower provisions. PSB reported strong net profit growth of 124.8% y-o-y to Rs. 0.34 lakh crore in Q1FY24. Return on Assets (RoA, annualised) of SCBs improved by 44 bps y-o-y to 1.31% in Q1FY24. However, banks faced marginal pressure on a sequential basis due to rising cost of deposits and seasonality impact.
- SCBs were adequately capitalised in Q1FY24. PSBs’ median Common Equity Tier- 1 (CET-1) ratio expanded by 90 bps y-o-y to 12.3% in the quarter due to robust growth in profitability, while median CAR expanded by 100 bps y-o-y to 15.9% on account of profitability and bond issuances.
Scheduled_Commercial_Banks_-_Healthy_Profitability_and_All-time_Low_Net_NPAs
