Synopsis
- Scheduled Commercial Banks (SCBs) reported a robust rise in advances at 17.3% y-o-y in Q4FY23 mainly driven by personal loans and NBFCs.
- Net Interest Income (NII) of SCBs grew by 29.5% year-on-year (y-o-y) to Rs.1.83 lakh crore in Q4FY23 due to healthy loan growth and a higher yield on advances.
- The Net Interest Margin (NIM) of SCBs witnessed a year-on improvement of 46 basis points (bps), reaching 3.3% in Q4FY23. This enhancement can be attributed to the faster repricing of loans, whereas deposit rates have not yet reflected the increased interest rates. The anticipated rise in deposit costs, which is expected to be a lag effect, is likely to be counterbalanced by the withdrawal of Rs 2000 denomination banknotes in Q1FY24.
- Total income of SCBs grew by 30.9% y-o-y to Rs 4.7 lakh crore in Q4FY23 driven by interest income. Meanwhile, non-interest income grew by 24.8% y-o-y vs a drop of 18.6% in a year-ago period due to healthy growth in fee income of the banks and higher treasury income of PSBs.
- The cost to Income (CTI) ratio of SCBs widened marginally by 17 bps y-o-y to 48.8% in Q4FY23 mainly driven by a rise in higher employee costs for PSBs.
- SCBs’ Pre-Provisioning Operating Profit (PPOP) grew by 28.2% y-o-y to Rs 1.3 lakh crore due to higher growth in NII, also supported by non-interest income.
- Gross Non-Performing Assets (GNPAs) of SCBs reduced by 23.5% y-o-y to Rs.5.5 lakh crore as of March 31, 2023, due to lower slippages, “steady recoveries & upgrades” and write-offs. The GNPA ratio of SCBs reduced to 3.96% as of March 31, 2023, from 6.04% over a year ago.
- Net Non-Performing Assets (NNPAs) of SCBs reduced by 34.0% y-o-y to Rs.1.3 lakh crore as of March 31, 2023. The NNPA ratio of SCBs reduced to 0.95% from 1.72% in Q4FY22 which is significantly better than pre-AQR levels of 2.1% (FY14).
- SCBs credit cost (annualised) declined by 16 basis points (bps) y-o-y to 0.6% in Q4FY23.
- Restructured assets for select eight PSBs reduced by 24.7% y-o-y to Rs.1.0 lakh crore as of March 31, 2023, meanwhile select six PVBs declined by 50.1% to Rs.0.2 lakh crore.
- PCR of SCBs expanded by 376 bps y-o-y in Q4FY23 mainly driven by PSBs on account of higher reduction rate in GNPAs as compared with accumulated provisions.
- SCBs’ net profit grew at 52.1% y-o-y for Q4FY23 due to robust growth in PPOP and also supported by lower requirement of provisions.
- Return on Assets (RoA, annualised) of SCBs improved by 36 bps y-o-y to 1.36% in Q4FY23 and it has been generally on an uptrend since Q1FY21.
- All SCBs have maintained their Capital Adequacy Ratio (CAR) greater than the minimum required level for Q4FY23. The median CAR of SCBs witnessed a rise of 40 bps y-o-y in Q4FY23.
