Q2FY25 outcomes overview: PNB, BoB to Canara Financial institution — Revenue of PSBs jumps 35.4% to ₹45,550 crore

Indian public sector banks (PSBs) delivered a sturdy efficiency within the September quarter (Q2FY25), surpassing their private-sector friends. This was pushed by a drop in provisions and a notable enchancment in asset high quality. Moreover, a surge in non-interest earnings and Treasury earnings helped state-run lenders report a powerful present in Q2.

The mixed web revenue of 12 Indian PSBs rose by 35.39 per cent to ₹45,550 crore in Q2 FY25, in line with information compiled by LiveMint. The nation’s largest lender, State Financial institution of India (SBI), accounted for about 40.24 per cent of the web revenue of PSBs in Q2 FY25.

In the identical quarter final yr, PSBs reported a mixed web revenue of ₹33,643 crore. Sequentially, web revenue additionally elevated, with PSBs recording ₹39,974 crore within the first quarter of the present fiscal yr.

PNB leads revenue progress amongst PSBs

When it comes to web revenue progress, Punjab Nationwide Financial institution led the pack with a powerful year-on-year (YoY) progress of 145 per cent, surging from ₹1,756 crore in September 2023 to ₹4,306 crore in September 2024. Asset high quality additionally improved, with PNB’s gross NPAs falling to 4.48 per cent from 6.96 per cent a yr in the past, whereas web NPAs dropped to 0.46 per cent from 1.47 per cent.

Financial institution of India adopted with robust YoY progress of 63 per cent, as its revenue rose from ₹1,458 crore to ₹2,373 crore. Central Financial institution of India recorded a 51 per cent enhance, with earnings rising from ₹605 crore to ₹913 crore on a YoY foundation. Its gross and web NPAs have come right down to 4.59 per cent and 0.69 per cent, respectively.

UCO Financial institution reported a 50 per cent YoY leap in web revenue to ₹603 crore, alongside reductions in gross NPAs to three.18 per cent and web NPAs to 0.73 per cent. Financial institution of Maharashtra additionally confirmed stellar progress of 44 per cent YoY, growing from ₹920 crore to ₹1,327 crore.

Moreover, Union Financial institution of India reported a 34 per cent rise in web revenue, rising from ₹3,511 crore to ₹4,720 crore YoY. Indian Financial institution additionally noticed a 36 per cent enhance in revenue, reaching ₹2,707 crore, whereas lowering gross NPAs to three.48 per cent and web NPAs to 0.27 per cent.

Financial institution of Baroda recorded a 23 per cent YoY rise in revenue to ₹5,238 crore. Its gross NPAs improved to 2.5 per cent and web NPAs to 0.6 per cent.

Deposit struggle continues

Lately, banks have noticed a shift in traders’ focus towards investing in capital markets reasonably than saving in conventional mounted deposits. This has led to a “deposit struggle” throughout the banking system, which is ongoing, inflicting lenders to trim each deposit and mortgage progress targets.

Moreover, a number of small finance banks (SFBs) have raised their mounted deposit charges to over 8 per cent for two-year phrases. These increased charges put SFBs in direct competitors with bigger banks, as their deposit charges are actually 100–120 foundation factors increased than a yr in the past, highlighting the growing challenges banks face in attracting deposits.

Amid this backdrop, Financial institution of Baroda has adjusted its advances progress goal for the second quarter to 11-13 per cent, down from the earlier goal of 12-14 per cent, and its deposit progress goal to 11th of September per cent, in comparison with the sooner steering of 10-12 per cent.

In its latest report, home brokerage agency B&Okay Securities highlighted that deposit progress within the nation is predicted to decelerate to 11.2 per cent YoY in fiscal yr 2025. In line with the report, deposit progress on the finish of fiscal yr 2024 was recorded at 13.8 per cent YoY.

Non-public sector banks publish average revenue progress

Non-public sector banks displayed extra average revenue progress in Q2 FY25. Axis Financial institution recorded the very best revenue enhance amongst personal gamers, with an 18 per cent rise, adopted by ICICI Financial institution with a 14.5 per cent enhance.

HDFC Financial institution and Kotak Mahindra Financial institution confirmed modest revenue progress of 5.3 per cent and 4.8 per cent, respectively, whereas IndusInd Financial institution skilled a notable decline in revenue by 39.6 per cent.

General, personal sector lenders reported an 8.21 per cent progress in web revenue throughout Q2. On the asset high quality entrance, HDFC Financial institution, Kotak Mahindra Financial institution, IndusInd Financial institution, RBL Financial institution, and IDFC First Financial institution noticed gross dangerous loans as a share of complete property enhance by 2 to 19 foundation factors through the quarter.

Most of those personal banks have raised provisions, setting apart extra funds to cowl potential defaults, notably in anticipation of rising pressures in unsecured lending segments.

Lenders with the next share of unsecured loans are experiencing larger stress in comparison with these targeted on secured lending. Segments equivalent to private loans and bank cards, particularly, are going through heightened default dangers.

The RBI has been highlighting the numerous progress in unsecured lending over the previous yr, together with potential challenges associated to asset high quality. In November 2023, the central financial institution elevated the chance weights on particular segments of unsecured loans, equivalent to private loans and bank cards, by 25 share factors, bringing them to 125 per cent.

Moreover, it raised the chance weights on financial institution credit score to NBFCs. Following the COVID-19 pandemic, banks considerably elevated their lending to NBFCs, primarily pushed by the expansion in retail and unsecured loans.

However, personal banks maintained a stronger home Present Account Financial savings Account (CASA) ratio through the September quarter. Kotak Mahindra Financial institution led with a CASA ratio of 43.6 per cent, intently adopted by ICICI Financial institution at 40.6 per cent.