An analysis of the second quarter results of 23 banks show that both credit growth and deposit growth have declined. Bank credit grew by 2.1 per cent during April-Sept of 2017, lower compared with 3.4 per cent growth recorded in the comparable period last year. Deposits grew by only 2 per cent during April-Sept of 2017 compared to 8.2 per cent of growth witnessed in the corresponding period last year.
CARE Ratings analysed 23 banks including 13 private and 10 public sector banks. Profitability too has taken a hit with net profit declining by close to 18 per cent for all the banks taken together. Profits have gone down as a result of fall in other income coupled with slower growth in interest income. However, the decline in profit is lower than the same period last year because of lower growth in provisioning.
After growing by a significant 105 per cent in the second quarter of FY17, growth in gross NPAs slowed down to 26.3 per cent in Q2 of FY18. This may be due to a cautious approach undertaken by banks while lending to the customers owing to increasing stressed assets in the past few years.
NPA ratio increased to 8.7 per cent in Q2 of FY18 from 7.6 per cent in Q2 of FY17.
Things seems to be turning around for private banks, however for public sector banks it continues to be dark. Public sector banks posted a loss but private banks together posted a profit of Rs 10,172 crore.
While provisioning grew by 45.7 per cent for public sector banks, meaning that PSU banks had to set aside more capital, it declined by 15.6 per cent for private banks. The report says that public sector banks have also lost share in the total credit disbursed in the industry in last three years.
Even as gross NPAs of both public and private sector banks have gone up, the NPA ratio of public sector banks is much higher than that of their private peers. For PSU banks, it stood at 13.4 per cent compared to 4.3 per cent at private banks.
Among government owned banks, IDBI Bank has the highest NPA ratio at 24.9 per cent, followed by UCO bank (19.7 per cent), Central Bank of India (17.2 per cent), Punjab National Bank and Andhra Bank at around 13 per cent.
Banks with lowest NPA ratio in the range of 1 per cent includes IndusInd Bank Ltd., HDFC Bank Ltd., and RBL Bank Ltd.
