MUMBAI: Banks have raked in as much as Rs 2.7 lakh crore in net income in the first nine months of 2024. Going by all indications, public sector lenders are set to overtake their private sector peers in the profitability sweepstake this year.
Of the system wide profit of Rs 2.7 lakh crore, Rs 1 lakh crore came from the January-March quarter of the year and the rest in the next two quarters. Of this, public sector banks raked in close to Rs 46,000 crore in the March quarter and Rs 85,520 crore in second and third quarters. Private sector banks have made almost Rs 44,000 crore in the March quarter and R82,172 crore in the next two quarters by the top seven (HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Federal Bank and Yes Bank) of them alone.
As against this, in the entire fiscal 2024, they had earned Rs 3.12 lakh crore—Rs 1.66 lakh crore by private sector banks and Rs 1.46 lakh crore by their public sector peers. While till last year private bankers topped the profitability chart, going by all indications, the trend is set to reverse this fiscal—thanks to the continuing stellar show by the nation’s largest lender State Bank of India this fiscal.
Of the system-wide profit of Rs 1.31 lakh crore in the first nine months of the year by the state-run banks, SBI alone booked R56,064 crore in the first three quarters of the year. In the entire fiscal 2024, its net income was Rs 61,076 crore.
During this reporting period, the second largest lender HDFC Bank earned Rs 49,507 crore and the third largest ICICI Bank raked in Rs 33,512 crore, which means just three lenders contributed almost 52% or Rs 1.4 lakh crore of the industry profit. This is because, as against the past, this year private banks are facing a lot of headwinds on asset side, especially from their unsecured books led by credit cards and personal loans. Most of the pain in the unsecured books is with the private sector lenders and not the public sector banks. The rising delinquency in the credit card space—which has risen by 110 bps to 7.6% till the June quarter of this fiscal and the same is set to spike considerably.
On the back of record write-offs through the insolvency route—as much as R12 lakh crore in the past one decade, of which as much as Rs 9.9 lakh crore in the past five years alone—banks have been able to clean their books. But the irony is that average recovery from these write-offs or bad loan sales through the IBC route, has only been around 24% so far, which means banks lost more than three quarters of the public money to defaulting corporate borrowers. Of the total, banks write off Rs 1.7 lakh crore in FY24 (consolidated data are not available yet for the current year), Rs 2.8 lakh crore in FY23, Rs 1.75 lakh crore in FY22, Rs 2.02 lakh crore in FY21 and Rs 2.34 lakh crore in FY20.