Page 6 - Banking Finance March 2023

BANK UPDATE

loans, which contracted by 38 basis Bankers likely to get cover metric NIM rose to 3.28%, according to
points sequentially to 3.14 per cent. an analysis by Care Rating agencies.
from Lokpal Act
Its net NPAs - or bad loans - narrowed
India is eyeing a significant revamp of Bank credit grows at
to 0.77 per cent from 0.80 per cent in
the banking laws that includes
the quarter ended September 2022. 16.3%
ringfencing bankers from the Lokpal
Act, stock options for state-owned Bank credit grew at 16.3 per cent year-
PSB's profit jumps 66% on banks' employees, and review of the on-year (YoY) in the fortnight ended
entire scheme of board constitution January 27 to Rs 133.41 trillion, latest
healthy interest margins
including composition and selection data by the Reserve Bank of India (RBI)
Eleven public-sector banks (PSBs) re-
methodology. showed, moderating marginally from
ported an average of 65.7 per cent
the growth witnessed till last fortnight
"We are examining all these aspects.
year-on-year (YoY) growth in net profit
(16.5 per cent).
In some cases, discussions with stake-
at Rs 28,620 crore in the third quarter
holders are at an advanced stage," a In the fortnight under consideration,
ended December 2022 (Q3FY23).
government official aware of the de- credit growth increased by 0.5 per
Growth came primarily on the back of
liberations told. cent or Rs 64,684 crore. It had mod-
a steady rise in net interest income
erated to 14.9 per cent YoY in the fort-
(NII). Finance minister Nirmala Sitharaman
night ended December 30 due to base
in her FY 24 budget speech proposed
Sequentially, the state-owned lenders
amendments to the Banking Regula- effect, but picked up subsequently as
posted a 13.6 per cent rise in net profit
tion Act, the Banking Companies Act, the effect eased out.
over the Rs. 25,183 crore in July-Sep-
and the Reserve Bank of India Act to Meanwhile, deposit growth of the
tember 2022 (Q2FY23).
improve bank governance and en- banking system came in at 10.5 per
Almost 50 per cent of PSB net profit in hance investors' protection. cent YoY for the fortnight ended Janu-
Q3FY23 came from State Bank of In-
The final amendments to the various ary 27. In the previous fortnight ended
dia, the largest lender in India, the
legislation including Banking Regula- January 13, deposit accretion grew at
data compiled by the research Bureau
tions Act may be done after getting 10.6 per cent YoY.
for the 11 banks showed.
the sectoral regulator, the Reserve
For the fortnight, deposit accretion
SBI posted the highest quarterly profit Bank of India, on board, said the offi-
saw marginal increase of 0.2 per cent
of Rs. 14,205 crore. Except Chennai- cial quoted above.
or Rs 44,131 crore. The credit-deposit
based Indian Overseas Bank, all PSBs
The changes in the Banking Regula- growth gap has now contracted to 580
have announced their results.
tions Act and Banking Companies Act basis points (bps) from over 800 bps
The State-owned banks posted a may protect bankers from the Lokpal, earlier but still remains quite high.
growth rate of 24.6 per cent YoY in NIL and going forward, the Lokpal may not
Banks have increasingly hiked deposit
to Rs. 94,409 crore in Q3FY23. Sequen- directly refer the vigilance cases
interest rates over the past few
tially, it rose 904 per cent from Rs. against bank employees to investigat-
months to mobilise funds for the high
86,314 crore in the second quarter. ing agencies like the Central Bureau of
credit growth in the economy as liquid-
Investigation, or CBI.
The rise in loan volumes, the benefit of ity in the system has moderated.
repricing loans, and increase in lending "The difference has narrowed, but
Banks' net interest income
rates amid a hardening interest rate
there is still a difference. It is really up
cycle also contributed to healthy NIL, soars 26% to the banks to mobilise deposits and
bankers said. Net interest income (NIM) of banks make up the gap. They are doing so
The net interest margin (NIM), an in- grew by a record 25.5% to Rs 1.8 lakh through certificate of deposits and re-
dicator of profitability, has risen to 3.55 crore in the December quarter, driven ducing non-SLR investments but they
per cent (FY17-22 average: 3.1 per by a healthy credit offtake and higher need to mobilise deposits on their own
cent). This is set to change and as yield on advances. The quarter saw to meet the gap," Michael D Patra,
banks increase deposit rates, said Fitch banks booking higher yields on advances deputy governor of RBI, had said in the
Ratings. as the system-wide core profitability post-policy press conference.
6 | 2023 | MARCH | BANKING FINANCE