homefinance NewsFinStreet | Banking stocks under pressure but third quarter was their best show in 8 years
FinStreet | Banking stocks under pressure but third quarter was their best show in 8 years
Based on the Q3FY23 report card, the banking sector in India has shown significant improvement in various performance metrics. The operating profits of the banking sector have grown by 29.6 percent YoY and 11.4 percent QoQ, with PSU banks showing better growth than private banks.
The banking stocks have been under pressure in the past few trading sessions with market watchers saying that a muted deposit growth might keep Nifty Bank under pressure in the near term. However, the performance story only in the quarter gone by shows a positive picture. The sector recorded it's best quarter in the past eight years riding on gains by the public sector players.
Here's how the banking sector performed:
Operating Profit
Banking sector saw robust growth in operating profits, up 29.6 percent YoY & 11.4 percent QoQ to Rs1.28 lakh crore. PSU Banks saw operating profit growth of 33.4 percent YoY while private banks saw operating profit growth of 25.6 percent YOY. The share of PSU banks, in the operating profits pie, has increased YOY & QOQ.
| Operating Profits (in Rs, crore) | Q3FY23 | Q3FY22 | Q3FY23 | YoY | QoQ |
| PSU Banks | 68,026 | 50,996 | 60,962 | 33.4% | 11.6% |
| Pvt Banks | 59,646 | 47,498 | 53,612 | 25.6% | 11.3% |
| Total | 1,27,672 | 98,494 | 1,14,574 | 29.6% | 11.4% |
Profit After Tax
The banking sector recorded its highest-ever quarterly profits at Rs 65,808 crore, up 45 percent YoY and 11.6 percent QoQ. PSU banks reported a positive profit after tax (PAT) for 11 quarters in a row. Profit after tax for the sector was aided by robust net interest margin expansion and lower credit cost.
| Banks (Rs cr) | Q3FY23 | Q3FY22 | Q3FY23 | YOY | QOQ |
| PAT | 65,808 | 45,377 | 58,979 | 45% | 11.6% |
| PSU Banks (Rs cr) | 30,001.67 | 18,307.71 | 26,613.08 | 63.9% | 12.7% |
| Pvt Banks (Rs cr) | 35,807 | 27,069 | 32,366 | 32.3% | 10.6% |
Asset quality
Banking sector's asset quality also showed improvement, with the PSU bank's annualised slippage ratio at a mere one percent. The slippages of the banking sector were at Rs 51,658 crore, down 3.4 percent YoY and 4 percent QoQ.
| Slippages, Rs cr | Q3FY23 | Q3FY22 | Q3FY23 | YOY | QOQ |
| PSU Banks | 21,447 | 27,071 | 26,556 | 20.8% | 19.2% |
| Pvt Banks | 30,211 | 26,427 | 27,231 | 14.3% | 10.9% |
| Total | 51,658 | 53,498 | 53,787 | 3.4% | 4% |
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Restructured book
The total restructured book of the banking sector, excluding IDBI Bank, is now below Rs two lakh crore or less than 1.5 percent of loans. Private players saw a rise in slippages, while their restructured book declined faster than their PSU counterparts. Bandhan Bank became restructured book free in the third quarter.
| Restructured Book, Rs cr | Q3FY23 | Q3FY22 | Q2FY23 | YOY | QOQ |
| PSU Banks | 1,44,548 | 1,84,910 | 1,55,069 | 21.8% | 6.8% |
| Private Banks | 48,830 | 83,813 | 55,860 | 41.7% | 12.6% |
First Published: Feb 28, 2023 1:12 PM IST
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