Private banks surpass PSBs in FY24 net profit growth
Private banks in India have outperformed public sector banks (PSBs) by reporting a higher net profit growth in fiscal year (FY) 2024, as per a Moneycontrol analysis. The banking sector's cumulative net profit crossed the ₹3 lakh crore mark for the first time ever in FY24. Prime Minister Narendra Modi acknowledged this achievement, stating, "In a remarkable turnaround in the last 10 years, India's banking sector net profit crosses ₹3 lakh crore for the first time ever."
Private banks lead in absolute profit terms
Year-on-year (YoY) data revealed a 41% surge in private banks' profit, compared to a 35% increase for PSBs. In absolute terms, private sector banks reported larger net profits than PSBs in FY24. Specifically, 26 private sector banks collectively clocked a net profit of ₹1.78 lakh crore, while the combined net profit of the 12 PSBs stood at ₹1.41 lakh crore.
HDFC and SBI top profit charts
HDFC Bank emerged as the top earner among private sector banks with a net profit of ₹60,812 crore in FY24. On the other hand, the State Bank of India (SBI), the country's largest bank, led among PSBs with a net profit of ₹61,076 crore. These figures underscore the robust performance of both sectors in the fiscal year under review.
High credit growth fuels profit rise
The rise in profits for both private and public sector banks is attributed to high credit growth, which led to a rise in net interest income. Sachin Sachdeva, Vice President of Financial Sector Ratings at ICRA stated, "Banks maintained their healthy performance trajectory with healthy credit growth. It led to an increase in net interest income and consequently, in operating profits." He further noted that steady asset quality indicators resulted in benign credit costs for the sector.
Not all banks witness profit increase
Despite the overall profit growth, not all banks reported an increase in their net profits on a YoY basis. UCO Bank's net profit dipped to ₹1,653 crore in FY24, from ₹1,862 crore in FY23. Similarly, Punjab & Sind Bank also experienced a decline with its net profit falling to ₹595 crore, from ₹1,313 crore over the same period.
