New Delhi: The government is unlikely to announce capital infusion for public sector banks (PSBs) in the upcoming budget because their financial health has improved significantly and they are on track to earn a combined profit of rupees one lakh crore, said a news report by Mint. For the first quarter of the current fiscal year, all 12 public sector banks earned a cumulative profit of about Rs 15,306 crore, registering a 9.2 percent growth annually, while in the second quarter, the PSBs continued the same magnitude and posted a 50 percent y-o-y jump in combined net profit at Rs 25,685 crore, it reported.
SBI reported its highest-ever profit of Rs 13,265 cr
During the second quarter, SBI reported its highest-ever profit of Rs 13,265 crore. On a y-o-y basis, this was 74 percent higher than the same quarter a year ago. In the first half of FY23, the cumulative net profit of all PSBs increased by 32 percent to Rs 40,991 crore. The combined profit more than doubled to Rs 66,539 crore in 2021–22 despite COVID-19 pressure.
Following the RBI’s rapid rate hikes, banks raised lending rates quickly but went slow on deposit rates, resulting in higher net interest margins in the second quarter. In addition, lower provisions have also contributed to the bank’s profitability, reported Mint.
Bank’s capital adequacy ratio is much above the regulatory requirement & varies between 14 and 20%
“Bank’s capital adequacy ratio is much above the regulatory requirement and varies between 14 and 20 percent. To augment their resources, banks are raising growth funds from the market and also by selling their non-core assets,” sources said.
The government last provided capital support to banks in 2021–2022. It had earmarked Rs 20,000 crore for the recapitalisation of PSBs through supplementary demands for grants.