Financial Daily from THE HINDU group of publications
Tuesday, Jul 30, 2002
Financial Daily from THE HINDU group of publications Tuesday, Jul 30, 2002 |
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Money & Banking
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Public Sector Banks Columns - Appraisal Q1 profit numbers muted for PSBs N.S. Vageesh
CHENNAI, July 29 THE first quarter results of a handful of public sector banks reflect a return to reality after the heady days of May and June when most public sector banks reported a doubling of profits during the previous fiscal. Falling interest rates helped inflate the value of their securities portfolios, which they quickly cashed on. Treasury profits were the main contributor to the spectacular growth in bottom line last fiscal. Thirteen public sector banks have posted a 22 per cent growth in profits in the first quarter of the current fiscal. That's a big drop from the growth rate posted last year. What is striking is that the growth in profits of these 13 banks has come on the back of a 7.5 per cent growth in interest income at Rs 9,921 crore and a 15.43 per cent growth in other income at Rs 1,491.31 crore. Banks clearly did not have the opportunity to rake in the moolah through sale of securities as they had done in the previous fiscal. The trend in profits is, however, only indicative. Traditionally banks make only ad hoc provisions in the first quarter — which is usually on the lower side when compared with the final figure at the end of the year. These provisions can pop up suddenly in the last quarter and distort the overall picture if a couple of accounts turn non-performing. So it may be misleading to annualise the first quarter numbers. The results must also be seen in the backdrop of trends in other parts of the economy. A recent survey of corporate results has indicated that there has been a 36 per cent rise in profits of about 675 companies. These provide a faint glimmer of hope of an economic recovery and some good news for banks.
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