Public sector banks’ cumulative profit crosses Rs 1 lakh crore in FY 23

22 May 2023 , 02:38 PM

In the fiscal year that ended in March 2023, public sector banks' cumulative profit surpassed the Rs 1 lakh crore threshold, with State Bank of India (SBI), the industry leader, accounting for about half of the total earnings. 

 Public Sector Banks (PSBs) have made significant progress since posting a total net loss of Rs 85,390 crore in 2017–18; their profit reached Rs 1,04,649 crore in 2022–23.

The overall profit generated by these 12 PSBs increased by 57%.

The Bank of Maharashtra (BoM) had the biggest percentage increase in net profit, rising by 126% to Rs 2,602 crore. UCO came in second with a 100% increase to Rs 1,862 crore, and Bank of Baroda came in third with a 94% increase to Rs 14,110 crore.

However, SBI has recorded an annual profit of Rs 50,232 crore in absolute terms for 2022–23, an increase of 59% over the previous fiscal year.

Other PSBs have recorded impressive annual gains in their profit after tax, with the exception of the Punjab National Bank (PNB).

PNB's annual net profit decreased by 27% in its Delhi headquarters, from Rs 3,457 crore in 2021–22 to Rs 2,507 crore in the year that ended in March 2023.

Bank of Baroda (Rs 14,110 crore) and Canara Bank (Rs 10,604 crore) are PSBs that declared yearly profits of over Rs 10,000 crore.

Other lenders like Punjab and Sind Bank, Central Bank of India, Indian Overseas Bank, Bank of India, Indian Bank, and Union Bank of India all reported annual profit growths of 26% (Rs. 1,313 crore), 51% (Rs. 1,582 crore), 23% (Rs. 2,099 crore), 34% (Rs. 5,282 crore), and 61% (Rs. 8,433 crore).

In PSB, record losses were followed by record profits. The government's actions and wave of reforms headed by Prime Minister Narendra Modi, former Finance Minister Arun Jaitley, Financial Services Secretary Rajiv Kumar, and their successors are responsible for the doom-to-bloom tale of the public sector banking industry.

The 4R approach, which the government has fully implemented, stands for Recognising NPAs Transparently, Resolution and Recovery, Recapitalizing PSBs, and Financial Ecosystem Reforms.

As part of the policy, between the 2016–17 and 2020–21 fiscal years, the government invested an unprecedented Rs 3,10,997 crore in PSB recapitalization. The recapitalization initiative gave the PSBs the much-needed backing they required and shielded them from any potential default.

The government has implemented measures that address credit discipline, assure responsible lending, and enhance governance. In addition, technology was used, banks were merged, and bankers' general confidence was upheld.

The PSBs' cumulative profit climbed by more than 95% to Rs 34,483 crore in the most recent March quarter, which corresponds to the fourth quarter of 2022–2023 (fourth quarter). The same amount was Rs 17,666 crore in the same time frame last year.

According to analysts, the increased profitability of the banks is mostly due to increasing interest revenue and improvements in the management of non-performing assets, also known as bad loans.

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