Public sector banks posted 139.6 per cent growth in net profit in Q1FY22, on a YoY basis, gaining from a rise in other income (34.8 per cent) and a dip in provisions (10.7 per cent). However, the net interest income (NII) showed subdued growth of 5.4 per cent in a quarter marked by low credit offtake due to the impact of Covid-19 on the Indian economy.
The asset quality of state-owned banks remained stable with a fall in gross non-performing assets (NPAs) on both a y-o-y and sequentially. Net NPAs bad loans after provisions fell annually (down 5.1 per cent) but inched up sequentially by 1.6 per cent over March 2021.
Anil Gupta, vice president and head of financial sector ratings at ICRA, said the performance of state-owned banks in Q1FY22 is on expected lines, and they will continue to be profitable in FY22. The headline number for asset quality (NPAs) looks good.
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“At the same time, we have to keep in mind the fact that in the case of PSBs, the restructuring has been substantial in the quarter (retail and SMEs),” he said. The behavior of restructured books will have to be monitored closely since this is the first retail loan has been recast on a large scale.