PSU Banks Q1 results update: PNB, SBI lead as lenders on a strong footing, double the bottomline
3 min read 09 Aug 2023, 01:44 PM ISTThe overall net profit of 12 PSU banks in the first quarter of FY24 surged to ₹34,418 crore as compared to a net profit of ₹15,307 crore recorded in the April-June quarter of FY23.
PremiumThe Indian public sector banks (PSBs) have delivered robust performance for the quarter ending June 2023, with many state-run lenders’ net profit growing more than double as compared to the same period last year.
The overall net profit of 12 PSU banks in the first quarter of FY24 surged to ₹34,418 crore as compared to a net profit of ₹15,307 crore recorded in the April-June quarter of FY23.
The net interest margin of PSU banks during Q1FY24 grew at an average of more than 3%, lifted by the high interest rate regime.
“PSU banks are witnessing late benefits of credit growth and improving asset quality. The balance sheets of state-run lenders have improved and this improvement is expected to continue going for the next 2-3 quarters," said Vinod Nair, Head of Research at Geojit Financial Services.
During the first quarter of FY24, four state-run lenders recorded a profit of more than 100%.
| PSU Banks | Q1FY24 Net Profit (Rs. Cr) | YoY Growth |
|---|---|---|
| Punjab National Bank | 1,255.41 | 307.02% |
| State Bank of India | 16,884.29 | 178.25% |
| Bank of India | 1,551.07 | 176.24% |
| Union Bank of India | 3,236.44 | 107.67% |
| Bank of Maharashtra | 882.08 | 95.19% |
| Bank of Baroda | 4,070.07 | 87.72% |
| UCO Bank | 223.48 | 80.79% |
| Central Bank of India | 418.43 | 78.22% |
| Canara Bank | 3,534.84 | 74.82% |
| Indian Bank | 1,709.83 | 40.83% |
| Indian Overseas Bank | 500.35 | 27.58% |
| Punjab & Sindh Bank | 152.67 | -25.42% |
| Total | 34,417.96 |
The highest profit growth was registered by Punjab National Bank (PNB). The lender reported a net profit of ₹1,255.41 crore in Q1FY24 as against ₹308.44 crore in the same quarter of the previous year, witnessing a growth of 307%.
PNB’s net interest margin also improved to 3.08% from 2.79%, with a net interest income (NII) growth of 26%, YoY.
It was followed by the largest lender in the country, State Bank of India (SBI), which posted a net profit growth of 178.25% at ₹16,884.29 crore. SBI’s NIMs increased to 3.47%, while its NII also rose 24.71% on-year.
This was SBI's highest-ever quarterly profit and is about 50% of the total profit earned by PSBs.
Read here: SBI Q1 results 2023: Net profit jumps 178% to ₹16,884 crore, NII rises 24.71%
In FY23, cumulative profit of all PSU banks was ₹1.05 lakh crore and SBI contributed about 50% of it.
Bank of India’s bottomline during the quarter jumped 176.24% YoY to ₹1,551.07 crore. Its NII rose 45.22% YoY.
Next in line was the Union Bank of India that reported a net profit growth of 107.67% to ₹3,326.44 crore from ₹1,558.46 crore, YoY. NII increased 16.59% to ₹8,839.70 crore, while NIM grew to 3.13%.
Five state-owned lenders reported bottomline growth between 50% and 100%. These included Bank of Maharashtra with 95.19% net profit growth at ₹882.08 crore; Bank of Baroda delivering PAT growth of 87.72% to ₹4,070.07 crore and UCO Bank registering a net profit rise of 80.79% to ₹223.48 crore.
Central Bank of India’s net profit during the quarter rose 78.22%, while that of Canara Bank increased 74.82% YoY.
Meanwhile, Punjab & Sind Bank was the only state-run lender to see a drop in its net profit during the quarter. Its bottomline declined 25.42% to ₹152.67 crore at the end of June 2023.
Analysts believe the strong performance of PSU bank may continue for a couple of quarters but then NIMs are likely to stabilise.
Among stocks, Nair said he had coverage on SBI and Bank of Baroda and is positive on the stocks given their fair valuations.
The growth in state-run lenders was also reflected in their stock prices. The Nifty PSU Bank index has gained 5% this year so far.
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