New Delhi [India], June 4 : The government-owned banks have reported higher profits than their private sector counterparts in the fourth quarter of the financial year 2025, according to a recent report by CareEdge Ratings.
The report shows that Scheduled Commercial Banks (SCBs) collectively witnessed a moderate improvement in their financial performance in Q4FY25.
The report said "Net profit for SCBs increased by 4.3 per cent year-on-year to Rs 0.93 lakh crore in the quarter, driven by business expansion.... Conversely, Private Sector Banks (PVBs) experienced a decline of 4.7 per cent, reaching Rs 0.42 lakh crore in Q4FY25".
Their Net Interest Income (NII), the difference between interest earned and interest paid, rose 3.6 per cent year-on-year (YoY) to reach Rs 2.09 lakh crore, supported by steady loan growth. However, this was partially offset by rising deposit costs, which impacted margins.
The Net Interest Margin (NIM) for SCBs declined 21 basis points (bps) YoY to 2.99 per cent, mainly due to slower growth in high-yield loan segments, increased deposit rates, and slower growth in low-cost CASA deposits.
Despite pressure on margins, net profit for SCBs increased by 4.3 per cent YoY to Rs 0.93 lakh crore in the quarter. This improvement came on the back of business expansion, lower provisioning requirements, and higher income from other sources.
Among SCBs, Public Sector Banks (PSBs) showed impressive growth, with their net profit rising 13.1 per cent YoY to Rs 0.51 lakh crore. This surge in profit is attributed to a low base in the previous year, better asset quality, gains from treasury operations, and controlled operating expenses.
In contrast, Private Sector Banks (PVBs) saw a 4.7 per cent decline in net profit, bringing their total to Rs 0.42 lakh crore in Q4FY25.
The fall was largely due to losses posted by one major private bank, which faced accounting mismatches, difficulties in the microfinance segment, and higher provisioning needs.
However, if this particular bank's performance is excluded, the overall profit of PVBs would have actually grown 5.4 per cent YoY, reaching Rs 0.46 lakh crore, showing relatively healthy growth.
The banking sector's asset quality also improved in Q4. The Net Non-Performing Asset (NNPA) ratio of SCBs dropped to an all-time low of 0.5 per cent, compared to 0.6 per cent a year ago
Overall, the report suggested that public sector banks have emerged stronger in the latest quarter, supported by improvements in profitability and asset quality, while private banks faced pressure due to isolated issues in select institutions.
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