Mumbai: Bolstered by a four-fold jump in
treasury gains, India`s top 12 banks clocked a 55.2 percent
jump in net profits in the quarter ended June 30, but high
cost of funds hit their net interest margins, rating agency
CARE said in a report on Monday.
Aggregate net profits of the top banks zoomed to
Rs 8,175.6-crore in the quarter as compared to Rs Rs
5,266.7-crore in the year-ago period, with treasury gains
accounting for 11.6 percent of the operating income, the
However, higher cost of funds and lower lending rates
brought down the NIMs (net interest margin) of the top 12
banks in the April-June quarter due to subdued growth in the
net interest income (NII), it said.
Given that a substantial portion of deposits were
mobilised in Q2 and Q3 of FY 09, the interest outgo on these
deposits remained high during the quarter, CARE said.
In the face of slowdown, banks` provisions for
non-performing assets rose by 3.5 times in the quarter over
the same period in the previous year, the report said.
However, the banks could report lower provisioning during
the quarter due to change in secondary market conditions, it
"Due to improvement in secondary market conditions,
depreciation on investments was written back during the
quarter, helping banks to lower total provisioning cost," it
The year-on-year credit growth of top banks fell to
15.1 percent for the month ended June, 2009, the lowest level
since March, 2004, the report said.
Also, the top 12 lenders restructured loans worth Rs
32,530 scrore in Q1 FY10, taking the total restructured assets
to nearly Rs 73,000 crore, with public-sector banks takinig
lead in the process, the report said.
However, the proportion of total restructured advances
to total loans remained within a comfortable level of 4 per
cent, the report said.
The top 12 lenders--State Bank of India, Bank of
Baroda, Bank of India, Canara Bank, Axis Bank, HDFC Bank,
ICICI Bank, IDBI Bank, Central Bank of India, Punjab National
Bank, Union Bank of India and Syndicate Bank-- covers 61 per
cent of the credits in India.