Public sector banks outperformed private banks by a wide margin in net profits during Q2 FY25: SBI

The net profit of public sector banks has surpassed that of private sector banks by a wide margin on a Year-on-Year basis, highlighted a report by the State Bank of

The net profit of public sector banks has surpassed that of private sector banks by a wide margin on a Year-on-Year basis, highlighted a report by the State Bank of India.

The report’s data shows that in the second quarter of FY25, India’s public sector banks (PSBs) outperformed their private counterparts in terms of net profit growth, showing strong resilience and adaptability in a competitive banking environment.

The report said, “In terms of profitability, PSBs have trumped the PVBs by a wide margin on YoY basis”.
It also highlighted that PSBs collectively achieved a remarkable 39.3 per cent year-over-year (YoY) increase in net profit, significantly outpacing the 7.1 per cent profit growth achieved by private sector banks.

Punjab National Bank (PNB) led the charge among PSBs, reporting an impressive 145 per cent YoY increase in net profit. A 2.5 times surge in PNB’s Q2 bottom line was due to a sharp fall in new provisions and contingencies.

Other public banks, including the Central Bank of India, UCO Bank, and Bank of Maharashtra, also posted notable profit gains, with respective increases of 50.9 per cent, 50 per cent, and 44.2 per cent respectively.
These gains highlight the strides made by PSBs in improving profitability through enhanced operational efficiency and portfolio management.

In contrast, private sector banks displayed more moderate profit growth. Axis Bank recorded the highest profit increase among private players at 18 per cent, followed by ICICI Bank with a 14.5 per cent rise.
HDFC Bank and Kotak Mahindra Bank showed modest profit growth of 5.3 per cent and 4.8 per cent respectively, while IndusInd Bank saw a notable decline in profit by 39.6 per cent.

While PSBs outperformed in profit growth, private banks maintained a stronger domestic Current Account Savings Account (CASA) ratio. Kotak Mahindra Bank led with a CASA ratio of 43.6 per cent, closely followed by ICICI Bank at 40.6 per cent.

Among PSBs, Bank of Maharashtra recorded the highest CASA ratio of 49.3 per cent, indicating a robust deposit base.

Deposit and advance growth also varied, with private sector banks achieving a 14.9 per cent increase in advances, compared to 9.8 per cent among PSBs.

However, several sector public banks such as Indian Overseas Bank and Bank of Maharashtra displayed strong advances growth of 13.8 and 15.5 per cent respectively, showcasing the expanding credit portfolio of PSBs in response to rising demand.

The Q2 FY25 results highlight a shift in the banking sector as PSBs leverage reforms and government support to enhance profitability and customer reach, while private banks focus on sustaining growth through high CASA ratios and advances.

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