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SBT among top banks in terms of profitability

KOCHI: The State Bank of Travancore ranks fourth in the overall profitability of banks in the fiscal 2008-09, according to a study conducted by the Associated Chambers of Commerce and Industry.

The Kerala based non-banking financial company Manappuram General Finance and Leasing Limited is fifth in profitability among the NBFCs considered for the study. The overall profitability of NBFCs stood higher at 18.90 per cent as compared to those of scheduled commercial banks, whose average profitability has been put at 10.08 per cent.

This is despite the world-wide financial crisis and slowdown in key sectors of the Indian economy.

In its study titled ‘Indian Banks vs. NBFCs: Profitability Analysis’, Assocham pointed out that as financial markets faced heat of the global crisis in 2008-09, most of the NBFCs faced problems in fund raising.

Yet, their profitability was much higher as compared to their competitors in scheduled commercial banks.

Among the seven NBFCs, the highest profitability was reported by Infrastructure Development Finance Company Limited at 20.89 per cent, with total income at Rs.3,626.38 crore with net profit of Rs.757.73 crore in 2008-09.

It was followed by Housing Development Finance Corporation Limited (HDFC) and Power Finance Corporation Limited (PFCL) at 20.76 per cent and 20.67 per cent respectively.

The Reserve Bank of India cutting interest rates during 2008-09 has benefited the NBFCs since many of them finance their operations through market borrowings.

Among the 17 public sector banks, the highest profitability was reported by Indian Bank and Bank of India at 15.83 per cent and 15.50 per cent respectively. Out of the private sector banks, the top positions were occupied by Axis Bank and Yes Bank at 13.22 per cent and 12.46 per cent respectively.

The aggregate total income of the seven NBFCs grew by a whooping 57.3 per cent to Rs.28,208.72 crore in FY’09 from Rs.17,906.84 crore in the previous fiscal. However, the aggregate total income of 29 banks increased by 25.3 per cent from Rs.2,69,055 crore in 2007-08 to Rs.3,37,206.9 crore in 2008-09.

Year-on-year performance of the 29 banks regarding net profit to total income ratio at the aggregate level showed a marginal decline during FY’09 with 10.08 per cent as against FY’08 recorded at 10.52 per cent, while in the case of seven major NBFCs, the ratio declined during 2008-09 at 18.90 per cent as against 21.80 per cent in FY’08, according to the report.

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