Chennai, Nov 19
Though public sector banks (PSB) posted good profits during the first half of the current fiscal, they are losing business to the nimble and tech-savvy private and small finance banks.
The PSBs had lost market share to private banks and small finance banks during the first quarter of the current fiscal.
This is a unique quirk where both PSBs and the private banks have grown at roughly equal levels in absolute terms but the latter has gained a bigger share while PSBs lost theirs, CARE Ratings said in a report.
Similarly, Kotak Securities, in a report, said the private banks have increased their market share in current accounts and in the corporate segment while public banks have been losing share steadily in the household and government sectors.
On Nov 7, Finance Minister Nirmala Sitharaman said 12 PSBs registered handsome net profits during Q2FY23 and also H1FY23.
"The continuous efforts of our govt for reducing the NPAs & further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 cr in Q2FY23 & total Rs 40,991 cr in H1FY23, up by 50% & 31.6%, respectively (yoy)," Sitharaman tweeted.
Be that as it may, according to CARE Ratings, the outstanding bank deposits reached Rs 170 lakh crore as of June 30, 2022, registering a 9.5 per cent growth yoy.
The overall deposits of private banks rose in double digits whereas PSBs reported 6.9 per cent growth. The low cost current account, savings account (CASA) deposits saw double-digit growth and outpaced term deposits. CASA for private banks rose by 16.2 per cent whereas PSBs reported growth of 7.6 per cent due to higher interest rates and
client acquisition.
The private banks reported a strong credit growth of 18 per cent as compared to 9.6 per cent over a year ago, due to a focus on the retail credit market.
In absolute terms, private banks' credit expanded by Rs 7 lakh crore to reach Rs 46 lakh crore in Q1FY23 over a year ago, said CARE Ratings.
According to the credit rating agency, PSBs reported a healthy rise of 11.5 per cent as compared to 3.1 per cent over a year ago due to retail credit, inflation induced working capital requirement, MSMEs driven by emergency credit line guarantee scheme (ECLGS), and
low-interest rates.
In absolute terms, credit expanded by Rs 7.3 lakh crore to Rs 68.3 lakh crore in Q1FY23, CARE Ratings said.
In terms of credit growth performance, private banks outperformed by a wide margin of 650 bps in Q1FY23. It also gained the market share from PSBs by 120 bps yoy and reached 36.8 per cent due to higher retail credit growth and aggressive capturing of the credit market, CARE Ratings said.
In terms of deposits market share, private banks accounted for a 31.3 per cent share, gaining 115 bps yoy in Q1FY23, whereas PSBs held a 59.9 per cent share, losing 144 bps yoy.
CARE Ratings said private banks have been continuously gaining market share due to the aggressive acquisition of clients and offering better services.
In absolute terms, CASA rose by Rs 7.6 lakh crore in Q1FY23, reaching Rs 75.7 lakh crore as of June 30, 2022.
The private banks and PSBs expanded their CASA by Rs.3.4 lakh crore (growth rate 16.2 per cent yoy) and Rs.3.1 lakh crore (growth rate 7.6 per cent) respectively during the quarter.
