Customer takes centre stage in this round of the battle

While the banking sector has improved its risk-management and underwriting skills to prevent bad loans, it needs to be innovative to mobilise deposits and keep the cost of money low

- TAMAL BANDYOPADHYAY

As the July-September quarter of 2024-25 (FY25) comes to an end amid intense debate over whether the best is behind India's banking industry, let's look closely at some critical data.

The industry's year-on-year (Y-o-Y) operating profit—or the operating profit of the September quarter of the current financial year (FY25) over the September quarter of the previous finance year (FY24)—is up by a handsome 20.27 per cent, from ₹1.27 trillion to ₹1.52 trillion (figures are rounded off).

Besides all universal banks, this includes the earnings of nine small finance banks (SFBs).

The State Bank of India (SBI) leads the brigade with a 51 per cent increase in its operating profit, from ₹19,417 crore to ₹29,294 crore.

Among others, IDBI Bank Ltd has posted 45.12 per cent growth in operating profit and Central Bank of India, 41.46 per cent.

Only two universal banks have shown a drop in Y-o-Y operating profit—IndusInd Bank Ltd and Karnataka Bank Ltd. On a quarter-on-quarter (Q-o-Q) basis, or the September quarter over the June quarter of FY25, besides these two, at least five other banks have recorded a decline.

After making provisions, the industry's net profit is up 18.61 per cent (₹91,792 crore).

In absolute terms, SBI tops the list with a ₹18,331 crore net profit, followed by HDFC Bank Ltd (₹16,821 crore).

SBI's net profit is up 27.92 per cent and that of HDFC Bank, 5.29 per cent.

Three private banks—IndusInd Bank, IDFC First Bank Ltd, and RBL Bank Ltd—have recorded a dip in their net profits.

Overall, the provisions made by them are up 26.68 per cent, but eight private banks and seven public sector banks have cut down on their provisions.

Net interest income (NII) is the main driver of the banks' profit.

This is up 8.99 per cent Y-o-Y, though only 1.05 per cent Q-o-Q.

Two banks have posted a drop in their NII Y-o-Y, and seven Q-o-Q.