Commercial banks in India reported a sixth consecutive year of rise in their net profits in 2023-24 while bad loans continued to fall, according to the Reserve Bank of India's (RBI's) annual publication "Trends and Progress of Banking in India", released on Thursday.
"Banks' profitability rose for the sixth consecutive year in 2023-24 and continued to rise in H1:2024-25 with the return on assets (RoA) at 1.4 per cent and return on equity (RoE) at 14.6 per cent," the report said.
At the same time banks borrowed at higher interest rates and increased their deposit rates to bridge the credit-deposit growth gap in FY24.
Consequently, growth in their interest expenditure outpaced that of their interest earnings, resulting in a deceleration in both operating and net profit growth. The interest expense to interest income ratio increased to 57.4 per cent during 2023-24 from 52.2 per cent in the previous year.
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