The financial services sector, including banks, continues to prosper even as the rest of corporate India faces earnings headwinds from higher commodity prices and rising inflation.
The share of banks, financial services, insurance, and stock broking (or BFSI) in overall corporate profits reached a record high of 41.5 per cent during the July-September 2022 period (Q2 of FY23), nearly double its historical 10year average share of 21.8 per cent. However, this is excluding the June quarter of 2020, when the share of BFSI jumped to nearly 60 per cent because many other sectors saw a sharp fall in profits or reported loss following lockdowns amid the outbreak of Covid.
In comparison, the BFSI segment accounted for 30 per cent of India Inc's combined earnings in the year-ago period and 32.7 per cent in the first quarter this financial year.
The earnings boom in the BFSI segment has come at a time when non-financial companies have seen their profits taking a hit from higher interest rates and commodity prices.
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