The banking sector in India has recorded a net profit exceeding Rs 3 lakh crore for the first time in FY24. Listed public and private sector banks saw a significant 39% increase in their net profit, soaring to Rs 3.1 lakh crore from Rs 2.2 lakh crore in FY23.
Public sector banks reported a historic net profit of Rs 1.4 lakh crore, marking a 34% rise from the previous year. Meanwhile, private sector banks outpaced their public counterparts with a 42% increase, reaching nearly Rs 1.7 lakh crore compared to Rs 1.2 lakh crore in FY23. This growth has further widened the earnings gap between the two sectors.
To contextualize, the Rs 3 lakh crore net profit is equivalent to the combined quarterly profits of all listed companies over the first three quarters of the fiscal year. This figure also surpasses the total annual profits of the IT services sector, traditionally the most profitable group, which reported a net profit of nearly Rs 1.1 lakh crore for FY24.
The resurgence in profitability for public sector banks follows extensive balance sheet clean-ups and enhanced earnings over the past three years, resulting in their net profit more than quadrupling during this period. Their FY24 profits would have been even higher if not for a one-time pension provision that several banks had to accommodate. However, the actual pension provisions were lower than anticipated, leading to a positive impact on their share prices. Additionally, some banks, like Bank of Baroda, faced setbacks due to provisions related to their exposure to Go Air, despite these loans being collateralized.
On a broader scale, Reliance Industries remains the most profitable Indian company on a consolidated basis, with an annual profit of Rs 79,020 crore. On a standalone basis, its profit was stable at Rs 42,042 crore in FY24. Among the top 10 listed companies, TCS recorded a net profit of Rs 43,559 crore, followed by Indian Oil (Rs 39,618 crore), ONGC (Rs 38,828 crore), and Infosys (Rs 27,234 crore).
