"To support credit-off take, banks are expected to shore up their liability franchise by raising capital (
The banks are increasing their interest rates for deposits and plans for bonds issue. Further, profitability is also expected to support the capital base of the banks. Overall, the
All SCBs have maintained their Capital Adequacy Ratio (CAR) greater than the minimum required level for Q3FY23. The median CAR and Common Equity Tier 1 (CET-1) ratio of SCBs witnessed a rise in Q3FY23 over Q3FY22 and Q3FY21, the report notes.
According to CARE Ratings, the net profit of SCBs grew by 45 per cent year-on-year (y-o-y) to Rs 0.65 lakh crore in Q3FY23 driven by a higher pre-provisioning operating profit (PPOP) growth compared to a lower growth in provisions.
The net interest income growth and stability in non-interest income helped PPOP to grow by 28.5 per cent y-o-y to Rs 1.30 lakh crore in Q3Y23. Meanwhile, provisions rose by 9.1 per cent to Rs 0.38 lakh crore.
Public sector banks' net profit rose by 64.3 per cent y-o-y to Rs 0.29 lakh crore in Q3FY23, meanwhile private sector banks' grew by 32.2 per cent y-o-y to reach Rs 0.35 lakh crore in Q3FY23, the report added.
Return on Assets of SCBs improved by 28 bps y-o-y to 1.23 per cent. At present, banks are in a better position after navigating the Covid period and managing mounted NPAs.
Healthy credit growth, improvement in asset quality, and lower growth in provisions due to lower incremental slippages and reduction in restructuring books are expected to generate healthy net profit growth.
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