In the second quarter of the financial year 2025, public sector banks (PSBs) in India have outperformed their private sector counterparts in terms of net profit growth, according to a report by the State Bank of India. The data shows that PSBs collectively achieved a remarkable 39.3 per cent year-over-year increase in net profit, significantly surpassing the 7.1 per cent profit growth achieved by private sector banks. Punjab National Bank (PNB) led the charge among PSBs, reporting an impressive 145 per cent year-over-year increase in net profit. Other PSBs, such as Central Bank of India, UCO Bank, and Bank of Maharashtra, also posted notable profit gains, showcasing the strides made by PSBs in improving profitability through enhanced operational efficiency and portfolio management.
On the other hand, private sector banks displayed more moderate profit growth in the same period. Axis Bank recorded the highest profit increase among private players at 18 per cent, followed by ICICI Bank with a 14.5 per cent rise. HDFC Bank and Kotak Mahindra Bank showed modest profit growth of 5.3 per cent and 4.8 per cent respectively, while IndusInd Bank saw a notable decline in profit by 39.6 per cent. Despite the slower profit growth, private banks maintained a stronger domestic Current Account Savings Account (CASA) ratio. Kotak Mahindra Bank led with a CASA ratio of 43.6 per cent, closely followed by ICICI Bank at 40.6 per cent. Among PSBs, Bank of Maharashtra recorded the highest CASA ratio of 49.3 per cent, indicating a robust deposit base.
Deposit and advance growth also varied between public and private sector banks, with private banks achieving a 14.9 per cent increase in advances compared to 9.8 per cent among PSBs. However, several PSBs such as Indian Overseas Bank and Bank of Maharashtra displayed strong advances growth of 13.8 and 15.5 per cent respectively, highlighting the expanding credit portfolio of PSBs in response to rising demand. The results from the second quarter of FY25 underscore a shift in the banking sector as PSBs leverage reforms and government support to enhance profitability and customer reach, while private banks focus on sustaining growth through high CASA ratios and advances.
Overall, the performance of public sector banks in India has exceeded that of private sector banks in terms of net profit growth, showcasing their resilience and adaptability in a competitive banking environment. With Punjab National Bank leading the charge with an impressive 145 per cent year-over-year increase in net profit, other PSBs such as Central Bank of India, UCO Bank, and Bank of Maharashtra also posted notable profit gains. In contrast, private sector banks displayed more moderate profit growth, with Axis Bank recording the highest increase at 18 per cent. Despite slower profit growth, private banks maintained a stronger domestic Current Account Savings Account (CASA) ratio, with Kotak Mahindra Bank leading the pack. The varying deposit and advance growth rates highlight the evolving landscape of the banking sector in India, with PSBs showing strength in expanding their credit portfolios to meet rising demand.
As PSBs continue to make strides in improving profitability through enhanced operational efficiency and portfolio management, private sector banks remain focused on sustaining growth through high CASA ratios and advances. The second quarter results of FY25 point towards a shift in the banking sector dynamics, with PSBs leveraging reforms and government support to enhance profitability and customer reach. Despite challenges faced by the banking sector, both public and private banks are working towards strengthening their positions and meeting the evolving needs of customers in a rapidly changing financial landscape.
