In the second quarter (Q2) of the financial year 2025, India’s state-owned banks significantly outperformed private banks across key metrics, including profitability and asset quality. An analysis of 35 banks shows public sector banks reporting stronger net profits and lower non-performing assets (NPAs) compared to their private sector counterparts. Government Banks have posted strong results this quarter ending September 2024. Click here to check net profit of all Banks this quarter. Click here to download Bank Results PDF.
Net Profit Reported by Public Sector Banks
In the September 2024 quarter, several public sector banks reported impressive growth in net profits.
- Bank of Baroda: Net profit of Rs. 5,238 crore
- Union Bank of India: Net profit of Rs. 4,720 crore
- Punjab National Bank (PNB): Net profit of Rs. 4,303 crore
- Canara Bank: Net profit of Rs. 4,015 crore
- Indian Bank: Net profit of Rs. 2,707 crore
- Bank of Maharashtra: Net profit of Rs. 1,327 crore
- Central Bank of India: Net profit of Rs. 913 crore
- Indian Overseas Bank: Net profit of Rs. 777 crore
- UCO Bank: Net profit of Rs. 603 crore
- Punjab & Sind Bank: Net profit of Rs. 240 crore
- SBI: Data not yet released
- Bank of India: Data not yet released
Net Profit Reported by Major Private Banks
- HDFC Bank: Net profit of Rs. 16,821 crore
- ICICI Bank: Net profit of Rs. 11,746 crore
- Axis Bank: Net profit of Rs. 6,917.57 crore
- Kotak Mahindra Bank: Net profit of Rs. 3,344 crore
- IDBI Bank: Net profit of Rs. 1,836 crore
- IndusInd Bank: Net profit of Rs. 1,325 crore
- Federal Bank: Net profit of Rs. 1,056.7 crore
- Also Read: Click here to check net profit of all Banks this quarter
- Also Read: Click here to download Bank Results PDF.
Strong Profit Growth for State-Owned Banks
From July to September, state-owned banks saw robust profit growth, with net profits increasing by 23% to 51%. In contrast, private banks recorded a lower range of growth in net profits, from 4% to 40% during the same period. Among public banks, Punjab National Bank (PNB) reported a remarkable 145% rise in net profit, while UCO Bank and Central Bank of India posted gains exceeding 50%. Indian Bank, Bank of Maharashtra, and Union Bank of India also achieved more than 30% growth in net profit.
On the private sector side, YES Bank led with a net profit increase of over 140%, while IDBI Bank and Jammu and Kashmir Bank reported profit growth of more than 38% compared to the previous year. However, several private banks, including IndusInd Bank, RBL Bank, and IDFC First Bank, faced declines in net profit. Click here to check net profit of all Banks this quarter. Click here to download Bank Results PDF.
Boost in Public Sector Profit Margins
Public sector banks benefited from higher net interest margins (NIMs) and increased interest income, largely driven by rising lending rates. Additionally, these banks kept deposit costs under control by limiting rate hikes, which further supported profitability. This prudent cost management allowed state-owned banks to maintain a competitive edge over their private counterparts in terms of profit margins.
Impact of RBI’s Penal Charges Regulations
In Q2, the Reserve Bank of India (RBI) introduced new penal charge regulations, which affected banks’ financial results. Under these guidelines, banks can no longer classify penalties for missed loan repayments as “penal interest” to be added to the loan’s interest rate. Instead, penalties must be recorded as “penal charges” under non-interest income.
These changes had a noticeable effect on banks’ NIMs, particularly among public sector banks. Private banks reported higher net interest income (NII) growth, ranging from 5% to 25%, while state-owned banks saw NII growth between 5% and 20%. Union Bank of India (UBI), for instance, noted an 11 basis-point decline in its NIM due to these revised guidelines.
Improved Asset Quality
Both private and state-owned banks reported gains in asset quality, an indicator of financial stability and recovery efficiency. Measured by net NPA ratios, asset quality reflects a bank’s capacity to recover defaulted loans. Lower NPA ratios signify stronger recovery performance, and state-owned banks reported net NPA ratios between 0.20% and 0.98%, while private banks’ NPA ratios ranged from 0.2% to 1.50% as of September 30.
Significant Debt Recoveries in Q2
During the quarter, several public banks made substantial recoveries from accounts under resolution by the National Company Law Tribunal (NCLT). Bank of Baroda (BoB) recovered Rs 2,525 crore from written-off accounts in Q2, a significant rise from Rs 554 crore in the previous quarter. Similarly, Punjab National Bank (PNB) recovered Rs 1,976 crore, with Rs 1,000 crore sourced from NCLT accounts.
Looking Ahead
These positive Q2 results suggest that state-owned banks are on a promising path, but consistent performance will require a focus on long-term strategy and operational efficiency. As the financial year progresses, maintaining the momentum will depend on effective lending strategies, controlled deposit costs, and sustained debt recovery efforts. The substantial gains in profitability and asset quality achieved by state-owned banks indicate strong underlying fundamentals, though adaptable strategies will be essential for continued success.
