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June 11, 2001
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Money > Business Headlines > Report June 11, 2001 |
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Banks bear the slowdown bruntB G Shirsat Reeling under the lag effect of industrial slowdown, the earnings of listed banks declined progressively during the four quarters of 2000-01. The full effect of the slowdown was reflected in the quarter ended March 2001 as the net profit of 20 listed banks declined 34.43 per cent. Although the first quarter of 2000-01 showed a 40.75 per cent jump in net profits, the profit margin fell to 4.56 per cent in the fourth quarter from 8.07 per cent recorded in the same period of the previous year. The performance of the 20 listed banks (seven are yet to announce results) in 2001 reflects the falling demand for bank loans over the four quarters. The rate of growth in interest earned by the 20 banks during January-March, 2001 declined to 15.88 per cent, down from 18.3 per cent in October-December, 2000 and a relatively stronger 20 per cent increase in interest income during each of the first two quarters (April-June and July-September, 2000). But with deposits growing at a faster rate than advances, the interest expenditure of the banks moved up at a higher pace than interest income. The interest expenditure during the fourth quarter increased 16.53 per cent compared with income growth of 15.88 per cent in a sharp reversal of trends seen in the first three quarters when interest earned outpaced the interest outgo. As a consequence, banks' margins remained depressed on account of decline in spread during each of these quarters. Reflecting the slack in demand for fee-based products also, banks' non-interest income registered modest growth during the last two quarters. During the quarter ended March 2001, non-interest income grew by 3.88 per cent, down from 5.69 per cent during the third quarter ended December 2000. In the second quarter, fee-based income actually fell by over 8 per cent while in the first quarter other income swelled by 18.23 per cent. The strong contribution of non-interest income was, in fact, a significant contributor to the 40.75 per cent jump in net profit during the first quarter. Powered by YOU MAY ALSO WANT TO READ:
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