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Operating profits of nationalised banks in 98-99 rose 7 pc to Rs 59.29 bn

The operating profits of nationalised banks have increased by seven per cent to Rs 59.29 billion in 1998-99 than Rs 55.41 billion the previous year, according to the Reserve Bank of India report on trends and progress of banking in India.

For nationalised banks, which predominantly form a part of the public sector banks in India, the ratio of operating profits to total assets declined marginally by 0.11 percentage point from 1.33 per cent in 1997-98 to 1.22 per cent in 1998-99.

The decline in the net profits can be attributed to the decline in profits of some of the large-sized banks, the report said.

The net profit ratio of the nationalised banks has declined from 0.62 per cent in 1997-98 to 0.37 per cent in 1998-99. The intermediation cost of nationalised banks showed a marginal decrease from 2.65 per cent in 1997-98 to 2.63 per cent in 1998-99.

The spread of nationalised banks was at 2.79 per cent during 1998-99 as against 2.78 per cent during 1997-98.

The report said that the State Bank of India and its seven associated banks, which constitute the second largest segment of public sector banks, accounted for 37.1 per cent of the assets of public sector banks.

An analysis of the SBI group indicates that the operating profits of the SBI group recorded a decline of 1.78 per cent from Rs 47.32 billion in 1997-98 to Rs 46.48 billion in 1998-99. The ratio of total assets also declined by 0.40 percentage points from 2.03 per cent in 1997-98 to 1.63 per cent in 1998-99.

In 1998-99, the combined assets of the Indian private sector banks (old and new) constitued a share of 10.9 per cent of the scheduled commercial banks.

An analysis of the financial performance of the banks shows that the new private sector banks have performed well above the average of SCBs with the exception of the spread.

The performance of the public sector banks has also been good. The combined performance of the 27 public sector banks shows that the operating profits of these banks increased by 2.96 per cent from Rs 102.73 billion in 1997-98 to Rs 105.77 billion in 1998-99.

The ratio of operating profit to the total assets, however, showed a steady decline from 1.58 per cent in 1997-98 to 1.37 per cent in 1998-99. The net profits of some large-sized banks like the State Bank of India, the Bank of India and the Punjab National Bank came under heavy pressure during the year which has affected the overall profits of the group.

The aggregate financial assets of financial institutions and banks registered a lower growth of 12.2 per cent during 1998-99 as compared to 16.9 per cent the preceding year.

At the disaggregated level, financial assets of financial institutions registered a growth of 8.1 per cent during 1998-99 as against 18.8 per cent during 1997-98.

The growth in these assets was driven primarily by the significant growth in assets of all-India term-lending institutions (16 per cent in 1998-99 on top of a rise of 22.5 per cent in 1997-98), the report said.

Total resources mobilised by the mutual funds industry posted a decline during 1998-99. Mutual funds other than the Unit Trust of India, in the private and public sector, however, posted better performance as compared to the previous year, the report said.

The report has attributed the decline in the resource mobilisation by the mutual funds industry to the redemption pressures faced by the UTI in respect of its US-64 scheme.

Excluding this scheme, which has a significant share in the total resource mobilisation by the mutual funds segment, the performance of the mutual funds industry was distinctly better as compared to the previous year, the report noted.

According to the report, the budgetary measures for the mutual funds sector, as announced in the Union Budget 1999-2000, along with the incentives offered to money market mutual funds in the Monetary and Credit Policy for the year 1999-2000 have created a favourble environment for greater resource mobilisation by the mutual funds industry in the current year.

UNI

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