For a sample of 29 banks, the bad loan provisioning fell by 27.6% year-on-year to Rs 23,080.6 crore in the December quarter. NII increased by 34.5% to a record Rs 1.8 lakh crore. NII is calculated as the difference between total interest earned and interest expended.
The public sector banks (PSU banks) reported a significant fall of 30.3% in provisioning at the aggregate level for the December quarter from the year ago while the private sector banks posted a 21.7% drop. The share of PSU banks in the total bad loan provisioning for the quarter fell to 66.2% from 68.8% in the year-ago quarter. Top PSU banks including State Bank of India, Bank of Baroda, and Canara bank reported a drop of 48.8%, 80.9% and 29% in the loan loss provisioning respectively for the third quarter of the current fiscal year.
Of the total sample, 20 banks or two out of every three banks showed lower year-on-year provisioning. This was better than the year-ago quarter when just 13 banks had reported lower provisioning.
The uptick in credit offtake has helped banks to report improvement in NII. The year-on-year gross bank credit growth remained in the double digits for each of the months in the current fiscal year till December. Though it slowed to 14.9% in December after peaking in October to 17.9%, it improved to 16.5% in the first fortnight of January 2023.
“The growth has continued to be driven by a sustained rise in retail credit, strong growth in non-banking financial companies (NBFCs) and working capital demand,” said CARE Ratings in a recent credit offtake report.
Private sector banks showed better year-on-year improvement of 46.9% in NII than the 25% growth reported by the PSU banks for the December quarter. As a result, the share of the former set of banks in the sample’s NII improved to 47.2% from 43.2% a year ago. Top private sector banks including ICICI Bank, Axis Bank, and Kotak Mahindra Bank recorded NII growth of above 30% for the December 2022 quarter.
