Banks’ profitability improves for sixth yr in row in FY24: RBI report

“Banks’ profitability rose for the sixth consecutive yr in 2023-24 and continued to rise in H1:2024-25 with the return on belongings (RoA) at 1.4 per cent and return on fairness (RoE) at 14.6 per cent,” mentioned the Report on Development and Progress of Banking in India 2023-24. File. Representational Picture
| Photograph Credit score: Reuters

Profitability of banks improved for the sixth consecutive yr in 2023-24 and their gross dangerous money owed or NPAs declined to a 13-year low of two.7 per cent, in accordance with the RBI knowledge launched on Thursday (December 27, 2024).

India’s robust macroeconomic fundamentals have boosted the efficiency and soundness of the home banking and nonbanking monetary sectors.

“Banks’ profitability rose for the sixth consecutive yr in 2023-24 and continued to rise in H1:2024-25 with the return on belongings (RoA) at 1.4 per cent and return on fairness (RoE) at 14.6 per cent,” mentioned the Report on Development and Progress of Banking in India 2023-24.

Asset high quality improved, with the gross non-performing belongings (GNPA) ratio falling to its lowest in 13 years at 2.7 per cent at end-March 2024 and a couple of.5 per cent at end-September 2024, it mentioned.

Banks’ capital place remained passable, as mirrored in key parameters like leverage ratio and capital to danger weighted belongings ratio (CRAR).

Additional, robust credit score enlargement by NBFCs was accompanied by additional strengthening of their stability sheets, enchancment in credit score high quality and profitability, and passable capital buffers.

Web revenue of the scheduled business banks elevated by 32.8 per cent to Rs 3,49,603 crore over the last fiscal.

At end-March 2024, India’s business banking sector consisted of 12 public sector banks (PSBs), 21 non-public sector banks (PVBs), 45 overseas banks (FBs), 12 SFBs, six PBs, 43 RRBs, and two LABs.

Out of those 141 business banks, 137 had been categorized as scheduled banks, whereas 4 had been non-scheduled.

The report mentioned the consolidated stability sheet of the scheduled business banks, excluding RRBs, elevated by 15.5 per cent throughout 2023-24, as in contrast with 12.2 per cent throughout 2022-23.

The non-banking monetary corporations (NBFC) sector exhibited double digit credit score development, whereas its unsecured lending contracted and asset high quality improved additional.

The GNPA ratio of NBFCs dropped to three.4 per cent at end-September 2024; robust capital buffers stored the CRAR nicely above the stipulated norm at end-September 2024.