In FY24, the banking sector achieved a significant milestone as its net profit surpassed Rs 3 lakh crore for the first time. Both public and private sector banks contributed to this remarkable feat, with the net profit of listed banks rising by 39% to Rs 3.1 lakh crore from Rs 2.2 lakh crore in FY23.
Public sector banks recorded a record net profit of Rs 1.4 lakh crore during the year, marking a notable 34% increase over the previous fiscal. Meanwhile, private sector banks saw their net profit surge by 42% to nearly Rs 1.7 lakh crore, compared to Rs 1.2 lakh crore in the preceding year. Consequently, the earnings gap between public and private sector banks has widened.
To provide context, the combined net profit of Rs 3 lakh crore for the banking sector in FY24 is roughly equivalent to the total quarterly profits of all listed companies in the first three quarters of the fiscal year. This surpasses even the profits generated by the IT services sector, which has traditionally been the most profitable group in recent years. Listed IT services companies reported a net profit of nearly Rs 1.1 lakh crore for FY24.
In the past few years, public sector banks had been narrowing the profit gap with private banks as they undertook measures to clean up their balance sheets and boost earnings. In fact, the net profit of public sector banks has more than quadrupled over the last three years.
However, some public sector banks had to make one-time provisions towards pensions in FY24, which impacted their net profit. Despite this, their shares saw gains as the pension provisions were lower than expected. Additionally, certain banks, such as Bank of Baroda, faced setbacks due to provisions for their exposure to entities like Go Air, although the loans were collateralized.
On a consolidated basis, Reliance Industries retains its position with the highest annual profit of Rs 79,020 crore. However, on a standalone basis, its profit remained flat at Rs 42,042 crore in FY24. Among the top 10 listed companies, TCS reported a net profit of Rs 43,559 crore for FY24, followed by Indian Oil (Rs 39,618 crore), ONGC (Rs 38,828 crore), and Infosys (Rs 27,234 crore).
