Higher rates, credit demand lift banks Q1 interest income

Recoveries rose to Rs 1,466 crore in the quarter under review from Rs 1,147 crore in Q1. Aggregate assets as of June 30, 2016, stood at 3,65,532 Crore as against 3,42,099 Crore as at June 30, 2015 registering a growth of 6.85%. Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance. Global brokerages bullish on HDFC, Marico, Dr Reddy’s post Q3 earningsMarket participants have been keenly focused on the December quarter earnings to gauge the first impact of demonetisation.

Big lenders in India, such as the SBI, ICICI Bank, HDFC Bank and Punjab National Bank, reported NIMs ranging between 3 per cent and 4.5 per cent for FY15. The performance metric cannot be confused with profitability, as it does not account for fees and non-interest incomes that banks generate through services related to brokerage and deposit accounts. In addition, NIM of two banks can’t be compared as their activities may differ due to asset sizes, composition of customer base, priority sector lending and other factors. The process of deregulation allowed for the liberal entry of foreign banks and the establishment of private banks.

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  • All efforts have been made to ensure the information provided here is accurate.
  • Thus, NIM is a significant indicator of financial stability of a lender.
  • Please verify with scheme information document before making any investment.
  • As a part of the structural reforms in the economy in 1992, the Government of India initiated a series of reforms in the Indian banking sector.
  • Its total deposits rose 3.15% YoY to Rs 9.14 lakh crore at the end of the September quarter.

Axis Bank net falls 16% on higher provisions, slippages decline in Q1The management hopes to bring down the credit cost to its long-term average of 100 bps by FY19. Profit before Tax increased by 23% from 1,367 crore in 9M FY 2011 to 1,682 crore in 9M FY 2012. At its 86th Board Meeting held on February 10, 2012, the Board of Directors of Infrastructure Development Finance Company Limited approved financial results for the period April 1, 2011 to December 31, 2011. IDBI Bank launched the eTrade Portal for online request of Letter of Credit, Bank Guarantee and further Straight Through Processing of such requests at Bank’s end. This e Trade portal is the first part of IDBI e Trade platform and the second module of the platform would cover Bills Discounting, Remittance, Pre & Post Shipment finance etc, which would be launched shortly. Deposits increased to 2,54,031 Crore as at end June 2016 from 2,41,328 Crore as at end June 2015 reflecting a growth of 5.26%.

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But bankers do not anticipate a dip in credit demand in spite of higher interest rates. As a part of the structural reforms in the economy in 1992, the Government of India initiated a series of reforms in the Indian banking sector. These measures provided greater opportunities to banks to expand and diversify their business in different dimensions.

  • Slippage ratio for the fourth quarter was restricted to 0.44 percent and for the entire year it was brought down to 2.15 percent from 2.41 percent, Das said.
  • IDBI Bank stock may face a hard time ahead due to disappointing quarterly resultIn the wake of demonetisation, the bank, like many of its public-sector peers, was expected to report underwhelming credit growth.
  • Banks continue to be a critical part of the financial system as most household savings are channelled through the banking system.
  • Non Performing Assets have a major impact on the NII of a bank and hence, this measure can be used to estimate the quality of assets of the bank too.

Domestic advances grew by 8.73 percent to Rs 3,93,991 crore and overseas advances increased by 31.09 percent to Rs 63,023 crore. RAM advances increased by 15.70 percent to Rs 2,16,567 crore, constituting 54.97 percent of the advances. Gross non-performing assets declined by 19.33 percent to Rs 45,605 crore in March 2022 from Rs 56,535 crore in March 2021.

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Bank’s income that has been generated by non-interest related activities as a percentage of total income (net-interest income plus non-interest income). Non-interest related income includes net gains on trading and derivatives, net gains on other securities, net fees and commissions and other operating income. Fresh slippages stood at Rs 1,502 crore during the January-March quarter. The cash recovery for the quarter was Rs 1,329 crore and at Rs 6,707 crore for FY22. The lender is targeting Rs 12,000 crore of recovery during FY23, he said. Das said the gross NPA is expected to be lower than 8 percent by March 2023.

non interest income

Much of the stock price movement is in reaction to the better- than-expected results for the December 2020 quarter . ClearTax offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. ClearTax serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. Non Performing Assets have a major impact on the NII of a bank and hence, this measure can be used to estimate the quality of assets of the bank too. Investors who wish to invest in bank stocks can review the financials of the bank by analysing the NII.

For the entire last year, the lender sanctioned more than Rs 70,000 crore but the availment was less at around Rs 29,000 crore. The bank reported a total income of Rs 20,684 crore, up 2.5% YoY. Net interest income – the difference between interest earned and interest expended – stood at Rs 6,829 crore, up 8.5% YoY. The bank’s net interest margin fell 13 basis points sequentially to 2.95% in Q2FY22. Please read the scheme information and other related documents carefully before investing.

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Net Interest Income is the difference between the revenue generated from a bank’s interest-bearing assets and expenses incurred while paying its interest-bearing liabilities. A bank’s assets consist of personal and commercial loans, mortgages, and securities. IDBI Bank stock may face a hard time ahead due to disappointing quarterly resultIn the wake of demonetisation, the bank, like many of its public-sector peers, was expected to report underwhelming credit growth. On capital raising plans, Das said the lender may raise Rs 2,500 crore this year.

non interest income

Investors interested in bank stocks can analyse the bank’s financials by examining the NII. Net interest income is the amount of money that comes in from interest on assets that is more than what is paid out in interest on deposits. The global net interest margin stood was flat at 2.9 for Q4 FY20 while the cost to income ratio reduced from 59 per cent in Q4 FY19 to 51.6 per cent in Q4 FY. Assets right hand gripping rule thumb represents and liabilities that have variable rates are more vulnerable to changes in interest rates thereby, impacting causing greater changes in the NII. When interest rates are growing in the economy, net interest margins become greater and vice versa. HDFC to announce Q4 results today; here’s what experts sayAnalysts expect the NBFC to report 23.8% YoY drop in net profit at Rs 1,986.70 crore.

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Slippage ratio for the fourth quarter was restricted to 0.44 percent and for the entire year it was brought down to 2.15 percent from 2.41 percent, Das said. Credit cost improved from 3.36 percent in Q4 FY21 to 1.10 percent in Q4 FY22. Net interest income increased by 35.77 percent to Rs 3,986 crore in Q4 FY22, from Rs 2,936 crore in the same period of the previous fiscal. “Irrespective of the interest rate hike, which has been talked about, now the retail engine https://1investing.in/ continues to adhere to its promise and we hope that we will have a decent growth in retail going forward as well. Rather, when it comes to corporate growth, we are quite hopeful this year we will have better traction,” Dinesh Khara, chairman, SBI, told analysts on 6 August. IDBI Bank launched ‘IDBI Express’ an unique banking solution, enabling customers to bank at their chosen time and place beyond banking hours, without having to visit the Bank branch.

  • That said, funding as well as operational cost pressures are rising and, thus, banks with the ability to pass on rate hikes floating rate book and drive-up fees should be able to protect their core profitability, it said.
  • Much of the stock price movement is in reaction to the better- than-expected results for the December 2020 quarter .
  • Suppose a bank earns Rs. 50 million in interest if its portfolio of loans totals Rs.1 billion and earns an average interest rate of 5%.
  • Net interest income – the difference between interest earned and interest expended – stood at Rs 6,829 crore, up 8.5% YoY.
  • Big lenders in India, such as the SBI, ICICI Bank, HDFC Bank and Punjab National Bank, reported NIMs ranging between 3 per cent and 4.5 per cent for FY15.

You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. One can understand the quality of loan portfolio, the effect of interest rate changes on the bank’s profitability etc. with the help of NII. YES Bank to report Q4 results on Wednesday; here’s what analysts sayBrokerage Motilal Oswal also expects double-digit bottomline growth from the private sector lender.

The weighted average lending rate on fresh bank loans increased 31 basis points between March and June to 7.94%, RBI data showed. The monetary policy committee of RBI has raised the repo rate by 140 bps in three tranches between May and August. In the three months through June, the effective rate hike was 90 bps.

Total business as of June 30, 2016 stood at 4,71,394 Crore as against 4,45,668 Crore as of June 30, 2015 registering a growth of 5.77%. Needs to review the security of your connection before proceeding. Full access to our intuitive epaper – clip, save, share articles from any device; newspaper archives from 2006. A non performing asset is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

The higher share of non-interest income leads to diversification benefits and reduces the risk of banks. The share of non-interest income has fallen and more banks have become unstable in the last decade. For the nationalised and foreign banks, the increase in the proportion of non-interest income has led to greater stability. However, for some of the private banks, this relation is not linear. The bank has projected a credit growth of around percent in the current financial year.

He further said the bank’s exposure to Future Group is about Rs 1,045 crore and it has made 100 percent provisions for the account. For Srei Group, where its exposure is Rs 963 crore, a 50 percent provisioning has been made. Income from principal investments increased by 90% from 169 crore in 9M FY 2011 to 321 crore in 9M FY 2012.