Despite the pandemic, banks see a record profit of 1 lakh Rupees

MUMBAI: In FY21, the banking sector made it’s highest-ever earnings of 1,02,252 crore, despite the economy being hit by the pandemic. This is a considerable improvement above the industry’s net loss of about 5,000 crore in FY19. Half of the profits in the business came from two banks: HDFC Bank and SBI. HDFC Bank accounted for 30% of overall earnings, or Rs 31,116 crore, a rise of 18% over the previous year. SBI, the country’s largest lender, contributed another 20%, or Rs 20,410 crore. ICICI Bank came in third, with earnings of 16,192 crore, more than double those of the previous year. Additionally, private banks benefited. The most dramatic change occurred among PSBs, which posted a net profit for the first time in five years. Only two of the 12 public sector banks, Punjab & Sind Bank and Central Bank of India, posted a net loss for the fiscal year.

Yes Bank remained in the red in the private sector, with a net loss of 3,462 crore as it continued to make provisions. Banks that were in the red, on the other hand, suffered smaller losses. The elimination of PSBs’ historical bad loan problem was the single biggest factor for their 57,832-crore turnaround – from a deficit of 26,015 crore in FY20 to a combined profit of 31,817 crore in FY21.

Banks had finished making arrangements for the majority of these loans by March 2020. Banks stopped bleeding as additional provisions were offset by huge recoveries from previously written-off accounts. According to ICRA, the profits for the current year came from windfall gains on public banks’ bond portfolios, which accounted for two-thirds of their profits before tax in FY21.

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