Indian Banks Achieve Record Net Profit of Rs 3 Lakh Crore in FY24

India’s banking sector has reached a significant milestone, with net profit surpassing Rs 3 lakh crore for the first time in FY24. The combined net profit of listed public and private sector banks increased by 39%, reaching Rs 3.1 lakh crore compared to Rs 2.2 lakh crore in FY23, as reported by TOI. This impressive figure is roughly equal to the total quarterly profits of all listed companies during the first three quarters of the fiscal year.

Notably, the banking sector’s profits have outstripped those of IT services, traditionally the most profitable sector. In FY24, listed IT services companies recorded a net profit of nearly Rs 1.1 lakh crore, much lower than the banking sector’s profits.

Public sector banks achieved a record net profit of Rs 1.4 lakh crore, a 34% increase from the previous year. Private sector banks saw their net profit rise by 42% to nearly Rs 1.7 lakh crore, up from Rs 1.2 lakh crore a year ago. 

The profit gap between public and private sector banks has widened. However, public sector banks have been closing this gap by improving their balance sheets and boosting earnings. Over the past three years, their net profit has more than quadrupled.

Public sector banks would have recorded even higher profits in FY24 if not for a one-time pension provision by several banks. However, since these provisions were lower than expected, their stock values rose.

Some public sector banks, like Bank of Baroda, faced losses due to provisions for their exposure to Go Air, despite the loan being backed by collateral.

Public sector banks have made a remarkable turnaround from record losses of Rs 85,390 crore in FY18 to record profits in FY24. India’s 12 public sector banks together earned a net profit of Rs 1,04,649 crore in 2022-23.

Banks like Bank of India, Bank of Maharashtra, and Indian Bank recorded over 50% growth in net profit. The government’s 4R strategy (Recognising NPAs, Resolution and recovery, Recapitalising PSBs, and reforms) has significantly contributed to the revival of India’s public sector banks.