PSU Banks' Profits Soar to Record Highs, Led by SBI

In a remarkable turnaround driven by improved asset quality, strong margins, and robust loan book growth, the combined net profit of all 12 Public Sector Undertaking (PSU) banks has surged nearly 4.5 times in just three years, reaching a record high of Rs 141,203 crore in FY24.

On a year-on-year basis, the profit pool of PSU banks witnessed a substantial 35% surge from Rs 104,649 crore in FY23. The State Bank of India (SBI), India’s largest lender, alone contributed over 40% of the total earnings, achieving an annual profit of Rs 61,077 crore.

SBI’s quarterly profit of Rs 20,698 crore was the highest reported by any company in the quarter, surpassing both Reliance Industries Limited’s (RIL) Rs 18,951 crore and HDFC Bank’s Rs 16,512 crore profits.

Other notable contributors included Bank of Baroda (Rs 17,788 crore), Canara Bank (Rs 14,554 crore), and Union Bank of India (Rs 13,649 crore). However, UCO Bank and Punjab and Sind Bank were the only two PSU banks that reported a decline in profit compared to the previous financial year.

This impressive performance reflects a dramatic turnaround in the balance sheets of PSU banks, which transitioned from a total net loss of Rs 85,390 crore in 2017-18 to becoming market favorites during the ongoing bull market.

The financials of PSU banks are now aligning closely with their private sector counterparts, leading to significant stock market gains. The Nifty PSU Bank index has surged over 76% in the past year, outpacing the modest 8% rise in the Nifty Private Bank index. Relatively lower valuations and restricted free float have also contributed to the strong stock price performance.